Cannabis Wheaton Income Corp (OTCMKTS:CBWTF) continues to work through a period of corrective action. CBWTF has been pulling back over the past several weeks and is now challenging some key technical levels, including its 50-day simple moving average as well as the $1.25/share level, where the stock found pivot support before blasting 40% higher in late December. At this point, we have seen about a 50% pullback from the stock’s intraday highs in mid-January, just shy of $2.75/share.
In addition, the company just announced that it has closed its previously announced transaction with Inner Spirit Holdings Ltd. According to the release, “Inner Spirit is the parent company of Spirit Leaf Inc., which aims to be a market leader in the franchising of retail cannabis dispensaries in jurisdictions in Canada where the private distribution of recreational cannabis is permitted. Inner Spirit has currently executed over 100 franchise agreements in Canada for proposed retail locations which strongly positions the specialty retailer and franchisor in preparation for recreational cannabis legalization in July 2018.”
Cannabis Wheaton Income Corp (OTCMKTS:CBWTF) trumpets itself as an investment company that seeks to provide investor returns through streams and capital appreciation in the Canadian cannabis industry.
The company operates as a cannabis streaming company. It provides funding for cannabis facility expansions, operations, and initial construction in exchange for minority equity interests and a portion of the cultivation production.
The company was formerly known as Knightswood Financial Corp. and changed its name to Cannabis Wheaton Income Corp. in May 2017. Cannabis Wheaton Income Corp. was incorporated in 1987 and is based in Vancouver, Canada.
According to company materials, “Wheaton Income is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.”
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Basically, Wheaton picked up about 15 million shares of Inner Spirit, which also gave it right to the exclusive right to supply up to 50 percent of Inner Spirit’s annual inventory requirements for any cannabis, cannabis-infused or cannabis-derived products to be sold at its retail dispensaries with a mutually agreeable profit-sharing arrangement relating to any such cannabis product sales.
According to the company’s most recent release, “Pursuant to the investment agreement entered into by the Company and Inner Spirit, the Company also exercised its pre-emptive right to acquire an additional 1,500,000 Inner Spirit Shares for $150,000 and as a result now holds approximately 15% of the total issued and outstanding common shares of Inner Spirit. The Company would also like to congratulate Inner Spirit on the concurrent closing of the final tranche of its previously announced private placement for gross proceeds of approximately $4.5 million which Inner Spirit intends to use to build out its flagship corporate dispensary in Calgary, Alberta, develop its Spiritleaf brand, and support the rollout of its franchise partners once the private sale of recreational cannabis is permitted.”
Recent action has seen roughly flat action during the past week in terms of movement. That said, CBWTF has a history of dramatic rallies. In addition, the stock has seen interest climb, with an increase in recent trading volume of nearly 210% above the average volume levels in play in this stock over the longer term. Hence, it may pay to keep a close eye on this one.
Now commanding a market cap of $289M, CBWTF has a significant war chest ($26.1M) of cash on the books, which stands against virtually no total current liabilities. CBWTF is pulling in trailing 12-month revenues of $51K. However, the company is seeing declines on the top-line on a quarterly y/y basis. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $CBWTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $CBWTF, either long or short, and we have not been compensated for this article.