By the end of this article, you will buy stock in three companies. I will convince you this is a smart thing, because it is.

Oh yeah. None of these companies are clients. Let’s get that out there right up front.

Are we clear?

When the cannabis market was running crazy in late December and early January and we said, “sell your winners, take your profits,” a lot of people (and I mean a LOT) poured scorn on that suggestion because they figured merger and acquisition season was upon us and prices would continue heading for the moon as every LP got taken out by Big Everything.

It’s true, Aurora Cannabis (ACB.T) had made a run at Hempco (HEMP.V) and then Cannimed (CMED.T), and CMED had made a run at Newstrike Resources (HIP.C) as a means of defending itself, and Constellation Brands (STZ.NYSE) took a chunk of Canopy Growth Corp (WEED.T), and that activity had driven other players higher. But a circle of offensive and defensive moves attached to one company is not the trigger you should be looking for to assess the likelihood that everyone is going to get taken out.

Almost all of the above activity was, in our opinion, motivated by Aurora’s desire to lock in its elevated market cap and subsequent ability to raise money based on its value.

Canopy played a similar game a few years earlier when it took out Mettrum at a then-high value (especially as Mettrum turned out to be a pesticide-sneaking mess with no customer goodwill) right when Canopy was enjoying a huge market run.

There will, of course, be acquisitions to be had going forward. But nobody wants to acquire competitors when their prices are high, unless there’s a side hustle going on. That’s just bad business. And in early January, prices were ridiculous.

Now that the market has slumped some, the sharks are beginning to circle.

And as far as sharks go, few are bigger, better financed, better connected, and better at thinking outside the box than Chuck Rifici and Marc Lustig.

But they’re not engaging in bold, expensive takeovers. They’re coming in the back door and cleaning out the pantry while you’re asleep.

Rifici, who was one of the guys behind Canopy back when it was Tweed and used his Liberal Party contacts wisely to assess where the regulations were headed and how he could get in front of them, now has National Action Cannabis (NAC.V) doing deals at the retail side, and Cannabis Wheaton (CBW.V) rounding up the chum on the streaming end.

In essence, CBW finances early stage LP applicants and just-licensed guys who want to grow quickly – like Abcann (ABCN.V) and Beleave (BE.V) – in return for an ongoing piece of their future harvests, while NAC looks to open retail storefronts as the rules open up – presumably giving its sister company a place to distribute all that weed they’re going to be receiving.

From their website:

IS NAC A DISPENSARY? (WILL IT DISPENSE IN THE FUTURE?) No, NAC is not a dispensary. DO WE WANT TO BECOME A DISPENSARY? We believe the current distribution methods need improvement because it’s difficult for law enforcement to prevent black market diversion with cannabis being delivered through the mail system. We are very supportive of future changes that support greater regulation and a reduction of diversion. Many jurisdictions in the United States operate dispensaries under stringent regulations and that is a model we would support in Canada. WILL YOU BECOME A DISPENSARY? Medical Cannabis is evolving very rapidly and we are adapting our model to best suit patients. We will make changes that fall within the laws and guidelines of Health Canada and that we believe are in the best interest of the patients.

Allow me to translate: “We can’t be a dispensary yet, but we’ll be a shit ton of them soon enough, right Justin?”

Sidenote: I hate NAC’s logo so hard. Can we please stop with logos featuring a stylized person with arms raised to the heavens? Try harder, designers.

Hey, that one in the middle of this stock image pack looks familiar. What’d you pay for that, Chuck?

Further sidenote: We paid $35 for our logo so we should shut up about other people’s logos.

But I digress.

So Rifici has this $640m cannabis streaming company, and an $84m ‘access to cannabis’ company. His colleague at that latter deal, Marc Lustig, founded and runs CannaRoyalty (CRZ.V), which we’ve talked about here often because we believe it’s going to be the first ‘branding’ company in the weed space to take products truly national.

CRZ has 20+ (honestly, I can’t keep up with what the latest accurate number is) assets in the weed space in Canada and the US, with products in every category and multi-state brands (which is a rare thing in an age of state by state rules). You want vapes? Lustig has vapes. You want edibles? Sure. You want labs, growers, dispensaries, in Washington state, California, Florida, Oregon? Logistics, pharma products, extracts?

Hell, if you wanted CBD sex lube, there was a time when Lustig could help a brother out.

We told you Lustig would buck the downward weed trend with CRZ and he has, sitting at $4.25 today, good for a $200m market cap and up from $1.97 last August.

Why am I talking about the Chuck and Marc show?

Because we told you, when Chuck started NAC, that it would eventually be CBW’s dispensary, and it will.

And because we told you, when Lustig showed up at NAC, that CRZ would eventually be entwined with NAC’s future stores.

Well, hello there Nostradamus.

