How The Third Wave in Cannabis Stocks Begins – New Cannabis Ventures

May 24, 2020

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

This past week, the New Cannabis Ventures Global Cannabis Stock Index soared 26%, its best week since late March, when the index bounced off of its weekly all-time closing low and rallied 32%. We ended the week at 32.17, gaining 38% over seven trading sessions and leaving the index almost 90% above its March 18th low:


Even with the big rally over the past nine weeks, the index remains down 24% this year so far and still below levels seen in February. While stocks in general have been in decline since February, when the S&P 500 put in an all-time high, cannabis stocks have been in a bear market for more than a year.

Why Cannabis Stocks Are Going Up

Trying to explain the rationale for a move is always speculation, as no one knows for sure what drives explosive rallies. One explanation may be simply short-covering. It could also be just that traders returned to a sector they had abandoned. The reality is likely a combination of both of these. Quite simply, with prices still way down but a bottom likely in and stocks in general stabilizing, cannabis stocks were ripe for the picking.

The rally began with a small lift Thursday a week ago ahead of the Aurora Cannabis fiscal Q3 financial report. In fact, that day, the stock reversed off on all-time low set early in the session at C$7.50 to close at C$9.20, up 11% on the day. It had begun the week having closed on the 8th at C$10.92. The company exceeded revenue expectations, reduced its operating loss, announced divestitures and guided for positive EBITDA in the September quarter, all of which sent the stock 69% higher last Friday, with U.S. trading exceeding $1 billion and sparking interest across the sector. Written off for dead, with shorts piling on after its reverse split earlier that week, Aurora Cannabis was the initial catalyst that lured traders back to the sector it seems. Also helping to get the market rallying, in our view, was the GTI Q1 report showing revenue in excess of $100 million, well ahead of expectations and driving a big profit.

This past week, Aurora Cannabis again appears to have played a big role, as its American CBD acquisition announcement sent the stock soaring. The New York Post’s picking up a recently published story out of Canada about CBD potentially showing “promise blocking coronavirus infection” was gasoline on the fire. Across the board, volume picked up in the sector during the week.

The Rally May Be Sustainable

A quote by legendary investor Howard Marks of Oaktree in the New York Times in early March caught our attention: “There will come a day when we reach a bottom. We have no idea when or where that bottom will be. But all great investments begin with discomfort. You make the big money buying things no one else will buy.” Of course, he wasn’t speaking directly about cannabis stocks. His comments, which were just two weeks ahead of the S&P 500 low (at least for now!), certainly apply as well to cannabis stocks. We ran a survey in this newsletter, and the respondents were overwhelmingly negative right at the bottom.

It’s always a challenge to call a bottom in real-time, and calling one in the cannabis sector has been an exercise in futility. We shared our view that the bottom for cannabis stocks was likely in with subscribers at 420 Investor the evening Aurora Cannabis reported, though we had certainly expressed our belief that the bottom was possibly in much earlier. For the past two months, we have been discussing our views regularly that while many cannabis operators are likely to be crippled or bankrupted by the escalation of the capital crunch, those that are able to survive will actually thrive, and investors seem to have picked up on this. Three of the top four MSOs and Canopy Growth are outperforming the S&P 500 in 2020. Several ancillary companies in the U.S. are up year-to-date, including GrowGeneration (62%), Innovative Industrial Properties (9%) and Akerna (6%).

The Third Wave for Cannabis Stocks

From our perspective, interest in the sector has just started to return. We expect that a lot of stocks that are rallying could be dead-cat bounces and short-squeezes, but, at the same time, those companies with strong access to capital, good cash flow and defensible valuations could offer investors outsized returns ahead. We note that the four largest MSOs lagged the overall market move since May 13th, with returns ranging from 12.5% to 29.2%, all less than the 37.8% market move. Finally, we think valuations for public stocks are better than they have ever been, and expectations are certainly tempered regarding growth prospects.

We believe the market is transitioning to what we are calling the third wave for cannabis stocks. The first wave began in late 2012 or early 2013, when there were few publicly-traded cannabis stocks and few that were even real companies. The legalization in Colorado sparked a massive rally that petered out until early 2016, when the second wave began. This next phase saw Canada move forward with legalization for adult-use and many states legalize as well, including California. The second wave peaked as California implemented its legalization and was followed by the 2019 vaping crisis and then the pandemic.

