Hey researcher. I've been in this stock since not too long after they came public (I'd say late June/of last year). There are some unanswered questions and some communication/transparency issues with management. For example, on their most recently announced JV with the greenhouse company...what % ownership/production is CBW going to get from this deal and what costs are they going to incur? The reason that the price didn't move with that announcement is because without some basic details, it's a nothingburger.

I don't watch this tick by tick, but I have watched the stock fall 50% from it's 52 week high, almost straight down, in a month's time. Yes, many of the MJ stocks have been down, but most aren't down 50% off of their highs and most are much more transparent.

As I said, I'm still holding my entire position for now because I think Chuck knows what he's doing, and the fact that he just threw over $5 million of his own money in to exercise warrants and not sell them gives me some comfort, but knowing in his own head what they're going to do and effectively explaining it to shareholders and the investment community is something totally different. I like to do my own #'s and come up with my own projections, which I was previously able to do, but I can no longer do that as I don't even know what JV deals are still on and which ones are off because the company doesn't announce when one of them falls through. Go look up Harvest One if you think I'm wrong about that...

To be fair, there is a fourth possibility too: something negative going on with the company that we're not aware of...yet...warrants have expired and there is still constant selling pressure. I still hold all of my shares but definitely starting to get discouraged with the price action here.

Does anyone know what the deal is with the process re: the "approved" companies in each province? So far the only province CBW has been indirectly approved in Manitoba and that's it. Will the provinces be continuing to add approved companies in the future? If not, how is CBW going to be able to sell their hundreds of millions of annual grams? Yet another failure by management to effectively communicate with the investment community, which frankly is something that is getting extremely old as the price continues to drop day after day while CBW management acts as though they could care less. Maybe they know they have a great plan in place, but apparently no one else (including the market, obviously) knows/understands what it is.

Hi GGR. Not sure why the higher the share price when the warrants are exercised the worse it would be for CBW...ultimately if the share price goes up, it's six of one, a half dozen of the other eventually anyway. My frustration is a) it's weighing on the share price and I thought it would be over today after a frustrating 30 days or drip drip drip declines in the share price and watching most of my on-paper profits slowly melting away and b) if they're going to execute, then they should be able to raise the funds from the warrants by issuing less shares at a higher price anyway, so why would they want to give people extra time to exercise the warrants at a lower price? It seems they have plenty of money for now having just closed a $100 million financing so if they deliver, a few months from now when they need additional capital, they should be able to raise it on more favorable terms than the $1.50 warrants that they issued as part of the financing last June...

That being said, someone on the Yahoo! board stated that Chuck tweeted that the extension had something to do with a miscommunication between their transfer agent the warrant holders or the exchange or someone. All I can say is if it's extended again after this, I'll be selling some of my position because at that point I'll start losing faith in my competency of the management team to be able to execute a simple warrant deal, how can I trust in their competency to execute on a complex streaming deal? There are some other factors at play here as well that are making me question some of the decisions management is making in announcing/not announcing certain events that are taking place, but I am going to have to put a call into IR to verify some of it for myself before I get into specifics.

Badog, there is cost of goods sold and then there is OPEX/gram. OPEX/gram is the higher of these costs. The OPEX/gram is where CBW has a huge advantage over it's competitors. In the example I saw, Canopy's OPEX/gram was over $6/gram and CBW's anticipated OPEX/gram was under $1/gram. In this same example, CBW's COGS/gram was almost exactly the same as Canopy's around $2.50/gram, though it does sound like Canopy has improved on theor COGS/gram slightly now.

Wonderful...another week of pain for the shareholders. Thanks CBW mgmt team, truly appreciate this bullshit move on your part...

My best guess is that they only want or are required to have only a limited amount of exposure to one company, and they since just participated in the most recent private placement and bought around another $65 million of 6% convertible debentures from the most recent offering, they probably needed to divest some of the older holdings.

GreatGreenRush, I figured out a large part of the reason for the recent pressure on the share price and it doesn't appear to be the warrants: Between Jan 11, 2018 and Feb 12, 2018, MMCAP converted $20,472,000 of the convertible debentures expiring June 29, 2019 into 20,472,000 shares and disposed of them. So basically it would seem that in the past month, we've had almost 20,500,000 new shares dumped on the market in a period of low volume and no substantial news to create addt'l volume to soak them up.

