Canopy Rivers Inc (OTC: CNPOF) (TSX: RIV), a venture capital firm specializing in cannabis, has a complex structure, numerous investments and an unusual way of reporting financials.
Its objective is clear, though: to create value for shareholders by making investments in the global cannabis sector.
That value creation can come in any number of forms:
- above-market yields from its royalty and debt positions;
- dividends or other distributions from its equity investments;
- monetization events from its portfolio companies.
The company’s proposition is simple: take $1 of capital, invest in a disruptive company, leverage the company’s domain expertise and turn that dollar into multiples.
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Canopy Growth Corp (NYSE: CGC) is Canopy Rivers’ biggest shareholder, with a 27% stake. While the companies define themselves as “affiliates,” they operate autonomously.
Despite the simplicity of this business model, the financial metrics reported by the company are vastly different from those of a typical Canadian licensed producer or U.S. multistate operator.
To help better understand how Canopy Rivers accounts for its investments, the company has created a helpful infographic that provides clarity in how it classifies its investments and how they translate in the company’s financials. See it below.
“When you layer these 29 different financial instruments on top of 17 investees, the result is a somewhat complex set of financial statements,” said Canopy Rivers CFO Eddie Lucarelli.
“We strive to reduce that complexity by ensuring a robust level of disclosure in our financial statements and MD&A. Despite the challenges associated with this complexity, we believe that our ability to create multifaceted investment structures differentiates us in the venture capital arena and supports our position as a preferred supplier of capital to the cannabis industry."
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