The third wave is likely to see regulatory reforms in the U.S. at the state level and possibly the federal level, more states embracing adult-use cannabis such as Arizona, Florida, New Jersey, New York and perhaps Pennsylvania, improvements in key markets like Canada, California and Massachusetts, that have been slow to roll out, well funded private MSOs debut on the public markets and the first cannabis public companies to exceed $1 billion in revenue annually. This next rising tide will not lift all boats, but we are optimistic that investors who follow fundamentally sound companies could enjoy better returns ahead after two straight years with market declines of 34% in 2019 and 55% in 2018.


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New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

Green Organic Dutchman Raises $15 Million Selling Units at $0.40 – New Cannabis Ventures

May 20, 2020

The Green Organic Dutchman Announces $15 Million Bought Deal Public Offering Plus Over-Allotment Option

TORONTO, May 20, 2020 /CNW/ – The Green Organic Dutchman Holdings Ltd. (the “Company” or “TGOD”) (TSX:TGOD) (US:TGODF), a leading producer of premium certified organic cannabis, is pleased to announce that it has entered into an agreement with Canaccord Genuity Corp. (the “Underwriter”). The Underwriter has agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, an aggregate of 37,500,000 units (the “Units”) at a price of $0.40 per Unit (the “Offering Price”) for aggregate gross proceeds to the Company of approximately C$15 million (the “Offering”).

Each Unit shall consist of one common share (each a “Common Share”) and one common share purchase warrant of the Company (each a “Warrant”). Each Warrant shall be exercisable to acquire one common share of the Company for a period of 48 months from closing of the transaction at an exercise price of C$0.50 per Warrant.

The Company has granted the Underwriter an option (the “Over-Allotment Option”) to purchase up to an additional 5,625,000 Units at a price of C$0.40 per Unit, exercisable at any time, for a period of 30 days after and including the Closing Date, which would result in additional proceeds of approximately $2.25 million. The Over-Allotment Option is exercisable to acquire Units, Common Shares and/or Warrants (or any combination thereof) at the discretion of the Underwriter.

The Units will be offered by way of a short form prospectus to be filed in all provinces of Canada except Quebec. The Offering is expected to close on June 9, 2020 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX and the applicable securities regulatory authorities.

The Company will use best efforts to obtain the necessary approvals to list the Common Shares, Warrants, and the Common Shares issuable upon exercise of the Warrants on the Toronto Stock Exchange (“TSX”).

TGOD intends to use the proceeds of the Offering for general corporate purposes.

About The Green Organic Dutchman Holdings Ltd.

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US‐OTC: TGODF) is a premium certified organic cannabis company focused on the health and wellness market. Its certified‐organic cannabis is grown in living soil, as nature intended. The Company is committed to cultivating a better tomorrow by producing its products responsibly, with less waste and impact on the environment. Its two Canadian facilities have been built to LEED certification standards and its products are sold in recyclable packaging. In Canada, TGOD sells dried flower and oil, and recently launched a series of next‐generation cannabis products such as organic teas, infusers and vapes. Through its European subsidiary, HemPoland, the Company also distributes premium hemp CBD oil and CBD-infused topicals in Europe. By leveraging science and technology, TGOD harnesses the power of nature from seed to sale.

TGOD’s Common Shares and warrants issued under the indentures dated November 1, 2017 and December 19, 2019 trade on the TSX under the symbol “TGOD”, “TGOD.WT” and “TGOD.WS”, respectively, and TGODF trades in the US on the OTCQX. For more information on The Green Organic Dutchman Holdings Ltd., please visit www.tgod.ca.

Original press release

This Cannabis Software Company Secured a $2.2 Million Paycheck Protection Program Loan – New Cannabis Ventures

May 17, 2020

Cannabis software company Akerna (NASDAQ: KERN), the parent of MJ Freeway, disclosed in its 10-Q for the quarter ending March 31 that it received a $2.2 million Paycheck Protection Program loan in April. The company received the loan, which is guaranteed by the Small Business Administration, prior to guidance that was issued on April 23rd, and it is “evaluating the impact this guidance has on Akerna and the PPP Loan”, though it’s not clear what exactly the company is evaluating.

