CannaRoyalty Shares Increase Following Q4 Results

On Wednesday (April 4), CannaRoyalty (CSE:CRZ,OTCQX:CNNRF) presented its financial results for Q4 2017, revealing a busy quarter of acquisitions in California.

CannaRoyalty acts as an investor of cannabis businesses in the available legal US market. As part of its quarterly report, the company revealed a revenue stream of C$1,072,399 was generated.

During its most recent quarter results, the company sought to acquire Alta Supply and River Distributions as a way to strengthen its distribution capabilities. CannaRoyalty also closed the acquisition of Kaya Management, the manufacturer of the “Bhang” vaporizer brand of products.

“We believe we are well positioned given our focus on the distribution side of things but creating an open and independent system,” Afzal Hasan, executive VP of corporate development said during a conference call.

CannaRoyalty determined it created C$3,077,969 worth of revenue for the entire business year, which split between four components: products, services, royalties, and interest. Royalties gathered the largest amount of revenue for CannaRoyalty, collecting C$1,103,645 during the year.

“Our market-leading distribution business places us in an ideal position to be a partner of choice for leading brands and dispensaries across the state,” CEO Marc Lusting said.

After the markets closed on Wednesday, the company’s Canadian stock rose 2.98 percent, reaching C$3.80 on the Canadian Securities Exchange (CSE). On Thursday (April 5) the company has continued its trend upwards, with a 0.26 percent increase after markets closed.

CannaRoyalty exploring possibility of taking its brands outside of the US market

Lusting highlighted one of the more intriguing propositions by the company so far this year is the potential to bring its brand into jurisdictions outside the US and starting with Canada.

When the announcement was originally made of CannaRoyalty’s intentions to possibly bring its brands to Canada, Hasan told the Investing News Network (INN) the company had to secure a pathway for the distribution of its product before the regulations explicitly say about it.

Hasan also told INN the way for CannaRoyalty to enter the Canadian market could come via a licensing deal where another company pays a fee to bring the specific brands into the market.

Another option is for CannaRoyalty to downright acquire its own licensed producer (LP) or obtain a facility to get an LP status. It’s unclear what Canadian regulators would do regarding CannaRoyalty’s stance, given that on a federal level marijuana remains illegal in the US.

“Right now we are focused on building a platform in California to foster the creation of the global cannabis consumer product brands of the future,” Hasan said during the call.

During the call Lusting said he is focused on five distinctive opportunities for CannaRoyalty in the cannabis space, including the integration of the company’s most recent acquisitions, continue its strategic acquisitions, set the fundamentals for the option to expand the reach of their brands into Canada and other jurisdictions, and a focus and rationalization of their portfolio.

During the question period of the call, Alan Brochstein, cannabis analyst with 420 Investor asked what the landscape was for more acquisitions in California.

Lusting answered by explaining there is a lot of opportunity for CannaRoyalty based on the fact that a lot of cannabis businesses remain unlicensed after the legalization of recreational cannabis this year.

“What that means is that there are a number of revenue streams in the market that did have a fair amount of that market share and consumer perception share as well that are up for sale right now,” he said.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.