Cannabis Wheaton Income Corporation (CVE:CBW) (OTCMKTS:KWFLF) (FRA:3KF) has hit another snag in its ambitious effort to create a streaming royalty company focused on Cannabis. Unsurprising to many capital markets participants , a $50 million-upsized-to-$80 million financing that had been getting the royal treatment up and down Bay Street in favour of CBW over the last week has apparently been “mutually terminated”, sources close to the deal tell me.

However, Chuck Rifici, in response to an email seeking comment, said, “the termination was by mutual agreement and was by no way due diligence related, the financing is still on and we will be releasing further news to the market on Monday.”

I say unsurprising because members of lead underwriting investment banks such as Eight Capital and Canaccord Genuity Corp. have been identified as shareholders in the company from a previous financing round with a post-forward-split $0.018 cost basis. The now-cancelled $80 million financing was part equity priced at $1.15 per special warrant, and part debenture. No matter how you slice it, the conflict inherent in the underwriters selling $1.15 paper that they own for $0.018 is a huge conflict of interest, and it is a stunningly ill-conceived that will likely have repercussions for both firms going forward.

Nobody is willing to talk about the circumstances on the record surrounding the termination that I have been able to locate , and so it will be next week’s press releases that will provide the details.

Cannabis Wheaton has been the topic of chat room gossip that resulted in the company issuing a press release denying any wrongdoing and pledging to investigate the source of the innuendo.

We spoke to CEO Chuck Rifici last month on the Midas Letter CEO Podcast.

Updated at 1:04 p.m. ET Saturday June 3 to include comment from Chuck Rifici, resulting in the change in the Title to include the question mark at the end.