CannaRoyalty and its Subsidiary, Trichome, Announce Joint Closing of First Tranche Investment into Leading Canadian Online and Retail Vaporizer Products Company, 180 Smoke
Ottawa, Canada – May 11, 2018 – CannaRoyalty Corp. (CSE: CRZ)(OTCQX: CNNRF) (“CannaRoyalty” or the “Company”), a leading North American cannabis products and brands company, announced today that it and its subsidiary, Trichome Yield Corp. (“Trichome”) have closed the initial $500,000 investment under the previously announced credit agreement (“Credit Agreement”) to provide up to $2.5 million to 180 Smoke (the “Investee” or “180 Smoke”). CannaRoyalty and Trichome each invested $250,000 under the initial tranche of the Credit Agreement, to be followed by additional investments of up to an aggregate of $2.5 million.
Proceeds from the initial tranche will be used to support the rapid expansion of 180 Smoke’s vape retail footprint, as well as working with CannaRoyalty to establish a cannabis retail business in Saskatchewan and Alberta, subject to approval and permits. To date, 180 Smoke has applied for retail permits in 7 jurisdictions in Saskatchewan and plans to apply for up to 10 in Alberta. As the Canadian cannabis industry heads towards full legalization, 180 Smoke is pursuing a hybrid vape/cannabis retail model, adding a diversified line of business to an already high growth core business; In Q1 2018, 180 Smoke reported record sales of $2.45 million, a 51% increase from the same period in 2017.
“From CannaRoyalty’s perspective, 180 Smoke represents a key piece to our growing international distribution pipeline that will allow us to collaborate with our growing portfolio of consumer cannabis brands in the Canadian marketplace,” said Marc Lustig, CEO of CannaRoyalty. “Trichome elected to invest directly in 180 Smoke as it represents a very attractive credit opportunity from a number of perspectives; strong and sustained revenue growth, profitable history and an attractive balance sheet,” said Michael Ruscetta, CEO of Trichome.
Ashutosh Jha, President of 180 Smoke added, “Looking ahead at adult-use cannabis legalization in Canada later this year, we are pleased to partner with CannaRoyalty and Trichome to access both product and distribution expertise as well as capital, to pursue our hybrid vape and cannabis model. 180 Smoke is already a leading vaporizer products company and with this relationship expect to secure a solid position in the Canadian cannabis retail market.”
180 Smoke will receive up to $2.5 million under the terms of the Credit Agreement, with an initial investment of $500,000 to be followed by additional investments up to an aggregate of $2.5 million. Under the terms of the Credit Agreement, the second tranche of the investment is drawable at the election of 180 Smoke for a period of 90 days post the closing of the initial tranche. The Credit Agreement is secured against the assets of 180 Smoke. Further, 180 issued warrants (the “Warrants”) to acquire shares of 180 Smoke at a pre-determined exercise price for a three-year term. The capital for the Financing will be advanced by Trichome and/or CannaRoyalty at proportions to be determined by the respective parties. Shareholders of 180 Smoke have been granted the right to exchange up to an aggregate of 1.0% of their 180 Smoke shares in exchange for CannaRoyalty shares in certain circumstances based on the closing price on the date prior to the initial announcement of the transaction.
About 180 Smoke
180 Smoke is a leading Canadian vape product retailer that is considered the Gold Standard for vape store operations and customer service. 180 Smoke sells vape and nicotine-related products, herbal vaporizer products and parts. With the corporate mission of “significantly reducing harm done to human health from addictive substances,” 180 Smoke’s vision is to become a multi-region, omni-channel, vertically integrated market leader servicing the end-to-end needs of Canadian nicotine and cannabis consumers.
Trichome is a majority-owned subsidiary of CannaRoyalty and was formed to offer credit-based capital solutions to companies operating across the Canadian cannabis value chain. Trichome expects to offer creative credit-based capital solutions to cannabis companies in need of capital for a broad array of requirements. Trichome is focused primarily on addressing the largely underserviced Canadian cannabis market and expects to expand to meet the needs of companies operating in fully legal international markets as those jurisdictions develop.
CannaRoyalty is an active investor and operator in the legal cannabis industry. Our focus is building and supporting a diversified portfolio of growth-ready assets in high-value segments of the cannabis sector, including research, consumer brands, devices and intellectual property. Our management team combines a hands-on understanding of the cannabis industry with seasoned financial know-how, assembling a platform of holdings via royalty agreements, equity interests, secured convertible debt, licensing agreements and its own branded portfolio. CannaRoyalty’s shares trade on the Canadian Stock Exchange (CSE) under the symbol CRZ and internationally on the OTCQX under the symbol CNNRF.
For further inquiries, please contact:
Jonathan Ross, CFA
LodeRock Advisors Inc.
For Trichome lending inquiries, please contact:
Kevin Jarrett, VP, Investments