- FinCanna advances $2.25 million to Refined Resin Technologies and ezGreen Compliance
- California sales account for one-third of U.S. cannabis market
- California market projected to grow by CAGR of 23 percent to $6.5 billion by 2020
California is now home to the largest legal cannabis market in the world. A pioneer of medical marijuana, which it legalized in 1998, the state has gone a step further by legalizing adult use of marijuana as of January 1, 2018. As a result, sales, already accounting for one-third of legal cannabis sales revenues in the U.S., are projected to reach $4.3 billion in 2018 and continue to grow to $6.5 billion by 2020, according to Arcview Research & New Frontier Data. But such rapid growth won’t be possible unless the industry can attract funding, which means that the services provided by specialty financing company FinCanna Capital Corp. (CSE: CALI) (OTCQB: FNNZF) will likely be in high demand. FinCanna Capital, a royalty company for the licensed U.S. medical cannabis industry, provides capital to licensed medical cannabis companies in exchange for a percentage of future cash flows under a royalty financing model.
FinCanna Capital might have taken a leaf from the mining industry playbook, since royalty companies, sometimes referred to as streaming companies, are active in the precious metals industry. They fund the exploration and production activities of miners and, in return, receive rights over a percentage of future revenue streams. FinCanna’s modus operandi will be similar. The company will provide upfront advances to cannabis companies in return for a future stream of royalty payments.
Royalty financing offers several benefits to startup cannabis companies. Compared to equity financing from private or public investors, it can be a more palatable solution for shareholders, since it requires no transfer or dilution of equity. Accordingly, owners are also at less risk of losing control of their businesses. In royalty financing, investors own a piece of the company’s revenue stream rather than a piece of the company itself.
Royalty financing may also be less burdensome than debt. With a loan or bond, interest payments are usually fixed and can be difficult to change if business conditions deteriorate. However, flexibility is built into the royalty financing structure, since royalty payments are linked to revenues or cash flows.
FinCanna is already making its presence felt. The company recently announced that it had advanced $1.25 million, an initial tranche of capital, to Refined Resin Technologies (http://ibn.fm/RxntR). Refined Resin is retrofitting a legally zoned, large, state-of-the-art medical cannabis extraction laboratory in Oakland, California, that’s expected to be in operation by late 2018 or early 2019. Refined Resin has extensive experience in extraction, manufacturing and business operations and intends to be premier producers of bulk quantities of THC (tetrahydrocannabinol) distillate and various high-value concentrates produced via hydrocarbon-based solvent extraction.
Around the same time, FinCanna also revealed that it had advanced $1 million to ezGreen Compliance, which offers a state-of-the-art enterprise compliance and point-of-sale software solution for licensed medical cannabis dispensaries and cultivators (http://ibn.fm/OqLBD).
FinCanna also announced the appointment of John Campbell to its advisory board. Campbell has over 35 years of experience in the investment industry, and currently serves as chairman and CFO of TriView Capital, one of Canada’s largest Exempt Market Dealers (http://ibn.fm/BhWGN).
FinCanna’s first investment in California, Cultivation Technologies, recently executed an agreement with Phoenix Tears LLC, to be the exclusive manufacturer and distributer of official Phoenix Tears THC-based products in California. The Phoenix Tears-branded portfolio of THC based products will initially include a full spectrum of oil dispensers, vaporizer cartridges and vaporizer kits, as well as topicals (http://ibn.fm/M0rsM).
For more information, visit the company’s website at www.FinCannaCapital.com
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