MassRoots also received a PPP loan that was disclosed in its SEC filings, which created an uproar, as companies that derive revenue from the cannabis industry may be prohibited from accessing SBA loans. Cannabis-focused law firm Vicente, Sederberg stated, “While SBA has not formally addressed the eligibility of marijuana businesses for the broader Paycheck Protection Program, it appears prior SBA regulation and policy guidance may prohibit access to this program by marijuana businesses and certain other types of businesses.”

Akerna can prepay up to 20% of the loan at any time, but, prepayment in excess of 20% will require the company to pay all accrued interest if the loan has been sold on the secondary market. The two-year loan carries an interest rate of 1%, with interest deferred for the first six months. The company didn’t disclose the lender.

Schwazze Reports $3.2 Million Revenue in Q1 – New Cannabis Ventures

May 11, 2020

Schwazze, Formerly Operating as Medicine Man Technologies, Inc., Provides Company Update and Announces First Quarter 2020 Financial Results
  • Company to Host Conference Call and Webcast Today at 4:30 p.m. ET
  • Company Completes First Acquisition Amid COVID-19; Remains on Schedule to Roll-up Colorado Cannabis Operators
  • Total Revenues Increase 59.9%; Gross Profit Increases 160.5%; Net Loss Narrowed Significantly

DENVER, May 11, 2020–(BUSINESS WIRE)–Schwazze, formerly operating as Medicine Man Technologies Inc. (OTCQX: SHWZ) (“Schwazze ” or “the Company”), today provided a company update and announced financial results for its first quarter ended March 31, 2020.

Schwazze is uniquely positioned to be a winner as the cannabis industry experiences consolidation, and step by step we are making progress on our stated goal of becoming one of the largest vertically integrated seed-to-sale operators based on revenues.

Justin Dye, Chief Executive Officer of Schwazze

We recently completed our first acquisition, Mesa Organics, and we remain confident that we will make great strides in our outlined acquisition strategy this quarter. These transactions represent just the beginning of what we look forward to accomplishing this year.

“With respect to our financial performance, we had a very strong first quarter characterized by robust top-line growth due primarily to higher product sales and more than doubled our gross profit compared to last year. We also significantly narrowed our net loss despite meaningful investments in our business as we prepare for the future and work tirelessly to execute our strategy. 2020 is poised to be a historic year for our Company, employees, shareholders, communities, and above all, customers,” concluded Dye.

Company Update

  • During the COVID-19 pandemic, the Company’s top priority has been the health of its employees and communities and has therefore enacted measures to do its part to slow down the spread of the virus. It has also collaborated with state and local governments to develop and implement rules and regulations for the cannabis industry throughout Colorado with the underlying goal to protect patients, recreational consumers, employees, and the public. The Company is sincerely grateful to the healthcare providers, government officials, and essential businesses for their tireless work and is keeping those affected by the pandemic in its thoughts and prayers those affected by the pandemic.
  • On March 27, 2020, the Company launched a collective online platform that can now be found at www.schwazze.com/marketplace. Throughout the COVID-19 pandemic, emergency rules and regulations for Colorado cannabis operations have changed. To help Colorado consumers find information and updates on the dispensary operations of our strategic partners, we launched a collective online platform to bring together their ordering capabilities under one marketplace. This has enabled consumers to fulfill their cannabis needs in a manner that was not possible before and we thank our strategic partners for their commitment to supporting cannabis consumers.
  • On April 20, 2020, the Company announced that it would now be doing business as Schwazze (pronounced SHHwahZZ). The new branding reflects the Company’s goal to create a dynamic, innovative culture and brand identity while supporting the current and future house of brands as Schwazze continues to grow. It also further amplifies the Company’s purpose-driven mission to recognize the full potential of cannabis and continue promoting its ability to improve the human condition.
  • On April 20, 2020 the Company completed its acquisition of Mesa Organics and its Purplebee’s business. Mesa Organics operates four dispensaries throughout southern Colorado in Pueblo, Ordway, Rocky Ford, and Las Animas. Purplebee’s is a leading pure CO2 and ethanol extractor and manufacturer, as well as a producer of cannabis products for some of the leading edible companies across the state.
  • At this time, the Company is pleased with how it is trending during the second quarter and remains confident that great strides will be made in the outlined acquisition strategy during Q2. Additionally, the Company believes being deemed an essential business during COVID-19 has enabled not only the cannabis industry to thrive but the Company to continue to make significant progress.

