CannaRoyalty Corp. (CSE: CRZ) (OTCQX: CNNRF) announced it has recently acquired three California based cannabis companies. In statements released by CannaRoyalty, the company has acquired Kaya Management Inc., Alta Supply Inc., as well as River Distribution and its affiliates (“RVR”).
About Kaya Management and Alta Supply
Both Kaya Management and Alta Supply are based in Oakland, California and hold temporary medical licenses for their respective companies.
Kaya is a licensed manufacturing facility and is the “exclusive California manufacturer of Bhang edible and vaporizer product lines in California. Bhang brand products are highly awarded and widely distributed cannabis branded products”, as reported by CannaRoyalty.
CannaRoyaly reports during fiscal year 2017 Kaya achieved “$5.2 million in manufacturing revenue from Bhang vaporizers (equates to approximately US$13.0 million in retail sales)”, “US$2.8 million in revenue was generated by the former manufacturer of Bhang® edibles (equates to approximately US$7.0 million in retail sales)”, and “US$1.2 million in gross profit”.
Alta Supply is a distribution company with a Bay area facility. In the previous fiscal year, Alta Supply posted “US$6.5 million in wholesale revenue (equates to approximately US$13.0 million in retail sales)” and “US$1.4 million in gross profit” per CannaRoyalty’s website.
About River Distributor
CannaRoyalty is looking to make a splash in the California market. In addition to the Kaya Management and Alta Supply acquisitions, the company also announced it had acquired 100 percent of River Distribution and its affiliates, on its website.
RVR is a cannabis distribution company lead by Ted Simpkins, “a highly regarded career distribution executive in California, with over 40 years’ experience as an Executive VP of Southern Wine and Spirits – California’s largest wine and spirit distributor” according to CannaRoyalty. Simpkins brought his experience to RVR, putting the company on track to “rapidly become a leading cannabis distributor and market leader in California.”
RVR holds both medical and recreational distribution licenses through the state of California. During the 2017 fiscal the company managed to generate “US$25.4 million in revenue” according to a statement by CannaRoyalty.
The recent acquisitions position the Ottawa Canada based company to “become a middleman in the Golden State’s recreational market” according to Financial Post. CannaRoyalty is banking on the fact that California’s cannabis distribution is “controlled by private companies” which is very different from the Canadian distribution structure. In Canada “provincial liquor boards and their newly minted subsidiaries like the Ontario Cannabis Retail Corp. will oversee the flow of product from licensed cultivators to retailers” according to Financial Post. The Financial Post also reports that “CannaRoyalty is betting mostly on the U.S., the company is starting to make moves in its home market.”
While companies are investing a lot of resources in the Canadian pot stocks, CannaRoyalty’s focus on the California cannabis market is primed to be very profitable.
“California is the largest cannabis market in the world with annual sales of approximately US$2.8 billion in 2016, which only includes sales of products in the medical marijuana market”, according to CannaRoyalty. The future seems to be even brighter with the January launch of the recreational use in the state. CannaRoyalty reports “sales are forecast to grow to over US$6.8 billion by 2021 and vaporizer products are expected to account for 15% or over one billion dollars of the total.”