Cannabis Royalty Company Stands Out from the Herd
Contributed Opinion

There are more and more pot deals coming to the market every week and not all of them will do well or even survive. I find it best to stick with proven, successful people and those exploiting a niche or where there is little competition.

Tidal Royalty Corp. (RLTY:CSE) fits both bills. CSE:RLTY; Shares outstanding 153.6 million

Tidal involves many of the same people who started up Cannabis Wheaton and it has the same royalty stream plan but in this case the focus is on the U.S. market. Most Americans support legalization and every year we see new states adopt some form of legalization. Despite this significant growth, the inconsistency between federal and state laws restricts capital. In Canada, just now have the big banks started to tip their toes in the market and in the U.S. capital investment has been mostly from private investment and some hedge funds.

The Tidal team has built, led and advised some of the most iconic cannabis businesses in Canada and across the world. They plan to leverage this expertise to provide non-dilutive and value-adding capital to exceptional operators and help position them as a model for best-in-class businesses. Tidal investors get top line access to the companies that will form the future of this society-benefiting industry.

Management

Paul Rosen, Chairman & CEO, is a noted career entrepreneur and management consultant. Over the last five years, he has become one of Canada's most active and diversified investors in the emerging cannabis industry. He is the founder and managing director of BreakWater Venture Capital, a private venture capital fund and advisory based in Toronto. Mr. Rosen was a co-founder of PharmaCan Capital, now operating as The Cronos Group (CRON:NASDAQ, CRON.V), where he served as president and CEO for three years. Mr. Rosen sits on the board and chairs the audit committee of iAnthus Capital Holdings (IAN.C), a publicly traded New York-based investment bank, sits on the board of Hill Street Beverages, and acts as an advisory to several companies in the industry. Mr. Rosen is a member of the Law Society of Upper Canada and received a B.A. in Economics from Western University in 1985 and LL.B. from the University of Toronto in 1988.

Terry Taouss, president, is an entrepreneur with operational experience scaling fast-growing businesses. Mr. Taouss was part of the founding management team at SiteScout, an advertising technology company that he helped profitably build through its successful acquisition in 2013. In that role, Mr. Taouss had carriage over all finance, legal and corporate development functions. Mr. Taouss then served as the managing director of Centro Canada, with carriage over strategy, product, marketing and sales, and was a member of the Centro executive team, helping guide strategy for the company's broader technology and services offering. Mr. Taouss received a J.D. from Osgood Hall Law School and an MBA from the University of Toronto.

Theo van der Linde, CFO, is a Chartered Accountant with 20 years of extensive experience in finance, reporting, regulatory requirements, public company administration, equity markets and financing of publicly traded companies. He has served as a CFO & director for a number of TSX Venture Exchange and Canadian Securities Exchange (CSE) listed companies over the past several years.

Courtland Livesley-James, Executive VP, Strategy, is an active investor and entrepreneur with significant experience in corporate finance and investment banking. Mr. Livesley-James helped develop the cannabis practice at Dundee Capital Markets, playing a key role in a wide variety of domestic and international corporate and commercial transactions. His work included advising on some of the largest deals in the cannabis sector. Mr. Livesley-James is also a partner at a private venture capital fund with a focus on emerging companies in a variety of sectors. Mr. Livesley-James received an Honours Degree in Accounting and Financial Management from the University of Waterloo.

Jonathan Beland, VP, corporate development, has been focused on investing and providing corporate advisory to some of the marquee clients in the cannabis sector since 2016. Prior to joining Tidal, Mr. Beland spent seven years in sell-side investment banking roles with BMO, Deloitte and other firms focusing on the cannabis and mining sectors. Some of the core clients Mr. Beland was responsible for covering included Canopy Growth, Aurora Cannabis, MedReleaf, PotashCorp, Mosaic, Agrium, BHP, Vale, CN, CP and Aecon. Mr. Beland holds a B.A. in Architectural Theory and History from Carleton University, an Associate's Degree in Architectural Technology from George Brown College, an M.B.A. from the University of Toronto specializing in investment banking.

Iniataly Tidal will focus on U.S states with adult use markets that are seeing strong growth like California, Massachusetts. Florida, New York, Illinois and Nevada. The company is in advanced talks with about 10 possible royalties deals.

Tidal put out a news release today indicating it has had discussions with over 100 prospect companies, and have entered into three separate Letters of Intent to date. Its pipeline of opportunities to fund high-caliber operators across nearly a dozen key U.S. states continues to grow and it anticipates that current efforts will lead to multiple additional agreements as discussions progress.

Today Tidal also announced four advisors.

Hugo Alves is the president of Auxly Cannabis Group Inc. (TSXV:XLY), formerly known as Cannabis Wheaton Income Corp. Auxly is one of the world’s first and foremost cannabis streaming companies.

Marc Lustig is the founder and CEO of CannaRoyalty Corp. (CSE:CRZ). CannaRoyalty is a North American cannabis consumer product company currently focused on building a leading distribution business in California, the world's largest regulated cannabis market.

Joel Sherlock is the co-founder of Doventi Capital Inc. and the chairman of Vitalis Extraction Technologies. Doventi Capital is a private equity firm specializing in investment in the regulated cannabis industry in North America. Vitalis Extraction is an engineering and manufacturing company producing the highest-flowing industrial extraction systems for the cannabis industry.

Richard Brooks is the managing partner of Brooks Business Lawyers. The Brooks firm provides corporate and commercial legal services to some of the fastest-growing companies in Canada across a number of industries, including cannabis.

Finance

As part of the go public process, Tidal set out to raise $20 million at 33 cents per share and ended up raising $30 million. This gives them about $38 million cash on the balance sheet.

Summary

Tidal has the right people to do the job, but not just the royalty agreements but the influence in financial circles to raise the necessary funds.

I believe as this becomes known in the investment community we will see much higher share prices. That said it is always difficult to know how these new issues will trade. I would use the approach of buying half of the intended position now and the other half after some trading history. With a longer-term view, you could just buy your whole position now and I would bet at some point down the road it will be much higher.

At $0.65, the market cap is about $100 million, not very high in the marijuana field. I bought into the 33 cent financing and currently own 38,000 shares.

For 27 years, Ron Struthers, founder and editor of Struthers' Resource Stock Report and Playstocks.net, has consistently beat the comparable benchmarks selecting stocks in the precious metals, oil and gas, clean-tech and disruptive technology sectors. In 2017, 35 stocks in the precious metals sector saw an average gain of 62% and energy clean-tech an average gain of 65%. In disruptive technology, 16 picks saw an average gain of 55%. Past performance is no guarantee of future gains. Struthers leverages his vast network of contacts, approaches investments from a value perspective seeking several 100% gain potential and uses technical analysis to aid in buy and sell levels.

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