The marijuana sector’s first streaming company Cannabis Wheaton Income Corp., which came roaring onto the marijuana scene a month ago, has cancelled an $80 million financing deal with investment banks that also have stakes in the company.

Cannabis Wheaton, which provides seed money to marijuana producers in exchange for a slice of future production, said in a statement Monday that ending the deal was a mutual decision between the royalty company and its lead financing agents Eight Capital and Canaccord Genuity Corp. It did not give a specific reason but alluded to damaging reports about the agreement.

“Over the preceding week the company has been the subject of multiple inflammatory false or misleading reports, published primarily online by persons seeking to discredit the company,” it said in a statement.

“Cannabis Wheaton as well the co-lead agents have been referenced and targeted about various matters, including the ownership of securities in Cannabis Wheaton by employees of the co-lead agents.” 

The private placement deal, initially for $50 million but expanded to $80 million, was signed with Eight Capital and Canaccord. The May 23 deal gave the lead underwriters half of receipts convertible into stock and warrants at $1.35 and half for six per cent on two-year debentures convertible at $1.15.

The company’s stock had risen from just pennies to as much as $3.35 a share after it went public last month and rolled out its plan to raise money for its novel streaming idea. But its financing arrangements have led to concerns about perceived conflict of interest as banks’ employees own significant stakes in the company.

A company press release announcing the recent offering said “representatives” of Eight Capital and Canaccord Genuity own 13.1 million Cannabis Wheaton shares and the same amount of warrants, which amounts to about 8 per cent of the total shares outstanding. Eight Capital and Canaccord did not immediately respond to request for comment.

The stock was halted on the TSX venture exchange ahead of Monday morning’s market open. It had fallen to $1.16 at the close of trade Friday, about 67 per cent below its peak. 

The royalty company offers financing and guidance to companies in exchange for an equity stake and a portion of the product at a fixed price. It was inspired by streaming agreements popular in the resources sector, especially with junior miners who struggle with similar financing challenges. Its name is a homage to Wheaton Precious Metals, a big player in the mining space — although the two companies are not associated with each other. 

CEO Chuck Rifici said in a statement that the business itself has been making positive strides since the private placement was announced and that the deal’s termination was not related to any due diligence findings or lack of investor interest.

He said the timing of the termination was disappointing but that the company has received an “enthusiastic response” from other firms looking to act as new agents in the private placement. 

“We are acting swiftly to finalize an agreement with a new broad syndicate of agents to facilitate an expeditious closing of the proposed private placement,” he said.

The company also denies that it had not been contacted by law enforcement or any regulatory agencies regarding the financing arrangement and “any allegations to the contrary being published online are entirely without merit.” The company issued a similar statement May 31. 

Still, questions remain about what will happen to its investments in some 15 marijuana companies. 

Shares of some of those companies, including ABcann Global Corp. and Beleave Inc. were down about five per cent Monday morning.

Cannabis Wheaton estimates its total share of production capacity on its partners’ sites to be around 1.3 million square feet by the time all are built at the end of 2019, assuming all applicants are approved.

It is backed by heavyweights from across the political spectrum, part of a wave of politicians jumping into the potentially lucrative new industry. 

CEO Chuck Rifici is a former chief financial officer for the Liberal Party and co-founder of Tweed Inc.( now Canopy Growth Corp.),while former Conservative Member of Parliament Rick Dykstra and current party president in Ontario is a strategic adviser to the company.