The North American cannabis industry has been steadily picking up steam for years now, but the lack of concrete Federal approval and various financial hindrances have caused a major headache for the industry players. In an effort to offer a remedy to this malady, Tidal Royalty Corporation (CSE: RLTY.U), a Canadian company, had begun trading on the Canadian Securities Exchange (CSE) last week.
According to Paul Rosen, Chairman and CEO of Tidal Royalty Corp., the current state of the U.S. cannabis market is deeply reminiscent of the one he successfully navigated in Canada, circa 2012. And as the Canadian market is drying up of the “easy money,” the United States market is in prime position for huge expansion. The only thing missing, however, was major financial backing for these companies due to the Federal restrictions that are still in place in the U.S. government. Mr. Rosen’s company offers a solution: non-dilutive financing solutions in a streaming model that is widely used throughout the mining industry for developing projects. Tidal Royalty Corp. plans to write checks of CAD 10 Million, or more, to developing and licensed companies in exchange for a percentage of their top-line revenue.
The money can be used to expand production, cross state lines and create market rollups. Investors, on the other hand, “get top-line exposure to diversified assets (…) to a portfolio that spans states, operators, and the value chain (cultivation, production, dispensary, etc.),” according to the CEO.
The Company has raised USD 30 Million of capital and is ready to invest throughout the United States, with a goal of deploying USD 1 Billion within the next two to three years. “There is very little real institutional money being deployed in the US to date," said Mr. Rosen. "And, the private equity and/or high net worth money that is there: (i) is generally a smaller quantum (meaning you need to put together party rounds); and, (ii) doesn't necessarily understand the cannabis industry, which means it will take longer to do deals and they might fall apart at the last minute as these guys ‘wake up' to deal when they actually start doing diligence.” The difference, however, is that, “Tidal Royalty is adopting proven winning strategies gleaned from more than six years of pioneering the financing of early-stage Canadian cannabis companies and has augmented that experience with insights gained from studying proven accretive royalty financing products that large cap. mining companies succeeded with…the reason that Tidal Royalty will work is that it provides 'real value' to the market."
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