FinCanna Looks to Tap High-Growth Global Medical Cannabis Market, with Initial Focus on California
October 19, 2017
Vancouver, British Columbia, October 19, 2017 – According to industry analysts, the global market for licensed medical cannabis is growing at a compound annual rate of more than 21.1%, and is on track to exceed $63.5 billion by 2024
The market is being driven by the increasing awareness of cannabis for various medical applications, like chronic and neuropathic pain, epilepsy, glaucoma, cancer treatment, and opioid addiction. An increasing number of countries as well as many U.S. states are legalizing the use of medical cannabis, which is supporting broader therapeutic studies and medical use. Many new cannabis studies and clinical trials are underway at major hospitals and universities, including the first-ever U.S. DEA-approved clinical study for the treatment of post-traumatic stress disorder that was launched early last year in Colorado.
FinCanna is looking to support the greater medical use of cannabis and benefit from the growth in the market by investing in top-tier licensed medical cannabis companies in California. The company is offering access to capital in exchange for royalties from their licensed medical cannabis and related operations.
FinCanna’s flagship investment is Cultivation Technologies (CTI), based in Irvine, California. CTI is developing two very significant, state-of-the-art medical cannabis projects in California and may expand in the future.
“We aim to capitalize on the fast-emerging licensed medical cannabis opportunity in California through building a portfolio of investments in scalable, best-in-class projects like CTI,” said Andriyko Herchak, president and CEO of FinCanna, which has an agreement to go public via a previously announced reverse takeover with Astar Minerals Ltd. (TSX.V: TAR). “We believe our royalty-based business model is ideally suited to the market opportunity and will resonate with investors.”
California - Land of Opportunity
FinCanna is focusing initially on California since it is the sixth largest economy in the world and the largest medical cannabis market in North America. Analysts estimate the State’s legal cannabis industry will grow at a 21.1% CAGR to $6.5 billion by 2020, and generate upwards of $1 billion in tax revenue.
After becoming the first state to legalize medical cannabis in 1996, California has developed into a relatively sophisticated patient marketplace. The state legislature passed in 2016 the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act, and has continued to take additional regulatory actions to support the market. New laws that come into effect in January 2018 are expected to significantly change existing supply and demand dynamics.
In addition to the high capital costs for building and maintaining compliant indoor facilities, companies will be required to obtain local approvals in a process that can take a year or more, as well as meet rigorous pesticide and testing standards. These constraints could keep State licensed supply levels low over the coming years.
First Mover Advantage
In terms of meeting the new California regulations, CTI is ahead of the curve. The company has already secured permits to construct a fully-entitled, 111,500 sf. permitted medical cannabis facility on a six-acre property in Coachella, Southern California.
Plans for the campus include large-scale cultivation, extraction and manufacturing capabilities, as well as support for testing, distribution and processing. An indoor multi-tier grow system will produce ultra-premium, chemical-pesticide-free products with high-yield. An extraction facility will enable branded and white-label production in a programmable, repeatable and scalable system.
FinCanna and CTI recently announced an interim medical cannabis extraction lab has been established on the Coachella premises in accordance with CTI’s conditional use permit. The lab has already begun to produce medical extracts for sale, and will remain in operation during the construction of the full six-acre medical cannabis campus planned for the site.
While the lab is among the first medical cannabis solvent extraction facilities to be legally permitted in California, CTI believes it to be the first such facility to conform to AB 2679, a key CTI-sponsored legislation passed in 2016 allowing locally-permitted extraction labs to operate legally. The new comprehensive rules coming into effect on January 1, 2018 are expected to create significant barriers to entry for existing and new medical cannabis producers who, unlike CTI, have not secured municipal permitting or are unable to cultivate without chemical pesticides.
FinCanna is investing in CTI in return for royalty payments equal to 10% of CTI’s top line revenues at Coachella. FinCanna also has the right to invest and earn the same royalty on CTI’s next two licensed medical cannabis facility projects. The second project has already been identified in Colusa, Northern California on a 10.9-acre property, which also features local approvals for extraction and cultivation.
About Cultivation Technologies
Cultivation Technologies, Inc. provides infrastructure, genetics, technology, and branding to the legal medical cannabis industry. The first major project for the company is in Coachella, California, which will span 6-acres featuring cultivation centers, manufacturing facilities, a testing lab, a distribution hub, and a centralized processing center. For more information, visit www.CultivationTech.com.
About FinCanna Capital Corp.
FinCanna is a royalty company for licensed medical cannabis, with a focus on California. FinCanna, led by a team of finance and industry experts, is building its portfolio of investments in scalable, best-in-class projects. FinCanna’s flagship investment is with Cultivation Technologies, Inc. (CTI) to provide funding for its fully-entitled, large-scale indoor medical cannabis facility to be developed in Coachella, Southern California. This Coachella Campus will be a state-of-the-art facility that will include cultivation, extraction, manufacturing, testing and distribution. For additional information, visit www.fincannacapital.com.
FinCanna and Astar entered into a binding agreement on July 13, 2017, pursuant to which Astar will acquire all of the issued and outstanding common shares of FinCanna on a one for one basis (the “Transaction”).
All trademarks in this press release are the exclusive property of their respective owners.
FinCanna Capital Corp.
Andriyko Herchak, CEO & Director
Astar Minerals Ltd.
Stephen Stanley, CEO & Director
Neither the TSX Venture Exchange or the CSE in any way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
All information contained in this news release with respect to Astar and FinCanna was supplied by the parties, respectively, for inclusion herein, and each parties' directors and officers have relied on the other party for any information concerning such party.
This news release contains forward-looking information based on current expectations. Statements about, among other things, the future business plans and prospects of FinCanna and CTI are forward looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Such factors include, but are not limited to the ability of CTI to execute on its current business plan, the ability of FinCanna to identify and finance investment opportunities, and changes in the U.S. and Canadian regulatory regime. Although such statements are based on management's reasonable assumptions at the date such statements are made, there can be no assurance that FinCanna or CTI will achieve the future performance or results described above and that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on the forward-looking information. Astar and FinCanna assume no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.