Tidal Royalty has entered into a letter of intent to provide up to $41 million to an established cannabis company in Illinois to finance the expansion of its operations and strategic acquisitions.
The company is led by a seasoned management team with years of cannabis industry experience. It currently operates a state-of-the-art facility that uses highly advanced plant monitoring technologies to precisely track plant inputs and other critical control factors in order to achieve optimal production yield and consistency.
The company will use proceeds from the financing to expand its existing cultivation and manufacturing facility, as well as pursue acquisition of additional strategic assets that will increase market share.
Pursuant to the LoI, Tidal Royalty will provide the company with up to $41 million in the form of both a royalty financing and equity investment. The royalty financing and equity investment will be staged over specific milestones set by Tidal Royalty management.
For the royalty financing, Tidal Royalty will receive a 15% net sales royalty on all the company’s Illinois operations. This includes both net sales generated from existing cultivation and dispensary sales, as well as incremental sales generated by the planned expansion.
For the equity investment, Tidal Royalty will purchase the company’s common shares at an agreed-upon valuation.
“As Tidal Royalty looks forward to where the U.S. cannabis market is headed, we are excited to broaden our investment strategy,” said Paul Rosen, CEO and chairman of Tidal Royalty.
According to Marijuana Business Daily, the Illinois medical market is expected to grow to $150 million by the end of 2018, with significant opportunity for upside as the market develops.
