CannaRoyalty Secures Revenue Royalty and Product Distribution Agreement through 2024 with Leading California Licensed Medical Cannabis Distribution Company
Mar. 01, 2017 – CannaRoyalty Corp. (CSE: CRZ) (OTCQB: CNNRF) is pleased to announce that it has entered into a binding term sheet (the “Term Sheet”) whereby CannaRoyalty will invest a total of US$5 million, in two tranches, in exchange for a royalty equal to 2.25% of the net sales of River Wellness Inc. (“River”) until the US$5 million advance is repaid, and then 1.75% of net sales for the balance of the royalty term ending December 31, 2024. River has also agreed to a US$15 million purchase commitment for CannaRoyalty’s products in California over the term of the royalty agreement.
River was the first company in California to receive a permit for medical cannabis wholesale logistics, distribution and transportation. The company has built a leadership position whereby it represents over 20 leading cannabis brands, supporting over 100 cannabis farmers and manufacturers, and has relationships with over 400 retail collectives throughout California. River’s fiscal 2016 revenues were US$26 million and are expected to grow rapidly over the almost 8 year term of the agreement. ArcView estimates the sales for the California medical cannabis market in 2016 were US$2.7 billion and will exceed US$6.6 billion in annual sales revenue by 2020, with a 5-year projected
CAGR of 20%.
River will also support the launch and expansion of CannaRoyalty’s brands and products by agreeing to a preferred distribution arrangement of such products by way of a distribution agreement. The arrangement includes a commitment from River to acquire US$15 million of CannaRoyalty brand products over the term of the agreement.
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