CannaRoyalty, an integrated cannabis investor and operator, has entered into a joint-venture agreement with Sprott Asset Management
. Under the agreement, Sprott will provide $12 million in debenture financing to potentially profit from Canada’s move toward fully legalizing cannabis use among adults.
The joint venture, which will launch after the closing of the debenture financing, will focus on debt investment opportunities in the legal Canadian cannabis sector. Assets that may be targeted include licensed producers, licensed producer applicants, and production applicants. The financing is expected to occur by July 31.
In a statement, CannaRoyalty said it will use its relationships and experience in the cannabis sector, as well as its investment pipeline, to identify and funnel attractive Canadian opportunities to the joint venture. The firm will also help Sprott with due diligence, strategic support to investments, and structuring, negotiation, and monitoring of investments.
Sprott, meanwhile, will harness its expertise and experience in providing asset-backed investment capital in areas not fully served by traditional credit providers. The firm will arrange financing for each investment, which is expected to include both debt and equity upside; if CannaRoyalty is interested in participation, the firm will be included in Sprott’s arrangements.
“We look forward to helping CannaRoyalty continue expanding its footprint in Canada and leveraging our expertise and relationships in the natural resource sector to advance new investment opportunities,” said Sprott CEO Peter Grosskopf.
Exercising its right to nominate a member to CannaRoyalty’s board, Sprott has named Peter Gundy, who is currently chairman of Alexandria Minerals Corporation and has served on numerous other boards. With degrees from the University of Western Ontario, McGill University, and the London School of Economics, he is one of the founders of PotashCorp, and has also served as vice president of corporate finance at Dominion Securities.
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