First Quarter 2020 Financial Results

Revenues were $3,203,134 during the three months ended March 31, 2020, representing an increase of 59.9% as compared to $2,003,476 during the three months ended March 31, 2019. Product sales and consulting and licensing fees increased 63.8% and 46.8%, respectively. The increase in product sales can largely be attributed to consumer stockpiling due to the COVID-19 pandemic.

Cost of goods and services were $2,148,535 during the three months ended March 31, 2020, representing an increase of 34.4% as compared to $1,598,712 during the same period in 2019. This increase was due to increased sales of our products, and increased salaries and related employment costs.

Gross profit was $1,054,599 during the three months ended March 31, 2020 as compared to $404,764 during the same period in 2019. Gross profit increased to 32.9% of revenues from 20.2% of revenues during the same period in 2019. This improvement was mostly driven by improved product profitability.

Total operating expenses were $5,165,674 during the three months ended March 31, 2020 as compared to $2,632,791 during the same period in 2019. The increase was primarily attributable to higher salaries and selling, general and administrative expenses related to building an infrastructure to ensure a seamless integration of the numerous pending acquisitions and to help build the proper platform for sustainable growth, along with non-cash, stock-based compensation.

Net other income was $2,731,765 during the three months ended March 31, 2020 as compared to net other expenses of $683,791 during the same period in 2019. This represented an improvement of $3,415,556. The increase in other income (expense), net was primarily due to the forfeiture of contingent consideration in relation to the resignation of an officer and director, and an unrealized gain recognized on the change in fair value of certain derivative liabilities.

Net loss was $1,379,310 for the three months ended March 31, 2020, or a loss of approximately $0.03 per share on a basic weighted average, as compared to net loss of $2,911,818, or a loss of approximately $0.10 per share on a basic weighted average, for the three months ended March 31, 2019.

Conference Call and Webcast Today

Schwazze will host a conference call and webcast today at 4:30 p.m. ET. Investors interested in participating in the conference call can dial 412-317-6026 or listen to the webcast from the Company’s “Investors” website at https://ir.schwazze.com. The webcast will later be archived as well.

Following their prepared remarks, Chief Executive Officer Justin Dye and Chief Financial Officer Nancy Huber will also answer investor questions. Investors may submit questions in advance or during the conference call itself through the weblink: http://public.viavid.com/index.php?id=139701. This weblink has also been posted to the Company’s “Investors” website.

Virtual Investor Conferences Participation

On May 12, 2020, Schwazze is pleased to be participating in the Canaccord Genuity’s Cannabis Conference. The Company will be hosting meetings and presenting a company update at 2:00 p.m. ET via http://wsw.com/webcast/canaccord39/sch/ as part of this virtual conference.

The Company will announce additional virtual conference participation in the coming weeks, please check back on the Company’s website, ir.schwazze.com for information.

About Schwazze

Medicine Man Technologies, Inc. is now operating under its new trade name, Schwazze. Schwazze is executing its vision to become one of the nation’s largest vertically integrated cannabis holding companies by revenue. Upon the completion of its announced acquisitions, its portfolio will consist of top-tier licensed brands spanning cultivation, extraction, infused-product manufacturing, dispensary operations, consulting, and a nutrient line. Schwazze leadership includes Colorado cannabis leaders with proven expertise in product and business development as well as top-tier executives from Fortune 500 companies. As a leading platform for vertical integration, Schwazze is strengthening the operational efficiency of the cannabis industry in Colorado and beyond, promoting sustainable growth and increased access to capital, while delivering best-quality service and products to the end consumer. The corporate entity continues to be named Medicine Man Technologies, Inc.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Original press release

Here’s a Model for Solving a Huge Cannabis Industry Problem – New Cannabis Ventures

May 10, 2020

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

Since September, we have been detailing the challenges the sector faces with respect to raising capital, a situation set in motion by the vaping crisis and then exponentially magnified by the pandemic. Many operators, both public and private, are burdened with debt and facing an existential threat. Investors in public companies have shied away from both Canadian and U.S. operators with near-term debt maturities that are challenging to address, leaving the equity price under selling pressure.