Here's a link Sedar, search by Wheaton check the one that was put out yesterday (Feb 12, 2018) where it details this information.

https://sedar.com/FindCompanyDocuments.do#

OK so I understand the arbitrage concept on the convertible notes, but I don't understand the arbitrage on the warrants. The warrant holders are going to execute them at the price regardless of the current share price (assuming it's above $1.20) so why are the warrants acting as an anchor? For the convertible notes, the purchasers of the notes want to lock their guaranteed 6% until they convert to common shares, but it would seem that the warrant holders would want the price as much above $1.20 US as possible so if they wanted to, they could exercise at $1.20 and sell immediately for a higher price if they wanted. I guess there's probably something I'm not thinking about or looking at from the wrong perspective, just not sure what it is....can anyone explain?

Hi Badog. All can go by is what I've heard Chuck say on this issue, which is that supply/demand won't be in balance for at least three years after recreational legalization in Canada, and this assumes all projects move ahead on schedule. We already know that Aurora's has been delayed temporarily. Not sure about any of the others. I also believe that there will be some international distribution as well as more countries legalize recreational use (so far, the only other country I know of where it's federally legal for recreational use is Uruguay but I believe others will soon follow, if only for the tax revenue it will generate). Ultimately, could there be oversupply? Yeah, I guess anything's possible, but by the time that occurs, we should've already seen the bulk of the share price appreciation as CBW (and others) are in hyper-growth mode as the market is forward-looking. The other factor in this is that due to their business model and low costs/high margins, I'd think that CBW would have a pretty good amount of pricing flexibility whereas some producers may not, so even if oversupply were to occur, I'd think that they'd be in a decent position to be able to adapt to the lower pricing environment that would result until the supply/demand equation normalized.

I don't think everyone wants to get rich overnight. They announced game-changing news, the stock took a nice run, they did a large financing, the stock pulled back a little then went substantially higher than the price at which they did the financing, getting as high as $2.38 on the American version (the $2.70 was a BS trade, it was there for less than a second after it re-opened from the halt due to the news about the agreement to purchase weed from Aphria so they could enter the international markets sooner). Since then, the fundamental story has only gotten stronger but the share price has dropped over 50% from it's true high ($2.38) in the beginning of January. Watching the share price and valuation lag other companies when CBW's story is clearly fundamentally stronger can be frustrating so patience is required. It's not about "wanting to get rich overnight", it's about wanting to see constructive share progression in line with the fundamentals as well as the other companies in the same sector. If that's not happening, maybe management isn't doing a good enough job getting their story out there...you know, since an updated investor presentation hasn't even been released since they signed the FV Pharma deal...

It'll be interesting to see if the volatility in the US stock market impacts it or not. Seemed like it was down earlier and then turned up a little when the US market turned up.

I see so much positive with this stock, just wondering why the market is missing it (or if there's something that I'm missing) and why it isn't trading at a substantially higher price than it currently is given the upside it should have...

Interesting, his #'s line up pretty closely with mine, especially the Most Likely, I just wish the market was seeing the same potential right now.

It depends on whether the people who exercise them want to take the quick profits and run or if they actually believe in the company and decide to hold on for potential additional future share price appreciation. Or they could sell enough to lock in free shares and let those ride. Difficult to know what they'll do...

Corum, here is the best article that I've found. I went through a lot of filings etc trying to do figure out the actual share count, and after some googling and researching, I eventually found this. There are a couple of things to note however:

1) there are two versions of this stock, a US version (CBWTF) and a Canadian version (CBW.V). The Canadian version is priced in CDN, the US version in USD. I believe that everything in this article pertains to the Canadian version, so for the US version (since we're on the board for the US version) would need to be reduced by the exchange rate. I would also note that the share price has dropped since the time this article was published so the market cap is lower now.

2) Remember to take into account that best I can tell they have approx $140 million cash on hand currently. If all of the warrants are exercised, they'll obtain something in the area of another $100 million ($58 million from warrants from the most recent $100 million offering, along with any remaining unexercised warrants with exercise prices of $1 and $1.50). They also now own KoLab which holds a cultivation license and allows them to actually distribute their own marijuana, potentially on better terms than their streaming partners could. They also own 18% of the only marijuana dispensary with a franchise license as well as an exclusive distribution deal with them, they have exclusive distribution partnerships with an independent pharmacy chain as well as a convenience store chain and probably many other things I'm not even thinking of. Basically the vast majority of these shares have been put to good use in building for the future, and though the value in them hasn't yet been recognized, they will pay off in many multiples of what it cost them in the future.

