Providing Capital to the Global Cannabis Industry
This Vencanna Ventures Inc. profile is part of a paid investor education campaign.*
Vencanna Ventures Inc. (CSE:VENI) aims to be a strategic capital provider for state-compliant, early-stage, vertically-integrated cannabis companies. Vencanna targets companies that operate in limited licensed jurisdictions or possess competitive advantages whether through scale, branding or technical advances. Combining Vencanna’s access to deals through its deep global contacts with the management team’s investment experience gives the Vencanna shareholder a unique investment opportunity.
Vencanna is looking for earlier stage, licensed, US-based, cannabis initiatives. Vencanna believes this is an attractive entry point, thereby enhancing the potential on the return of investment. Vencanna’s main investment thesis is to focus on companies with strong management teams with expertise throughout the value chain that operates in jurisdictions with barriers to entry such as limited licenses awarded within the state or local moratoriums on new operators entering the market.
To this aim, Vencanna has partnered with Vertical Companies, a leading vertically-integrated multistate operator brand and distribution company. Vertical has operations in Arizona and California. The company also has strategic partnerships in Ohio that it intends to leverage as Vertical expands its business into other states. Vencanna has agreed to loan Vertical up to US$4 million for inventory expansion and general working capital.
Vencanna’s management team brings vast industry experience as numerous members have invested in the market or have worked in the industry in some capacity. The team also brings over 100 years of combined experience in corporate finance, capital markets, direct investing and operational and legal advisory capacities.
The company also benefits from the experience of its board and advisory board members, most notably from Alan Gertner, Matt Christopherson and Trent Woloveck. All three have been heavily involved in the cannabis industry. Gertner founded Tokyo smoke and was the CEO of HIKU before it was acquired by Canopy Growth Corp (TSX:WEED) in September 2018. Christopherson is responsible for providing the industry with Lift, Canada’s largest database of comprehensive medical cannabis reviews from patients, and he is EVP of corporate development of Twisted Trimmer, the most used cannabis harvester in North America. Finally, Woloveck is the VP of Originations of Jushi and provides the company with his expertise and jurisdictional knowledge. Jushi was recently acquired TGS National Inc., a vertically-integrated, multi-state cannabis franchisor where Woloveck was the President.
Vencanna Company Highlights
- Investing in vertically-integrated cannabis companies in markets with barriers to entry with limited licensing opportunities.
- Invest in opportunities that offer superior returns over an expected time period of two to three years.
- Strategic relationship in place with TGS National and Jushi Inc., one of the first vertically-integrated, multi-state cannabis franchisors within North America.
- Management team brings over 100 years of combined experience in various sectors.
- A board consisting of cannabis pioneers.
- Management and insiders own approximately 19 percent of the fully diluted shares outstanding (and 12 percent of the basic shares outstanding).
The US Cannabis Market
While a lot of focus has been placed on the Canadian cannabis market of late, the US cannabis market is still one of the largest in the world. According to a report released by BDS Analytics and Arcview Market Research, the market is projected to generate $11 billion in revenue in 2018 and is expected to rise to $23.4 billion by 2022.
The report also states that the market is going to be fueled predominately by the growth of the recreational market. Alcoholic beverage companies have also been eyeing the growing cannabis market. Molson Coors Brewing (NYSE:TAP) and Hexo (TSX:HEXO), alongside Constellation Brands (NYSE:STZ) and Canopy, have formed agreements and partnerships to develop cannabis-infused beverages for the recreational market. In addition, we’ve recently seen big tobacco (Altria, the maker of Marlboro) enter the market through their $2.4 billion investment into the Cronos Group.
Changing views of the US government are also playing a role in the growth of the market. President Donald Trump has stated that he is in favor of passing the STATES Act, which will protect states that have legalized the use of cannabis from federal prosecution. If this bill passes it will allow cannabis companies to partake in safe banking practices, which they are barred from due to the federal stance on cannabis.
In December 2018, the US federal government passed the Farm Bill, which legalized the use of industrial hemp and cannabis plants with less than 0.3 percent THC and hemp from the controlled substances list. It’s created a hemp-derived CBD market that is expected to reach $22 billion by 2022, according to the Brightfield Group.
Vencanna’s Investment Model
Vencanna is focused on efficiently providing capital to vertically-integrated cannabis companies in the US that are unable to access the capital markets. These companies are operating in high-potential, early-stage markets with limited licenses and experience barriers to entry for that market.
Vencanna ensures that each investment opportunity is fully-compliant with the laws and regulations that govern the jurisdiction that they reside in and that the investments are likely to see an ROI that is multiples of the initial investment within a span of two to three years. They further focus on companies that are at or near cash flow and that the investment will be a catalyst to that company’s growth.
Coupling Vencanna’s business model with their rigorous investment criteria enables the company’s management team to leverage their experience to actively promote and expose their investments to the emerging, high-growth global cannabis market. The company’s management team has proven track record of securing capital, which they can deploy to their target companies to help grow and consolidate in their specific markets prior to the large players entering upon US federal decriminalization and legalization.