Companies facing debt maturities have several options:

  • Sell stock to repay existing debt holders
  • Convince the debt holders to take equity
  • Raise additional debt capital
  • Sell assets
  • File for creditor protection

While Aphria wasn’t facing any near-term liquidity issue, the company was extremely proactive addressing a weakness in its balance sheet. Recall that the company issued debt last April, selling US$350 million 5.25% convertible debt in a private placement, with a maturity of 2024. The bonds were convertible at US$9.38, then a 20% premium to the price but, more recently, more than 2X where the stock was trading.

On Friday, the company announced what we think is an extremely smart deal to repurchase 26% of the debt at a big discount. Specifically, it paid US$2.1 million to cover accrued and unpaid interest and issued 18.7 million shares to retire $90.8 million of the bonds, effectively US$4.84 per share, a 31% premium to its recent closing price. To be clear, the debt holders received stock valued at about $69 million, a discount of 24%.

In hindsight, the company would have been better off a year ago selling stock rather than issuing convertible debt, but this transaction reduces debt, improves net cash and lowers interest expense. Shareholders didn’t appreciate these benefits initially, as the stock sold off and ended the day down almost 7%. The best explanations of why the stock declined are that the increased share count is seen as dilution (the 18.7 million shares boosted shares outstanding by 7%) and, perhaps more importantly, that most likely a portion of the stock issued hit the market.

We were a bit surprised that the debt holders agreed to do the deal, so we reached out to the company to gain a better understanding.

The bonds had apparently been trading at about sixty-one cents on the dollar, so this transaction enabled the shareholders to exit the bonds at a higher price, effectively. As the bonds are privately traded, pricing data isn’t readily available to the public. For the debt holders to lose, the stock would have to decline to US$2.96.

So, why is this such a big deal?

We see a path to debt reduction through similar negotiated transactions across the sector. There are several Canadian LPs and U.S. operators with out-of-the-money convertible debt that need to address the maturity over the next 12 to 24 months, depending upon the issuer. Debt holders for some publicly traded convertible notes and presumably private placement convertible notes as well are willing to sell for very low prices, and companies, rather than trying to figure out how to repay them in full, should access capital to buy back the discounted debt or negotiate equity settlement, as Aphria did. Just chipping away over time could help the equity improve as the debt appears to become more manageable, decreasing the risk of a default at maturity, as relying upon other solutions becomes more tractable.

We are encouraged to see Aphria and some of its debt holders create a win-win scenario through the transaction announced Friday, and we are hopeful that holders of debt in other companies will take back reduced principal, effectively, a move that may save many companies that are otherwise executing operationally.


With the recent change in its laws, Colorado is now open to publicly-traded company ownership. A first-mover is Medicine Man Technologies, now doing business as Schwazze, which has closed its first acquisition and is in the process of closing several others to create a very large roll-up in the state. Led by management that played a big role in the turnaround of Albertsons, it is focused on being the nation’s largest vertically integrated cannabis holding companies.

Get up to speed by visiting the Schwazze Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

Aurora Cannabis 12:1 Reverse Split Effective May 11th – New Cannabis Ventures

May 08, 2020

Aurora Cannabis Confirms Share Consolidation Effective Date
  • Common shares of the Company will begin trading on the New York Stock Exchange and the Toronto Stock Exchange on a post-consolidated basis at the opening of trading on May 11, 2020

EDMONTON, May 8, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, confirms today that it has received all necessary approvals for its previously announced consolidation of the common shares (the “Common Shares”) of the Company on a 12 to 1 basis (the “Consolidation”) and confirms that the Consolidation will be effective on May 11, 2020 (the “Effective Date”).