So while I will say that I wish that the share structure were a little more shareholder-friendly, I still think they will ultimately end up with 750 million total shares or less outstanding when it's all said and done, and based on the #'s I've done, even assuming that their revenue/gram and adjusted EBITA/gram are lower than anticipated due to the prices in the recreational market potentially being somewhat lower due to government policies (i.e. capping selling prices in certain provinces), I still come up with a future share price of at least $20/share (and probably higher) in the next 24-36 months.

http://thedeepdive.ca/brief-mixed-emotions-cannabis-wheaton-income/

Another Motley Fool article mentioning CFB:

https://www.fool.com/investing/2018/01/29/4-marijuana-stocks-that-should-yield-at-least-1000.aspx

Thanks for pointing this out researcher but I think you may have either not read far enough or missed a couple of things because a few pages down from the section you referenced in the document from period ending 09/30/17 that you provided, there is a chart of what warrants/options were still outstanding as of 09/30/17:

1) assuming that none of the remaining .023 warrants have been exercised between then and now which I think is a stretch to assume since almost 40 million of the .023 warrants had already been exercised as of 09/30/17 and the price is substantially higher now than it was then, then there are just under 100 million warrants remaining .023. Note that this deal was made as a part of CBW buying the company who had secured some of the early streaming deals and coming public. It's a cost of doing business, and in the scheme of things, 100 million shares isn't that many, especially because as I said previously, I highly doubt that there are even 100 million left at this point.

2) There are 12,716,085 employee stock options exercisable at .025 outstanding (again assuming that none have been exercised between now and then

3) There are 15 million warrants from June 2017 exercisable at $1.50

4) There are 24 million warrants from June 2017 exercisable at $1.00

In total, again assuming that NO additional warrant or option exercises have occurred between 09/30/17 and now, at most there could be about 150 million warrants/options outstanding with proceeds to the company of $47 million in proceeds to the CBW. Not ideal, but certainly not the end of the world, because my guess is that at least an addt'l 40 million of the .023 warrants have been exercised already, just assuming that the same amount were exercised in the 4th quarter of 2017 as were exercised in the 3rd quarter. I'll have to try to dig up a more recent filing to see if there are any updated numbers, but regardless, the estimates I did were based on a billion total shares outstanding, so even with these addt'l shares, they'll still likely fall well below that total # of shares when it's all said and done...that being said, if you notice anything I overlooked (because admittedly I stopped at the charts that showed what warrants/options were still outstanding, please let me know because my goal is to understand exactly where they stand. I would say I am pretty sure that all of these options and warrants would already be included in their full-diluted share count as well.

Hi researcher. If you read the PR pertaining to this deal and CBW's streaming partner, #1) the streaming partner has a vertical growing technology that they believe will substantially increase yields over traditional growing methods and technologies #2) the streaming partner already has an existing facility that is 300k sq feet, of which 100k sq feet will be phase 1 of the build-out. There are probably other portions of the existing facility that will be used for other functions whereas if Aphria is building a totally new facility, a portion of that new facility may need to be dedicated to other parts of the business other than just as a straight growing facility whereas portions of the existing facility of CBW's streaming partner (not included in the initial 100k sq ft build-out) may already be dedicated for those same purposes. I'm sure there is a very logical explanation for the differences in yield. This isn't even one of CBW's larger deals, so what sense would it make for them to lie about the expected yield on this one?

I think we both agree that there will be economies of scale as companies ramp up their production, but the problem is that the lowest cost/gram isn't close to $2.50/gram, and I don't see how anyone gets it that low, no one was even close. I guess we'll see how it goes. I'm going to have to do some addt'l research into other companies and their fixed vs variable costs, margins, distribution models etc. Until then, I'm going to assume the company's #'s are close. I may call IR as well to see what information they're able to provide me as well.

What I do know is that they will have substantially more grams/yr than any of their competitors at substantially better margins, so with Aurora trading at a market cap of $5.4 billion barely having produced anything yet themselves, CBW is extremely undervalued trading at about 1/10th the market cap, so if I get a mere 10 bagger, I'll be OK with that too, but I continue to believe it will be much much more than that.

