FinCanna Capital Corp (CSE:CALI,OTCQB:FNNZF) is a royalty finance company uniquely focused on investing in licensed cannabis businesses in the US with a focus on California, the largest market in North America. Operators are seeking funding and big pharma, agriculture and tobacco continue to wait on further legalization. FinCanna aims to capitalize on this market opportunity by providing access to capital for companies operating in the licensed cannabis sector in exchange for royalty payments based on a percentage of their revenues. The business model is scalable as there are no operational components.
For portfolio companies, FinCanna’s business model enables them to avoid dilutive equity financing agreements with a potentially lower cost of capital. Portfolio companies also have greater flexibility as their owners and operators maintain control and operating autonomy and the agreements can be customized based on the situation. Incentives for both companies are also aligned since FinCanna only makes money when portfolio companies make money.
FinCanna’s shareholders benefit from a diversified portfolio of companies across different sectors as the company seeks to invest its capital in rapidly emerging private companies operating in the licensed US cannabis industry. For investors, diversification helps mitigate the risk of any individual company or sub-sector impacting an entire portfolio’s value. Cannabis investors also have access to private versus public cannabis companies as added diversification. Additionally, FinCanna’s royalty business model doesn’t require nearly as many personnel or resources as production companies, which keeps overhead costs relatively low and predictable.
FinCanna Company Highlights
- US-focused with an emphasis on California
- Royalty model aligns financial incentives for operators and FinCanna
- Diversified investment portfolio over multiple sectors
- Early entrant in the US with an extensive network for new projects
- Investing in private companies not available to individual