CANNAROYALTY AND NATIONAL ACCESS CANNABIS CORP. EXPAND AND SOLIDIFY BUSINESS RELATIONSHIP FOR CANNABIS PRODUCT SALES IN THE CANADIAN MARKET CannaRoyalty Corp. has signed a binding term sheet to expand its business relationship with National Access Cannabis Corp. to carry CannaRoyalty products in NAC stores across Canada, as legally permitted. NAC is in the process of applying for licences in several Canadian jurisdictions and recently announced that it was one of four entities that has received conditional approval for a licence to operate private retail cannabis stores across Manitoba. The term sheet covers the purchase by NAC of applicable products from CannaRoyalty in each jurisdiction that NAC operates retail stores, as a result of the company’s experience distributing and retailing products in mature cannabis markets, as well its existing pipeline and large portfolio of cannabis products.

This wasn’t rocket science. When one guy has dough and the other has tomato sauce and cheese, someone’s making a fucking pizza.

So let’s do a little math. $640m at CBW, $84m at NAC, $200m at CRZ… That’s a $924m total.

Let’s imagine if they were one company.

If a company showed up on the markets that had (according to its most recent investor deck) 15 deals to receive ongoing weed across four provinces, is building out its own 1m sq ft applicant, and has now expanded into Latin America, and will soon be outputting that weed to dispensaries it will be building across Canada, and potentially selling accessories, products and extracts from 20+ brands it owns in the US and Canada… would you say that company was undervalued at $924m on the current market?

Yeah. Me too.

In fact, I’d say it’s steal.

You want to play in the acquisition space, the first thing you need to do is find out who is going to be doing the acquiring, and then figure out what they like to acquire.

Will they take out LPs?

Why would you, when you can just give LPs money to put towards their facility expansions, and get their weed forever?

CANNABIS WHEATON INCOME CORP. ANNOUNCES CLOSING OF DEFINITIVE AGREEMENT WITH STREAMING PARTNER FV PHARMA INC. Cannabis Wheaton Income Corp. has entered into a binding definitive agreement with its streaming partner FV Pharma Inc. to develop all aspects of FV’s cannabis cultivation facility in mutually agreed staged phases, with the potential to build out the largest indoor cannabis cultivation facility in the world. [..] Pursuant to the agreement, the company will receive a 49.9-per-cent stream of all cannabis produced at the facility, under partnership with Cannabis Wheaton, in perpetuity. The company estimates that the Cannabis Wheaton allocation will result in approximately 200 million grams of cannabis for the company’s benefit per year upon completion of all phases of the facility development.

Why would you when you’re building your own mega grow?

CANNABIS WHEATON INCOME CORP. ANNOUNCES NEW JOINT VENTURE WITH PETER QUIRING – ONE OF CANADA’S LARGEST GREENHOUSE BUILDERS AND OPERATORS TO DEVELOP 1.4 MILLION SQUARE FOOT PURPOSE BUILT GREENHOUSE FOR CANNABIS CULTIVATION Cannabis Wheaton Income Corp. (doing business as Wheaton Income) has entered into a joint venture with Peter Quiring, one of Canada’s largest greenhouse builders and operators, via a newly formed subsidiary (GreenhouseCo), to develop, construct and operate a state-of-the-art purpose-built greenhouse for cannabis cultivation in Leamington, Ont., with Mr. Quiring acting as chief executive officer of GreenhouseCo.

Why would you when you’ll be able to buy it from the developing world (like Latin America) in a few years?

VANCOUVER, British Columbia, Jan. 30, 2018 — Cannabis Wheaton Income Corp. (TSX-V:CBW) is pleased to announce that it has entered into a binding interim agreement with Inverell S.A., pursuant to which Wheaton will purchase 80% of the issued and outstanding common shares on a fully diluted basis of Inverell. Inverell is a federally licensed “Cannabis Operator” based in Montevideo, Uruguay and was founded by Dr. Raúl Urbina. […] His experience includes founding Stevia One where under his leadership as Chief Executive Officer, the company became the lowest cost producer of Stevia in the world, expanded its field under production up to 1000 hectares in 5 years and achieved the highest purity with the highest yields in the market.

Why would you when the LPs will commit to selling to you whenever you need it?

CANNABIS WHEATON ANNOUNCES INTERNATIONAL SUPPLY AGREEMENT WITH APHRIA Cannabis Wheaton Income Corp. has entered into a binding interim supply agreement, pursuant to which Wheaton will purchase cannabis, including dried flower and cannabis oil for distribution to federally legal international jurisdictions from Aphria Inc.

Why would you when EVERY LP IS OVERVALUED?

Hell no. The value in the weed acquisition space right now is in early stage applicants of merit, retail distribution where allowed, and branding.

And NACCBWCRZ has those three areas covered.

So who’s going to be in the frame as they expand outward? That’s where we get into some educated guesswork

Tinley Beverage (TNY.C), if they can get their new weed products out quickly and build that brand out in California, has to be at ground zero. How do I know?

Because this, from today:

CANNABIS WHEATON INCOME CORP. ANNOUNCES STRATEGIC ALLIANCE AGREEMENT WITH PROVINCE BRANDS OF CANADA Cannabis Wheaton Income Corp. has entered into a strategic alliance agreement with Ontario-based research and development firm Honest Inc. (Province), whereby the company will assist Province with the establishment and licensing of a cannabis facility focused on the research, development and commercialization of cannabis-based beverages. Pursuant to the agreement, and subject to applicable laws, the company will assist Province in obtaining the Federal licensing necessary for Province to engage in the research, development and commercialization of cannabis-based beverages through its Wheaton licensing program by providing Province with the resources and expertise necessary to achieve the licence.