I agree, but that's where the value lies. There are a few factors to consider: #1) they won't start generating substantial revenue until 2019, but when they do start generating revenue, it will be substantial #2) They're still a relatively unknown as the company has only been public since May 2017 (as an example of this, I know two different people who are invested in multiple Canadian marijuana stocks who had never heard of them) #3) I don't think people necessarily understand their business model unless they have been involved in mining stocks in the past #4) Aurora was only trading at .between .60-.70 in Sept 2016, but is currently trading at $11. It took people awhile to see the value in that too, but once they did, it moved substantially higher very quickly, as I believe will be the case with CBW and finally #5) The recent convertible financing and early warrant conversion aren't helping things either as they're clearly putting pressure on the stock due to shorting/arbitrage from the participants, but it's a necessary evil as their business model is capital intensive up front. Honestly, I'm not worried a bit because finding small companies with huge potential that the market is overlooking is where the real money is made, and IMO this is one of those opportunities.

I don't know that the regular producers can make money at $5/gram since not a single one is profitable at $7/gram. The only two that were profitable were Aphria and Organigram and they both had an avg selling price of over $8/gram in the quarter referenced in the investor presentation. Aphria is the lowest-cost producer and to break even, they would need to sell for at least $6.20/gram. I can see how everyone else would likely eventually be able to make money at $6.50-7/gram once they scale, but if regular retail price is on avg $7.75/gram, there's no way that the retailers are going to make $2+ profit per gram while the producers lose money, so I don't see $5/gram being close to feasible.

I think the metric they'd be most likely to miss on would be adjusted EBITA for a couple of reasons, the main one being that the margins on the 200 million annual grams from the JV may not be as high margin as the other 240 million grams from their streaming deals, but I'm not sure because the company hasn't released the specific details on that yet.

I think the selling price per gram is fairly well established and pretty close, especially given that there is an anticipated shortage in supply in Canada for the next 3 years until all of the production is built out, but again, then you also have international markets as well. Of the 5 top producers, only two (Aurora and Canopy) are even below $8/gram at the time this investor presentation was made. The only one below $7/gram was Aurora at $6.06 but that is clearly an outlier when comparing their #'s to the all the others, and they were also losing a ton of money selling at that price.

I can only go by the #'s that are provided by the company, but I tried to be very conservative in terms of the forward EBITA multiple by using just over half of what the company estimated (10x vs 19x forward EBITA) as well share count (I think the total # will probably be between 600 million-775 million when it's all said and done, but I increased the high end of my personal estimate by 33%). I also didn't give them any value for their holdings in their streaming partners. How much more conservative do you think I should be? If I just make up my own #'s instead of using the ones the company specifically provides, wouldn't that pretty much be pulling them out of my ass? I can't pretend to know more about their business than they do. Maybe the #'s don't work out exactly the way that they're anticipating, but even if they don't, I think that I left enough wiggle room in plenty of other areas that my price target/market cap will still play out.

I agree 100% that not all of the selling is shorting but given the addt'l $40 million in convertible financing they added along with the early warrant exercise option and finally the trading looking exactly the way it had when they announced the initial $60 million convertible financing, I'm very certain that the vast majority of the selling pressure has been arbitrage/shorting. You're right, you don't usually lose taking a profit unless the stock gets away from you, which has happened to me in the past like in the case of Aurora, so I'm just making sure that it doesn't happen with this one.

#1: You're forgetting about the international market in which CBW will also be selling product. See recent news re: Aphria deal. #2: My #'s are based on the company's numbers, from their investor presentation, not my assumptions so you should take up any issues you have with the numbers with the company, not me. In fact, my #'s are more conservative than the company's are re: forward EBITA multiple and I was extremely conservative in using a billion total shares o/s.

I made that mistake with Aurora. I was in at .70. I did the #'s and thought they were going to $6-8 within 18-24 months. It ran to over $2 very quickly and then started pulling back. I thought the same way you were and I sold, but it got away from me and I never ended up buying back in. Hold tight man, take a long-term view and you'll be richly rewarded. The #'s don't lie. I performed the same financial analysis on CBW that I did on Aurora, and I believe that between 24-36 months this will be a $25+ stock. They'll be receiving 450 million grams a year at an avg adjusted EBITA of $5.25/gram. The company claims that based on streaming/royalty companies in the mining industry's multiples, they should be valued at 19X forward EBITA, but just give it a 10X multiple and assume a billion total shares (which is way higher than it will actually be). Do the math on those #'s and the answer becomes clear.

