Tidal Royalty Changes Business Model As It Enters Michigan Cannabis Market

Tidal Royalty, a Canadian provider of royalty financing to American cannabis companies, announced Thursday that it's entering into a binding letter of intent to acquire MichiCann Medical in a reverse takeover that will result in Tidal changing its business model.

What Happened

Following the RTO, former shareholders of MichiCann will hold 80 percent of the resulting company, while Tidal shareholders will keep the othe 20 percent. 

The acquisition allows Tidal to move closer to becoming a multistate operator, Tidal CFO Theo van der Linde said in a statement. 

Why It's Important

MichiCann Medical, which conducts its operations as Red White & Bloom, is a private cannabis investment company.

MichiCann holds an 8-percent senior secured convertible debenture and has an option to buy all the issued shares of its Michigan-based investee, OpCo, which it said has recently received a Step 1 prequalification from Michigan's Medical Marihuana Licensing Board and has other approvals for cultivation, manufacturing and dispensaries. 

OpCo invested is pursuing M&A and closed deals for eight provisioning centers and expects three more deals to close in the coming days. 

The company's acquisitions have generated revenue of over $100 million over the past 12 months on an unaudited basis, according to the press release. OpCo said it's purchased an 85,000-square-foot space for its cultivation and manufacturing facility.

What's Next

Tidal said OpCo plans to complete acquisitions for its outdoor grow operations and expects to operate 20 dispensaries by the end of March and have three grow facilities running in Michigan by the end of the year. 

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