Breaking News: Tidal Royalty Corp. Announces Letter of Intent To Finance Illinois Expansion

Tidal Royalty Corp. (OTC: TDRYF) (CSE: RLTY.U), a leading provider of royalty financing to licensed U.S. cannabis operators, is pleased to announce that on August 1, 2018 it has entered into a Letter of Intent (“LOI“) with an established licensed operator in Illinois (the “IllinoisCannabis Company“) to finance the expansion of the Illinois Cannabis Company’s operations and strategic acquisitions.

The Illinois Cannabis CompanyLOI

The Illinois Cannabis Company is led by a seasoned management team with years of cannabis industry experience. The Illinois Cannabis Company currently operates a state-of-the-art 75,000 sq. ft. facility that uses highly-advanced plant monitoring technologies to precisely track plant inputs and other critical control factors in order to achieve optimal production yield and consistency. The Illinois Cannabis Company will use proceeds from the financing to expand their existing cultivation and manufacturing facility, as well as pursue acquisition of additional strategic assets that will increase market share.

Pursuant to the LOI, Tidal Royalty will provide the Illinois Cannabis Company with up to US$41MM, in the form of both a royalty financing and equity investment. The royalty financing and equity investment will be staged over specific milestones set by Tidal Royalty management:

  • Royalty Financing: Tidal Royalty will receive a 15% net sales royalty on all the Illinois Cannabis Company’s Illinois operations. This includes both net sales generated from existing cultivation and dispensary sales, as well as incremental sales generated by the planned expansion.
  • Equity Investment: Tidal Royalty will purchase the Illinois Cannabis Company’s common shares at an agreed-upon valuation.

“As Tidal Royalty looks forward to where the U.S. cannabis market is headed, we are excited to broaden our investment strategy,” said Paul Rosen, CEO & Chairman of Tidal Royalty. “We are very excited to count the Illinois Cannabis Company among our portfolio constituents. Between the near-term cash flow generated by their existing operations, management’s vision and drive to grow their market share, and the ability to accelerate their growth with Tidal Royalty capital, we feel this is going to be the beginning of a great long-term relationship between our companies.”

Illinois is the sixth most populous state in the United States with nearly 13MM residents. According to Marijuana Business Daily, the state’s medical market is expected to grow to US$150MM by the end of 2018 with significant opportunity for upside as the market develops.

The LOI includes an exclusivity period during which the Illinois Cannabis Company will not negotiate with any other party. Closing of the transaction contemplated by the LOI is subject to, among other things, the satisfactory completion of Tidal Royalty’s diligence investigation, which is currently underway. Tidal Royalty expects to announce further details in respect to the contemplated transaction with the Illinois Cannabis Company upon the execution of a definitive agreement between the parties and the receipt of all necessary regulatory approvals.

With the execution of this LOI, Tidal Royalty has now entered into letters of intent for expansion projects in California, Nevada, Massachusetts and Illinois. In addition, Tidal Royalty is in the process of evaluating multiple additional opportunities across the U.S., including in Florida, New York, Arizona, Ohio and Michigan. Tidal Royalty intends to provide further information on those discussions when the parties reach an agreement and execute respective letters of intent.

 

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