BMO, CIBC provide $80-million loan to Canopy Growth-affiliated pot company PharmHouse
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Two of Canada’s largest banks — Bank of Montreal and Canadian Imperial Bank of Commerce — along with wholesale bank Concentra are dishing out an $80-million loan to cannabis company PharmHouse Inc., a joint venture part-owned by Canopy Rivers Inc., the investment arm of Canopy Growth Corp.

The bank loan is one of the largest provided to a private company in the cannabis industry by top-tier banks, most of which are still warming up to the industry, despite the legal status of recreational cannabis in Canada.

The loan will be used to finalize PharmHouse’s purchase of a 1.3-million-square-foot, all-glass greenhouse facility in Leamington, Ont., that the company expects will produce “a significant amount of cannabis within the Canopy Rivers ecosystem and beyond.”

“The entire team at Canopy Rivers has great pedigree. They come from CIBC, TD, OMERS (Ontario Municipal Employees Retirement System), and so it wasn’t difficult for us to convince the big banks that we have something great going at PharmHouse,” said Bruce Linton, chairman and CEO of Canopy Rivers.

CIBC’s investment bankers, along with GMP Securities Ltd., and Eight Capital co-lead Canopy Rivers’ reverse takeover, which resulted in the company going public on the Canadian Venture Exchange last September. It was the first time CIBC had been directly involved in cannabis financing.

It wasn’t difficult for us to convince the big banks that we have something great going at PharmHouse

Bruce Linton, chairman and CEO of Canopy Rivers

“We knew the guys from CIBC, they helped us with Rivers, so this was a familiar event for them,” Linton said

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Linton, who is also the CEO of Canopy Growth, has a relationship with BMO dating back to January 2018 when Canopy raised $175 million in a bought-deal financing co-led by BMO and GMP. It was the first time one of Canada’s big five banks touched the pot sector.

“I can tell you what they (BMO) were really looking for was whether there were strong actors in place in PharmHouse, that had a high probability of getting licensing quickly from Health Canada. We’ve been doing this since 2014,” said Linton.

Canopy Rivers CEO Bruce Linton.

Darren Brown for National Post

Other large Canadian banks, specifically Toronto-Dominion Bank, Royal Bank of Canada and Bank of Nova Scotia still remain wary of funding the cannabis sector in a significant way, although that may change the more the moves in the direction of legalizing marijuana on a federal level.

Both RBC and Scotiabank have dedicated cannabis analysts, with the former recently announcing it would begin doing deals in the pot industry. Last March, TD Bank’s CEO said the bank would consider participating in the cannabis industry after legalization — there has no official movement on that front as yet.

PharmHouse was formed in May 2018 through a joint venture between principals and operators of an unnamed North American greenhouse produce conglomerate and Canopy Rivers, which provided PharmHouse a loan of up to $40 million, payable only after the cultivator’s receipt of a Health Canada sales license.

Canopy Rivers has a 49 per cent stake in PharmHouse, with the agricultural conglomerate making up the balance — a November 2018 press release described the conglomerate as “cultivators and distributors of greenhouse grown vegetables under a household name for more than 60 years.”

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Canopy Rivers’ stock was up slightly in Tuesday morning trading.

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