Now, you might see that as a ‘shots fired’ situation, where CBW is going up against Tinley, not plowing ground for Tinley.

But I say bullshit. They’re calling their shot. Tinley can’t do business in Canada today because the rules don’t allow it, so CBW are putting money into a company that can lobby, research, and stake a local claim on the beverage ground.

But when the government says weed beverages are legal, do you want to be researching what you’d need to do to develop one, then set up a bottling plant, then go do test marketing and talk to retail chains, or just go get the company that has done that and is already selling in California, to a market ten times the size of Canada’s?

How about Canabo Medical (CMM.V), which folks yelled at us for supporting when it was at $0.40, but which recently announced plans to buy Aleafia, a health clinic network with its own LP, that will combine with CMM’s 22 health clinics to form what would otherwise be a competitor to NAC? That deal, which halted at $0.69 but is selling subs at $1.25 now, is expected to close at the end of March – will CBW let it run before it comes for a piece, or go get some early?

CRZ is making a run at the Canadian dispensary space of its own, with the recent news it’s taking a piece of 180 Smoke.

CANNAROYALTY SUBSIDIARY, TRICHOME, TO MAKE INVESTMENT IN AND FORM STRATEGIC RELATIONSHIP WITH 180 SMOKE, A LEADING CANADIAN ONLINE AND RETAIL VAPORIZER PRODUCTS COMPANY CannaRoyalty Corp.’s subsidiary, Trichome Yield Corp., has signed its first binding term sheet to provide up to $2.5-million to 180 Smoke to finance an expansion of its retail footprint in anticipation of Canadian adult-use cannabis legalization. The financing will support 180 Smoke’s retail and cannabis product offering expansion and prepare the company for entry into Canada’s legal cannabis space, including the opening of 11 new stores and an expansion of the company’s cannabis hardware offering, as well as an increase in related inventory. 180 Smoke and CannaRoyalty’s subsidiary, CR Advisory, will work together to bring innovative cannabis products to the Canadian marketplace to support and complement 180 Smoke’s further expansion into the Canadian cannabis retail space.

I can’t even.

Let’s put this under a different lens.

Aurora has 55k of growing space right now and a bunch of patients that will be going to dispensaries and liquor stores to get their weed soon.

CBW/NAC/CRZ has more weed committed to them than Aurora can currently produce, and their own retail network happening, and ancillary products.

Aurora is building 1m sq ft plus of growing space in Canada.

CBW/NAC/CRZ is too.

Aurora is expanding into foreign countries.

CBW/NAC/CRZ is too.

Aurora has made 8 acquisitions.

CBW/NAC/CRZ is like 35+ and counting.

Aurora has a market cap of $5.5 billion.

CBW/NAC/CRZ combined is under a billion.

The Green Organic Dutchman (TGOD) just announced the date of its IPO, and that company has significant buzz, not because it’s an LP (though it is), and not because it has a big partner (Aurora bought 17%), but because its plan is to execute down chain by turning its primo organic weed not into dried smoke fodder, but consumer products that will work their way into chain stores.

HIKU (HIKU.C), formerly DOJA, launched out of its LP box when it grabbed Tokyo Smoke out from under a series of potential suitors and marked itself as a legit retail storefront play. Even Supreme Cannabis (FIRE.V), which doesn’t move fast for any man, announced last week it has bought a piece of a retail play.

This expanded, multi-pronged model, and CRZ’s, and CBW/NAC’s, which we’ll call Weed 2.0, is where the smart money is going to head over the next few years, and if you’re still out there waiting for THC Biomed and Emblem and Organigram and Vodis to light up your portfolio by growing buds in crates, I’m gonna wish you good luck with your horse and buggy investments.

Times have changed. The future is now.

ADDENDUM: Literally as I hit ‘publish’ on this story, Cannaroyalty dropped news they’re raising $15 million in a bought deal through Cannacord.

“The Offering will enable us to continue to build on our leading platform of brands and supporting distribution and infrastructure assets in California through strategic acquisitions, while driving penetration for our existing CR Brands product portfolio in the state. Recent announcements with Aurora Cannabis Inc., National Access Cannabis Corp. and 180 Smoke indicate that there is significant interest in bringing our products to Canada and the Offering will enable us to continue to explore these opportunities in our home market through 2018.”

War chest. Let slips the dogs of vertical integration.

— Chris Parry

FULL DISCLOSURE: We have NO commercial arrangement with National Access Cannabis, Cannabis Wheaton, or CannaRoyalty, nor do we own stock in those companies, though they should change that because this story is hella dope. We do have commercial arrangements with Tinley, HIKU, Abcann, and Green Organic Dutchman, and have previously had Canabo Medical and Emblem as clients. The author owns stock and warrants in Tinley, HIKU, and TGOD.