Snapshot
The cannabis-focused merchant bank has a blueprint to build a portfolio of 20 companies with $75 million that it has injected via loans
Quick facts: Redfund Capital Corp.
Price: 0.085 CAD
Market: CSE
Market Cap: $4.27 m
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- The specialty finance company provides debt and equity funding to cannabis companies in the mid-to-late stages of their development
- It also provides services to companies, to help them move towards being publicly listed
- Redfund has been steadily converting its strongest portfolio client loans into equity company positions
What Redfund Capital does:
Redfund Capital Corp (CSE:LOAN) (OTCMKTS:PNNRF) is a specialty finance company which provides debt and equity funding to cannabis companies in the mid-to-late stages of their development. It specializes in medical cannabis companies focused on healthcare, hemp and CBD-related products.
Vancouver-based Redfund — designed by bankers and entrepreneurs — allows cannabis companies to expand, without prematurely releasing equity early in the growth cycle.
As Redfund Capital CEO Meris Kott explained, in an interview with Proactive: “We have designed a company with a debt facility to provide bridge financing to companies who are starting to build their revenues and have low valuations, so they don’t give up equity prematurely before they are ready.”
The high-profile banker has spent 25 years building global bridges for public companies. She has been involved in cannabis since Amendment 64 legalized recreational marijuana in Colorado in 2012.
Redfund also provides services to companies, to help them move towards being publicly listed.
Similarly, Redfund’s incubator program provides marketing initiatives plus exposure to its clients’ brands to help get them global exposure.
Redfund’s clients include Biolog Inc, a Silicon Valley company that is advancing a technology to add cannabis to food and beverages, and RxMM Health Care, a company in Irvine, California, whose products include Alzheimer’s Defense, a proprietary, CBD-infused nutraceutical product.
Another addition to its burgeoning client list is Mary’s Wellness Ltd, founded by Virginia Vidal, a cannabis drinks trailblazer and medical cannabis influencer with a product line of organic medicinal cannabis items.
The merchant bank is also working to help Seattle-based Winterlife Inc go public in 2019. Winterlife has $3 million in sales through 600 dispensaries and has just launched the WinterlifeCBD branded product line, which is free of tetrahydrocannabinol (THC). The cannabis edibles company produces a brand of vegan and gluten-free cookies.
Significantly, Redfund has been steadily converting its strongest portfolio client loans into equity company positions.
How is it doing:
Redfund is scouting beyond the Canadian border. One such country is Colombia, where medicinal cannabis is legal which has allowed the country to become a global player.
Redfund recently signed up Colombia-based Biominerales Pharma, which has a trifecta of licenses to grow, process and export CBD oil beyond South America to the global marketplace. Redfund believes Biominerales Pharma’s extensive farming operations plus a processing facility in Bogota make it an ideal supplier and distributor for Canadian licensed producers. Redfund has inked a two-year term convertible secured promissory note with Biominerales Pharma for $3 million at an annual interest rate of 14%.
In July, Refund said Wahupta Ventures Inc – which also belongs to its portfolio of clients – is in the process of filing a listing statement. Redfund has agreed to invest up to $1 million for the right to acquire 51% of the British Columbia-based hemp company and build out its growing Canadian hemp operations.
Significantly, Redfund said Curran Technologies, a wholly-owned subsidiary of Wahupta Ventures, signed its first CBD-extraction order in the US. The $670,000 order, Curran’s first in the US, was made by Health Care Industries in Florida. Curran will provide the company with four of its R6 Pro extraction units, which can produce both CBD isolate and distillate.
In May, Redfund demonstrated how committed it was to the cannabis space by announcing that it would launch a line of pharma-grade cannabidiol nutraceuticals headed by Dr Robert Klein. The Dr Klein CBD brand includes a pain cream, healing stick, face moisturizer, infused serum and CBD-infused bath bombs.
The company plans to initially target the US chiropractic community, of which Klein is a member, through online consumer marketing before launching globally later this year.
Redfund is also putting its money into the Cannabis Mercantile Exchange. In May, the investing firm signed a $1.5 million two-year convertible promissory note to fund the Cannamerx exchange which serves as a fully automated international business-to-business auction platform for cannabis, hemp and hemp products.
Since it went live in June, Cannamerx has auctioned nearly 25,000 kilograms of dried flower and its equivalents. Redfund hopes to smooth its global expansion.
In March, Redfund told investors that it will provide $1 million to Las Vegas headquartered Cannaki Beverage Inc to help fund the company’s expansion. Cannaki makes both still and carbonated beverages, as well as Nano CBD-infused flavored water and hemp water.
It signed a 2-year convertible note for $1 million at a yearly interest rate of 14%. The two-year note can be converted at Redfund’s discretion at any time during the term. In exchange, Cannaki will grant Redfund warrants in its common stock, equal to 20% of the amount of the note.
In February, Redfund created a buzz by announcing the launch of its own proprietary beverage product-line which has been in the works for almost a year. The first beverage product group will consist of powdered flavored hemp seed and hemp-infused teas. Redfund explained that this division will provide the go-forward business development advisory services as an added benefit to portfolio clients.
Redfund has also unveiled exciting plans for entering the European medical cannabis market with the launch of its subsidiary, First Euro Cannabis, saying it is aiming to raise more than $5 million for projects. Redfund says having a European team on the ground in Switzerland and London is key and will assist in helping the company provide debt financing.
Inflection points:
Redfund has outlined its blueprint for the year, indicating it wants to have a portfolio of 20 companies with $75 million that it will inject via loans. The company has already extended funds for five signed promissory notes and has over 11 companies in the pipeline at various stages of due diligence.
The merchant bank expects to gain traction by acquiring additional controlling positions in other CBD focused businesses with hemp company Wahupta Ventures as its lead footprint.
Strong momentum is likely to come from the planned launch of the Dr Klein CBD brand into Europe, South America and Canada when regulation allows in late 2019.
Redfund recently announced that it will partner with Fantasy Network Ltd of Tel Aviv, Israel to joint venture medical cannabis projects. Both companies have entered into a strategic cooperation agreement to form a foundation to JV opportunities in the Israeli medical cannabis sector.
This agreement could be a major inflection point as it enables Redfund to have a partner in Israel to evaluate potential acquisition and financing of medical cannabis, CBD, and hemp companies in the important region.
What the boss says:
In a recent interview, Redfund Capital CEO Meris Kott told Proactive: “We have assembled an amazing team of banking industry experts positioned to build Redfund into a formidable merchant bank focused on the quickly maturing cannabis industry.”
She added, “Cannabis 2.0 is here. Our clients are innovative, responsive and already revenue generating.”
Contact Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
