Adding to their existing deal to finance Cultivation Technologies’ (CTI) large California-based cannabis grow and extraction campus, and their just announced royalty deal on ezGreen seed-to-sale compliance software (10% in perpetuity), FinCanna Capital (CALI.C) has now cranked out another binding term sheet, this one with a cannabis research and refinement facility in Oakland.
Gram Co, based in Oakland, Calif., is a cannabinoid research and refinement facility focused on the medical cannabis industry to provide business-to-business (B2B) and business-to-consumer (B2C) products and services to licensed medical dispensaries, infused product manufacturers and numerous others in the cannabis supply chain.
This deal, which will see $3m go to Gram Co in tranches, will see FinCanna earn a tiered royalty rate, from 7.5% up to 14% of revenues. That’s tasty.
Gram Co has leased a facility in Oakland, Calif., in which it is retrofitting a large, state-of-the-art medical cannabis extraction laboratory, which is expected to be operating by the end of the third quarter of 2018. Gram Co plans to be a premier producer of bulk quantities of THC (tetrahydrocannabinol) distillate and various concentrates produced by hydrocarbon-based solvent extraction. Gram Co also plans to provide white-labelling services to licensed brand and infused product manufacturers that do not have direct access to compliant production facilities.
We like this space a lot, we like the location a lot, the size of the facilities involved, the potential to earn a great deal of money, and the low financial commitment level for FinCanna.
The model being used here is not unlike the model CannaRoyalty (CRZ.C) has used in building out its portfolio of 25+ cannabis assets. While the three deals CALI.C are currently involved with are early stage, financing licensed Californian cannabis build-outs is a real sweet spot opportunity wise.
In fact, I wrote just yesterday about how FinCanna was an interesting option for those looking for value – and that was before this new deal dropped.
The market has not paid much heed to this stock just yet, but at the rate they’re bringing in new deals, I expect this may change soon.
— Chris Parry
FULL DISCLOSURE: FinCanna is an Equity.Guru marketing client, and the author owns stock in the company.