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6/12/17

Cannabis Wheaton (CBW.v) and the amended placement: The real dope

Your humble scribe had a few minutes full of yoks and guffaws this morning, thanks to this hilarious FP interview and report on Cannabis Wheaton's (CBW.v) BSser in chief Chuck Rifici. There are so many chunks of wonderful contained it's difficult to know where to start. Maybe by noting that Rifici loves to use lawyers to shut truth tellers up and that IKN hasn't received so much as a whiff of a paper yet, because everything IKN has written about this joke scam of a company has so far come to pass. Anyway, check out the link yourself and have fun, but the first lines of the piece are the subject of interest in this post today:
"Cannabis Wheaton Income Corp.’s chief executive and marijuana industry pioneer Chuck Rifici admits the intricacies of large private placement deals are not his forte."
As my good friend Owly would say...

...so let's help out Chuckyboy with the design of the latest $50m placement, put together in a big hurry (by Chuck himself!!!!) when the previous $80m conflicted scam fell apart. It's not an easy deal to decipher at first just by reading the NR, which is almost certainly deliberate. These people tried to sucker in greenhorns the last time and they're aiming for the same dumbasses this time, but when you get a handle on what's going on, it works like this:

1) Mackie Research Capital commits to selling $25m of units (one share and a full warrant at $1.50) at $1 apiece.
2) If they sell all $25m worth, a separate insto will commit to an extra $25m of units.
3) But if Mackie fails to fill the book, the insto walks away.
4) But if Mackie fills the book, the insto in question gets a lend on 20m shares which it can short and hedge its exposure, thereby reducing its risk to zero.

Bottom line: Mackie cannot lose on this deal, it just runs the book and pockets the commish. The insto willing to put up the other $25m cannot lose on this deal, it hedges the risk, clips the warrant, picks up the 6% interest. The risk is fully and squarely on the shoulders of the dumbos that Mackie's sales desks are ringing right now in order to fill that book. And that's you sucker, when you agree to exchange your money for their paper (and lock it up for four months, begad!) you're buying into a massive shell game with a big heap of nothing in the middle of it. They put this company together for $1m, they raised $2.5m in sweetheart share deals, they buy $1.5m worth of worthless streaming deals, they tell you the company is now worth $200m or so. Retail, the crop that never fails.