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Cannabis Wheaton Income Corp. has cut ties with investment banks with employees who hold significant shares in the company.Ron Ward/The Canadian Press

Marijuana financier Cannabis Wheaton Income Corp. cut ties Monday with two investment banks with employees who own significant personal stakes in the company, in the midst of an $80-million financing.

In the latest development around a small deal that's attracting outsize attention on Bay Street, Cannabis Wheaton and investment dealers Eight Capital and Canaccord Genuity Corp. announced they "mutually agreed to terminate" their relationship. The bankers were raising money that Cannabis Wheaton planned to invest in upstart pot producers, in exchange for a percentage of the companies' future marijuana sales.

As part of the financing, which Cannabis Wheaton continues to market, the company disclosed representatives of Eight Capital, an employee-owned firm formerly known as Dundee Securities, and Canaccord own approximately 8 per cent of the company, which currently has a $190-million market capitalization. The personal stakes were acquired for pennies a share in a series of transactions done prior to the recent launch of the $80-million private placement.

Trading in Cannabis Wheaton shares was halted Monday at the company's request and the stock last traded at $1.16 a share on the Toronto Venture Exchange.

This transaction is turning heads in part because pot stocks are all the rage in public markets, but also because there has been a steady drumbeat of rumours alleging problems with this transaction, and at Vancouver-based Cannabis Wheaton. Much of the speculation focuses on disclosure of personal holdings in Cannabis Wheaton by Eight Capital executives.

In a news release on Monday, Cannabis Wheaton chairman and chief executive Chuck Rifici said Eight Capital and Canaccord confirmed the termination of their relationship "was not in any way related to due diligence conducted by" the two investment dealers, "or investors' reception of the company's private placement."

Cannabis Wheaton said it still plans to raise money and is in talks with new investment banks, while stating that the company "has been the subject of multiple inflammatory false or misleading reports, published primarily online by persons seeking to discredit the company."

Executives at Eight Capital did not respond to a request for comment on the transaction, while Cannacord declined to comment. A spokesperson for Cannabis Wheaton said the company could not comment beyond what was in the company's news release.

Mr. Rifici was previously an executive at Canopy Growth Corp., the country's largest publicly traded pot producer. His strategy at Cannabis Wheaton is to provide early-stage funds and advice to small weed producers in exchange for a portion of future sales, a financing technique known as streaming that has been successful in the mining sector.

Before launching the private placement, Cannabis Wheaton struck streaming deals with 14 fledgling pot producers. In late May, the company announced a $30-million investment in medical marijuana producer ABcann Medicinals Inc. that would see Cannabis Wheaton get 50 per cent of the revenue from an expansion of an ABcann facility in Napanee, Ont.

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