Cannabis Wheaton Financing Dead in the Water? (Updated)

James West

Cannabis Wheaton Income Corporation (CVE:CBW) (OTCMKTS:KWFLF) (FRA:3KF)  has hit another snag in its ambitious effort to create a streaming royalty company focused on Cannabis. Unsurprising to many capital markets participants , a $50 million-upsized-to-$80 million financing that had been getting the royal treatment up and down Bay Street in favour of CBW over the last week has apparently been “mutually terminated”, sources close to the deal tell me.

However, Chuck Rifici, in response to an email seeking comment, said, “the termination was by mutual agreement and was by no way due diligence related, the financing is still on and we will be releasing further news to the market on Monday.”

I say unsurprising because members of lead underwriting investment banks such as Eight Capital and Canaccord Genuity Corp. have been identified as shareholders in the company from a previous financing round with a post-forward-split $0.018 cost basis. The now-cancelled $80 million financing was part equity priced at $1.15 per special warrant, and part debenture. No matter how you slice it, the conflict inherent in the underwriters selling $1.15 paper that they own for $0.018 is a huge conflict of interest, and it is a stunningly ill-conceived that will likely have repercussions for both firms going forward.

Nobody is willing to talk about the circumstances on the record surrounding the termination that I have been able to locate , and so it will be next week’s press releases that will provide the details.

Cannabis Wheaton has been the topic of chat room gossip that resulted in the company issuing a press release denying any wrongdoing and pledging to investigate the source of the innuendo.

We spoke to CEO Chuck Rifici last month on the Midas Letter CEO Podcast.

Updated at 1:04 p.m. ET Saturday June 3 to include comment from Chuck Rifici, resulting in the change in the Title to include the question mark at the end.

James West

James West

Editor and Publisher

I employ a Capital Efficiency Model that dictates money should never be exposed for longer than is absolutely necessary to the possibility of being lost. Thus, I routinely sell half my position when a stock doubles from my entry price, and I sell stocks that lose 20%, unless there are...
More Info...

[email protected] | |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Free Newsletter,
Priceless Content.

Be the first to hear from Midas Letter on all things Cannabis.