Solomon Israel is a producer and writer for CBC News, based in Toronto. He’s been on the business news beat since 2011, with stints covering technology, world, and local news. More recently, Solomon has been covering issues related to marijuana legalization. He can be reached at solomon.israel@cbc.ca, or on Twitter: @sol_israel.
Some major players in the Canadian cannabis industry are bankrolling smaller Canadian marijuana companies, using so-called “streaming” deals to finance their growth plans.
Streaming is a business model traditionally associated with the mining industry. A backer provides upfront money for infrastructure and capital expenditures in exchange for the right to some of the miner’s future production.
Cannabis Wheaton, which identifies itself as “the world’s first marijuana streaming company,” chose its name in reference to well-known silver streaming firm Silver Wheaton, said chairman and CEO Chuck Rifici.
“The markets are frothy, a lot of people are raising a lot of money, but for your average licensed producer it’s still hard to get capital,” said Rifici, former CEO of Tweed Marijuana Inc. and a former chief financial officer of the Liberal Party of Canada.
Canopy Growth Corporation, which owns Rifici’s former employer Tweed, has also launched a streaming venture called Canopy Rivers.
“Generally speaking, banks aren’t giving you debt in this industry just yet,” said Vahan Ajamian, who covers the marijuana sector as an equity research analyst with Beacon Securities.
“And if you don’t want to raise equity or you can’t raise equity, or if you don’t want to go public, it’s another option that some are considering.”
How the streaming deals work
In addition to providing financing in exchange for production and equity stakes, Cannabis Wheaton also offers business guidance to its partner companies.
Cannabis Wheaton already has 16 streaming deals with…