An Ottawa-based firm that finances and invests in marijuana companies announced its first foray into the Canadian cannabis retailing market on Wednesday.
CannaRoyalty said the new funding will help 180 Smoke open 11 new stores in Canada and add to its cannabis hardware offerings and other inventory. CannaRoyalty subsidiary CR Advisory will work with the vape chain to “bring innovative cannabis products to the Canadian marketplace to support and complement 180 Smokes’ further expansion into the Canadian cannabis retail space,” the two companies said in a statement.
CannaRoyalty CEO Marc Lustig said the new partnership gives his company – which has already invested heavily in numerous California-based cannabis enterprises – a foothold in a marijuana accessories market that’s expected to experience rapid growth in Canada in the near future.
“With a substantial online presence, manufacturing facility and entrenched retail network, 180 Smoke is well-positioned to grow substantially into the Canadian retail cannabis space in the coming months and years,” Lustig said in a statement.
“The financial terms of the financing are attractive to both parties, providing responsible growth capital that is secured against a profitable business and offering CannaRoyalty shareholders the potential to own a piece of a rapidly growing distribution channel in the Canadian market, to complement our leading distribution network in California.”
The 180 Smoke chain currently operates 16 retail stores, including 14 in the Greater Toronto Area. According to a news release, the company racked up net sales of $7.7 million in 2017, with nearly 90 per cent of that total coming from vape and nicotine-related products and the remainder from cannabis vaporizer products.
Co-founded by heart surgeon Dr. Gopal Bhatnagar, 180 Smoke also has a major online presence. According to the news release, it operates the most popular vaping website in Canada, with 180smoke.ca attracting 64 per cent of all the country’s vape-related web traffic.
Company president Ashutosh Jha said CannaRoyalty’s funding and marijuana industry expertise will help the chain become a leader in the Canadian vaporizer and pot accessories market once cannabis is legalized for recreational consumption.
“With coast-to-coast reach online and significant brand awareness among cannabis consumers, 180 Smoke is perfectly positioned to capture a significant portion of the Canadian cannabis and vaporizer market,” he said in a statement.
“Combined with our rapid retail roll-out model, the financing will enable us to build a leading presence across Canada ahead of Canadian adult-use cannabis legalization.”
The firm’s stock hit its all-time high in early January with the legalization of recreational cannabis in California, but ensuing legal confusion in the U.S. market dragged on the company’s share price.
After trading in negative territory for most of Wednesday, CannaRoyalty shares rose in afternoon trading on the Canadian Securities Exchange to end the day exactly where they started at $4.40.