The FINANCIAL – According to a research report published by Mordor Intelligence, the global cannabis market was valued at USD 7.7 Billion in the year 2016 and is expected to reach USD 65 Billion by the year 2023 while maintaining a CAGR of 37% during the forecast period. Growth rate can be attributed to the legalization of cannabis in various countries, as well as to the increasing demand of cannabis products for medical and recreational purposes. North America accounts for more than 95% of the global market, with the U.S. alone making up more than 90% of the North American, as well as global market.
A major sector of the cannabis market is made up of cannabis edibles, also known as cannabis-infused foods. A market research by Technavio projects that the edible products market will witness considerable growth during the period 2018-2022 at a CAGR of over 25% by the end of the period. Edible products are used for both medical and recreational purposes, depending on its cannabinoid compounds. The recent trend of legalization for recreational purposes helps to increase the popularity of such products. Cannabis is now widely accepted in countries such as the U.S., Canada, Spain, Chile, Israel, Germany, and Australia.
Tidal Royalty Corp. (OTC: TDRYF) is also listed on the Canadian Securities Exchange under the ticker (CSE: RLTY.U). Earlier this month, the Company announced breaking news that it has, "entered into a letter of intent (LOI) with an established licensed operator in Illinois to finance the expansion of the Illinois cannabis company's operations and strategic acquisitions.
The Illinois cannabis company LOI: The Illinois cannabis company is led by a seasoned management team with years of cannabis industry experience. The Illinois cannabis company currently operates a state-of-the-art 75,000-sq. ft. facility that uses highly advanced plant monitoring technologies to precisely track plant inputs and other critical control factors in order to achieve optimal production yield and consistency. The Illinois cannabis company will use proceeds from the financing to expand its existing cultivation and manufacturing facility, as well as pursue acquisition of additional strategic assets that will increase market share.
Pursuant to the LOI, Tidal Royalty will provide the Illinois cannabis company with up to USD 41-Million, in the form of both a royalty financing and equity investment. The royalty financing and equity investment will be staged over specific milestones set by Tidal Royalty management:
Royalty financing: Tidal Royalty will receive a 15% net sales royalty on all the Illinois cannabis company's Illinois operations. This includes both net sales generated from existing cultivation and dispensary sales, as well as incremental sales generated by the planned expansion.
Equity investment: Tidal Royalty will purchase the Illinois cannabis company's common shares at an agreed-upon valuation.
'As Tidal Royalty looks forward to where the U.S. cannabis market is headed, we are excited to broaden our investment strategy,' said Paul Rosen, chief executive officer and chairman of Tidal Royalty. 'We are very excited to count the Illinois cannabis company among our portfolio constituents. Between the near-term cash flow generated by their existing operations, management's vision and drive to grow their market share, and the ability to accelerate their growth with Tidal Royalty capital, we feel this is going to be the beginning of a great long-term relationship between our companies.'
Illinois is the sixth-most populous state in the United States with nearly 13 Million residents. According to Marijuana Business Daily, the state's medical market is expected to grow to USD 150-Million by the end of 2018 with significant opportunity for upside as the market develops.