The recently announced Sprott JV dropped $12.0 million into CannaRoyalty’s (CRZ.C) (“CRZ”) war chest and really set things in motion for the company as it continues to facilitate industry growth and enhance shareholder value through the provision of strategic capital and deep industry experience to market participants.
Today, the company supported that endeavour with the launch of CR Advisory Services (“CR Advisory”).
The legal cannabis market is growing like a weed. Sales for the green stuff, its components and ancillary products and services jumped 30% last year, pulling in US$6.7 billion in North America alone during 2016.
Meanwhile, in the northern land of sun, sea and snow, the bottleneck has blown open and Health Canada has put the pedal to the metal when it comes to the ACMPR application process.
There were only 19 LPs in Canada during 2015, and many of the 1,300 applicants felt as though their submission had slipped into a Brazil-like bureaucratic black hole, but no longer, now there are 51 and that number continues to growth monthly as Health Canada scrambles to meet the expected demand of 750,000 kilograms per year the market will require once recreational marijuana hits the shelves of your local dispensary sometime in 2018.
At this exponential growth rate, applicants and other industry players will have to move quickly to establish market share while staying abreast of rapidly evolving regulations and business trends. For smaller operators especially, this will add an undue pressure on the business as owners attempt to remain compliant and relevant.
This is where CR Advisory comes in as Marc Lustig, CEO of CannaRoyalty, affirmed, “The challenges faced by cannabis companies in this nascent and highly-regulated industry are considerable, and CR Advisory provides these companies with the expertise required to realize significant and sustainable growth, and also achieve critical strategic corporate milestones.”
According to the news release, CR Advisory will provide a full suite of advisory services including corporate finance, capital markets, compliance and regulation as well as retail and sales strategy. It will also provide marketing and branding services through its wholly-owned marketing and design firm, Electric Medialand.
CR Advisory has already signed an advisory agreement with AltMed, a Florida- based company striving to bring pharmaceutical industry precision to the cultivation and dispensing of medical cannabis.
The deal with AltMed includes an upfront work fee of US$150,000, plus a success fee on corporate transactions taking place during the life of the consulting services agreement or within six months after the contract terminates.
CannaRoyalty currently owns an 8.2% equity stake in AltMed with a 3.5% revenue royalty extending to December 31, 2025 on many of its MüV products as well as the right to license MüV products in Canada, Puerto Rico and certain US states.
Lustig talked more about the agreement, “CannaRoyalty’s business relationship with AltMed is an excellent example of the strong relationships we have fostered with our investees through a multitude of platforms to assist in developing them into industry leaders, while generating significant returns for CannaRoyalty shareholders.”
Mike Smullen, CEO of AltMed, added, “We are pleased to have the support and guidance of CannaRoyalty through its CR Advisory division as we prepare to launch a significant corporate transaction for AltMed. We have enjoyed a strong working relationship with CannaRoyalty over the life of our company and are confident we will successfully advance our expansion and development with their help.”
In other news, CannaRoyalty also announced that it had engaged the services of Stoic Advisory to assist with CR Advisory and other company endeavours. Stoic was founded in 2016, by cannabis industry veteran, Aaron Salz. As consideration for these services, Stoic has issued CannaRoyalty common shares which are subject to customary hold periods.
The markets were mildly buoyant today on the company’s news and shares in CannaRoyalty rose 1.57% or $0.04 to $2.59 per share by the end of trading.
If the grower explosion continues as 2018 rolls into view, CannaRoyalty’s market trajectory could form a hockey stick. Smart investors would be wise to keep this one on their radar. Do yourself a favor and do the homework, you may want to jump on board.
FULL DISCLOSURE: CannaRoyalty is an EQUITY.GURU client.