On Thursday (March 15) CannaRoyalty (CSE:CRZ; OTCQX:CNNRF) and National Access Cannabis (NAC) (TSXV:NAC) announced a strengthening of a partnership between the two which will now include the sale of CannaRoyalty’s products in Canada if the regulations ever allow it.
The agreement between the companies cautions CannaRoyalty’s products will be sold in NAC stores “as legally permitted,” throughout the latter’s retail spaces in “various provinces.”
Afzal Hasan, executive vice president for corporate development with CannaRoyalty, told the Investing News Network (INN) this announcement is a way for CannaRoyalty to be proactive before it even knows if it’s possible to distribute its products in Canada.
“Given the fact that it’s uncertain when we will be able to produce products in Canada, given the fact that it’s uncertain when the regulations are going to come out and what exactly they are going to say about the different product categories, we have taken the pathway of actually trying to secure these distribution channels first,” Hasan said.
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Ways in which the deal could legitimately materialize for CannaRoyalty
Hasan did offer a few different ways in which CannaRoyalty could actually materialize the ideal version of this deal with NAC.
Since there is no way for cannabis products developed in the US to be exported into Canada legally, CannaRoyalty could offer a licensing agreement so a Canadian licensed producer (LP) can develop the products and then pay a licensing fee. The other option would be for CannaRoyalty to go ahead and acquire its own LP or obtain a license for a facility in Canada.
Hasan told INN CannaRoyalty is comfortable waiting for a maturation of the Canadian licensing regime into a more efficient system. Hasan said Health Canada has moved in the right path with the removal of a vault and 24-hour video surveillance for LPs.
National Access Cannabis earned one of the four coveted retail licenses in the province of Manitoba, which will allow the company to set up its own cannabis stores.
With the retail license announcement for NAC, the company revealed it would work to enhance its relationships with CannaRoyalty, streaming company Cannabis Wheaton Income (TSXV:CBW), and private medical marijuana producer Tilray.
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Mark Goliger, CEO of NAC said retail customers of the company’s future stores will have access to a “diverse portfolio” of cannabis products from CannaRoyalty’s catalog.
“[CannaRoyalty’s] deep experience successfully supplying branded cannabis products to the Californian marketplace will serve us well as we look to grow our retail footprint outside of Manitoba, to Alberta, British Columbia and beyond,” Goliger said.
CannaRoyalty is a cannabis operator with assets in the US. As part of the announcement, the company boasted about the reach their brands have had in the markets available.
Marc Lustig, CEO of CannaRoyalty said the company’s consumer brands currently satisfy “sophisticated U.S. cannabis markets” and he expects these to resonate with Canadians.
CannaRoyalty currently holds a “Moderate Buy” rating on TipRanks, based on one review from Matt Bottomley, cannabis analyst with Canaccord Genuity, who gave the stock a price target of $5.50 and a speculative buy rating.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.