C21 Investments (CXXI.C) closes final round of cap raise


C21 Investments (CXXI.C) closed the final portion of their previously announced cap raise, with a brokered sale of their “units.”

This will close the second and final portion of their previously announced upsized brokered syndicate private placement of units. Collectively, this new sale of units will generate CAD$9.825 million. Combined with the capital they secured in the first round, their gross proceeds from the offering are $14.88 million.

“With the closing of several acquisitions and others due shortly, we are providing investors with the opportunity to invest in a vertically integrated cannabis company that cultivates, processes, and distributes quality cannabis and hemp-derived consumer products in the United States,” said Robert Cheney, president and CEO of C21 Investments.

This round of the offering was led by Industrial Alliance Securities with Canaccord Genuity and Sprott Capital Partners as syndicate members. Cheney said the offering was well received as investors continued to show confidence in the company and its strategy.

For this cap raise, each “unit” consists of one $1,000 principal amount 10% unsecured convertible debenture and one-half of one non-transferable debenture warrant. Each warrant entitles the holder to purchase, for a period of 24 months from the date of issue, one additional $1,000 principal amount 10% unsecured convertible debenture at an exercise price of $1,000 per warrant debenture.

What’s different about a debenture than a general loan, is that it is often “unsecured”, and does not have any underlying asset or collateral against which it is taken out. However, the terms and conditions for this particular sale highlight that the debentures can be converted into common shares of C21 Investments at a price of $0.90 per common share.

The warrants and debentures of this transaction will mature two years from the date of issue, and the shares issued upon the conversion will be subject to resale restrictions under the applicable Canadian securities laws for a period of four months following the closing date.

C21 will use the proceeds from the cap raise to complete the previously announced acquisitions in the United States, and upgrade and expand the acquired businesses.

C21’s performance in 2018

The company had a busy 2018. Last year, C21 added properties in Nevada and Oregon to their arsenal. The addition of further capital on their balance sheets will also allow them to expand to locations in California.

Some of C21’s past acquisitions in Oregon have allowed them to scale manufacturing in the U.S. Some notable acquisitions include:

  • Eco Firma Farms
  • Phantom Farms
  • Swell Companies

Eco Firma Farms has a 23,000 square foot grow facility in Canby, Oregon.

Phantom Farms possesses 80,000 square feet of outdoor cannabis cultivation space in their main facility, and 40,000 square feet under development in southern Oregon.

Swell is into the extraction, manufacturing and distribution of THC and CBD products with more than 50 of its branded products available in over 275 retail locations across Oregon.

— Arth Gupta

Full Disclosure: C21 is an Equity.Guru marketing client.

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