I'm holding 40k shares and am looking for at least $25/share within 36 months, possibly sooner. I've done the #'s forwards and backwards based on the company's own estimates and think I was very conservative in a couple of areas such as eventual total share count (1 billion) in the future as well as the multiple going forward (they said avg was 19X and I used 10X) and the #'s support at least that price within 36 months assuming the company continues to execute. I'm not even sure what my average cost is, but I think half are under $1 and I bought all the way up to $1.67 I believe.

I really believe in the potential of this company, it seems like they have all the deals in place to be extremely successful, a fantastic, experienced, respected forward-looking management team etc.

Just need whoever is shorting due to the additional $40 million in financing and the early-exercise clause warrants to finish up what they're doing so this can start moving higher again. Hopefully they're almost done but who knows. I would think at most a couple more days of selling pressure, but hopefully they're finished up today.

If you hold Cannabis Wheaton and 9 others, you actually own holdings in about 30 different Cannabis companies :)

Concur that Aurora is a good one John, but I think that based on both of their current market caps and future potential, CBW has 10x the potential Aurora does. In fact, I'd be very surprised if by the end of 2019 CBW doesn't have a higher market cap on a straight apples to apples basis, and consider that (based on market cap) it's only about 1/9th the market cap Aurora is currently, the choice between the two is a no-brainer, especially given that Aurora still isn't producing much.

Trust me, time will show that you're a lot smarter than your girlfriend...

....aaannnnddddd back to our regularly-scheduled ask stacking. Shocker lol.

Can anyone see what the bid/ask is currently on CBW.V? I see nothing on CBWTF yet.

He is already short, he's hoping to save his ass as much as possible. Yeah, being a first-mover into international markets 12-18 months ahead of schedule when you're going to eventually have 450 million g's/yr to sell is such a joke. But then again, if you short this stock, you have the foresight of Ray Charles.

This Motley Fool pump shouldn't hurt either:

https://www.fool.com/investing/2018/01/17/a-royalty-marijuana-stock-might-be-the-smartest-wa.aspx

It seems like someone is just throwing shares out there and stepping on CBW stock's throat constantly lately. Over the past week plus, I can't remember the last time I've seen less than 30k shares on the ask for a prolonged period of time. Talk about trying to swim against the tide.

Long-term it's fine because once the fundamentals take hold, whoever is shorting/selling is going to get burned/lose out in a big way, but until then I guess this is what we're going to have to look forward to....Summer 2018 will be here before we know it, and I'd think as we get closer to that, that's when the real fun will start.

There's an Investor Presentation on their website, just go to the Investors section and you'll find it there. Unfortunately they haven't updated it in awhile, which honestly kind of pisses me off given how much has changed since it was last done. I e-mailed IR and asked them if they were going to be updating it and actually gave them a couple of suggestions, but no response back this time. I'm going to try again Monday and see if I have any luck.

I did the same today Sun, and no complaints about the close. I mean I wish it was green but popping back up over 10 cents in the last 5 minutes was nice to see.

Agree 100% and that's what I figured, was just wondering if I missed something. I'm not worried at all. I finished off my position today so I'm done buying. The other thing I'm wondering is are the institutions that got in on the additional $40 million in financing shorting as the companies involved in the initial $60 million financing and that's putting addt'l pressure on the stock. Fundamentally and from a deal-flow perspective, the company itself looks like it's in the best shape it's ever been in.

Is anyone aware of any reason that all of the Canadian weed stocks are pulling back as much as they are? The only slightly negative news I've seen is that Trudeau stated that legalization wouldn't come on July 1st but that it owuld be sometime this summer. Is there any other negative industry-wide news that anyone is aware of or are they just cooling down after a huge run? TIA!

Convertible debt is the common form of financing for the marijuana companies in Canada. Look no further than Aurora Cannabis as an example. They were doing convertible financings from $1 and it worked out OK for them. I guess if making 1000% on your money (as you would've with Aurora despite their multiple convertible financings) isn't worth the hassle of dealing with convertible financings along the way then you made the right move :)

John, honestly, it should have to do with the numbers. The projections I'm using are coming from the company based on deals they already have signed, not that they "might sign", "hope they sign" or are "about to sign". I honestly wish I could find something negative about the company but at this point, I really can't.