Opportunities in the US
Thirty-three states plus the District of Washington have legalized medical cannabis use, and nine of those have legalized cannabis for recreational use. This creates a large pool of companies that are going to need access to capital in order to make their businesses succeed. The challenge being able to attract the required capital while cannabis is illegal at the federal level. Vencanna has been, and continues to, evaluate and prioritize its investment opportunities in these legalized areas.
Vencanna has entered into a strategic partnership with Vertical Companies, a leading vertically-integrated multistate brand and distribution company in the medical and adult-use cannabis industry. Vencanna has agreed to loan Vertical up to US$4 million for inventory expansion and general working capital.
Vertical has operations in Arizona and California as well as strategic partnerships in Ohio. Vertical closed a US$64 million financing round in April and spun out its hemp and CBD assets into Vertical Wellness. Vertical is led by an executive team of entrepreneurs and business leaders from the alcohol, agriculture, CPG, distribution, entertainment, food, healthcare and medical industries.
Vencanna’s Management Team
David McGorman — CEO and Director
David McGorman has 25 years of experience in the financial services industry with a wide range of transaction experience. He has participated in over $12 billion in transaction value, including private and public equity issues, debt placements, including M&A advisory and restructuring assignments. Mr. McGorman has held senior positions at a number of independent brokerage investment firms, including being the Vice Chairman of Mackie Research Corp. and President & CEO of Jennings Capital Inc.
Jason Ewasuik — VP Originations
Jason Ewasuik has over 10 years of global financial market and trading experience. Ewasuik brings capital markets and acquisition expertise, including sourcing, structuring, financing and managing investment opportunities. Jason led Venexo Capital’s cannabis efforts as Director of Healthcare where Venexo has placed its private capital in over 20 cannabis initiatives. Previously, he was Director of Trading at Auspice Capital, a quantitative and systematic investment fund.
Jon Sharun — Executive Chairman and CFO
Jon Sharun has 18 diverse years of international investment, real estate, branding and business development experience and is a 40 under 40 winner. He is the Founder and Managing Partner of Venexo Capital, a boutique private equity firm that has raised in excess of $100 million in healthcare, hospitality and real estate. Venexo has been an early investor into the medical cannabis sector; such as Aurora, Friday Night, The Green Organic Dutchman and Emblem to name a few.
Matt Christopherson — Director
Matt Christopherson is the EVP of Business Development at Keirton Inc. Keirton’s Twister Trimmer™ provides cannabis growers with the world’s fastest and most dependable harvesting machines. Twister Trimmer™ is the most recognized and widely used harvesting solution, not only in Canada, but internationally. Prior to Keirton, Mr. Christopherson co-foundered Lift, Canada’s largest database of comprehensive medical cannabis reviews left by real patients.
Alan Gertner — Director
Alan Gertner, is a lover of technology, design and everything in between. Prior to taking the reins at HIKU Brands and founding Tokyo Smoke, he led a $100 million organization at Google in Asia and was a founding member of Google’s first Global Business Strategy team while based in Mountain View, California. In September 2018, HIKU sold to Canopy Growth for $300 million. Mr. Gertner was formerly a Management Consultant at Oliver Wyman in New York.
W. Scott McGregor — Director
Scott McGregor has over 20 years of energy and corporate finance experience as a senior investment banking professional working for prominent investment dealers in both Toronto and Calgary. Most recently, he served as Executive Vice President of Merrco Payments, a secure payment gateway that provides a fully customizable method to regulate a direct-to-consumer cannabis mail-order system in Canada.
J. Smoke Wallin – Director
J. Smoke Wallin is the Chairman of Vertical Companies (prior to being Chairman, he was President of Vertical Companies from January 2018 to June 2019) and the CEO of Vertical Wellness. He previously served as Chairman and President of the Wine and Spirits Wholesalers of America. Prior to joining Vertical, he helped build National Wine & Spirits (now part of RNDC) into one of the largest distributors of beer, wine and spirits in the US, with over $1 billion in beverage sales serving more than 36,000 retail accounts. He is a frequent speaker at global cannabis and CBD conferences as well as being a guest speaker at the likes of Cornell, Dartmouth, USC and Vanderbilt. Wallin holds an MBA from Vanderbilt University and a B.S. in Agricultural Economics from Cornell University.
Trent Woloveck — Advisory Board Member
Trent Woloveck is currently the President of TGS National Holdings which is responsible for the national and international expansion of two of the largest cannabis brands, The Green Solution and NectarBee., Prior to TGS National, Woloveck was the Chief Operating Officer of American Cannabis Company (AMMJ) which has successfully procured licensing agreements for its clients in several states and has accessed existing and new growth opportunities, in both domestic and international cannabis markets.
*Disclaimer: This profile is sponsored by Vencanna Ventures Inc. (CSE:VENI). This profile provides information which was sourced by the Investing News Network (INN) and approved by Vencanna Ventures Inc., in order to help investors learn more about the company. Vencanna Ventures Inc. is a client of INN. The company’s campaign fees pay for INN to create and update this profile.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Vencanna Ventures Inc. and seek advice from a qualified investment advisor.