Cannabis Wheaton Financing Dead in the Water

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.

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.

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