Aurora’s Common Shares will begin trading on the New York Stock Exchange (the “NYSE”) and the Toronto Stock Exchange (the “TSX”) at the opening of trading on the Effective Date under the symbol “ACB” on a post-Consolidation basis.

About Aurora

Aurora is a global leader in the cannabis industry serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis dedicated to helping people improve their lives. The Company’s brand portfolio includes Aurora, Aurora Drift, San Rafael ’71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, and ROAR Sports. Providing customers with innovative, high-quality cannabis and hemp products, Aurora’s brands continue to break through as industry leaders in the medical, performance, wellness and recreational markets wherever they are launched. For more information, please visit our website at www.auroramj.com.

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

Edibles Manufacturer Plus Products Generates $13.9 Million in 2019 – New Cannabis Ventures

May 07, 2020

Visit the Plus Products Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Plus Products Reports Audited 2019 4th Quarter and Year-End Financial Results

SAN MATEO, Calif., May 07, 2020 (GLOBE NEWSWIRE) — Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF) (the “Company” or “PLUS”), a cannabis branded products company in the U.S., today released its audited financial and operational results for the three and twelve months ended December 31, 2019, expressed in U.S. dollars. These filings are available for review on the Company’s SEDAR profile at www.sedar.com and on the Canadian Securities Exchange (the “CSE”) website at www.thecse.com.

Q4 and Year-End Financial Highlights

  • Revenues: Net revenues climbed to $13.9M in 2019, representing a 66% year-over-year growth as compared to 2018 net revenues of $8.4M. Net revenues in Q4 2019 reached $3.5M, representing a 4% year-over-year growth as compared to Q4 2018 net revenues of $3.4M. In December 2019, the Company was transitioning to a new distributor, HERBL Distribution Solutions (“HERBL”). Due to this transition, some sales which otherwise would have taken place in December 2019 were pushed out until January 2020.
  • Gross Profits: Gross profits grew to $2.8M in 2019 compared to $1.1M in 2018. Gross profit margin in 2019 was 20%, up from 13% in 2018. Gross profits increased to $0.9M in Q4 2019 compared to $0.4M in Q4 2018. Gross profit margin in Q4 2019 grew to 26%, up from 13% in Q4 2018. Higher sales volumes and a focus on increasing operational efficiencies diminished the growth of labor and overhead costs relative to sales, increasing gross profits.
  • Operating Expenses: Operating expenses were $27.6M in 2019, up from $7.6M in 2018. Operating expenses were $9.1M in Q4 2019, up from $3.3M in Q4 2018. In 2019, the Company invested in the nationwide launch of its hemp CBD line, entrance into the Nevada adult-use market, and launch of PLUS Mints, along with other investments in hiring talent, gaining market share, as well as building infrastructure and financial capacity to support its future growth.
  • Cash Balance: The Company reported $15.2M in cash and cash equivalents at December 31, 2019. PLUS is capitalized with enough cash on hand to continue executing through the entirety of 2020 without any additional fundraising. The Company made significant changes to its business in Q1 of this year to improve cash flow – detailed below – and expects the impacts of these adjustments to benefit PLUS especially well in light of the uncertainty presented by COVID-19.

2019 Business Updates

Product Launches

  • In April, the Company launched PLUS Mints as its first non-gummy product line. The low-dose products target consumers looking for a discrete, micro-dose experience with 2.5mg or less of THC per serving.
  • In October, the Company introduced a second line of its best-selling gummies including: BALANCE Cucumber Lime, UPLIFT Tangerine, and UNWIND Concord Grape.

Market Launches

  • In September, the Company entered the national CBD market with its line of 100% hemp CBD gummies. The products are currently available online at PlusProducts.com in 43 states and select health and wellness retailers throughout the country.
  • In October, PLUS gummies hit shelves in Nevada, marking the launch of the Company’s second adult-use market. According to Headset Insights, one quarter after market-entry, PLUS was already the second best-selling gummies brand in the state, a market that consists of over 40 gummy brands.¹

General Highlights

  • In July, the Company announced a rebrand of its core PLUS brand, introducing a new look for its line of low-dose, cannabis-infused edibles. The new packaging and product system were designed to go beyond the traditional use of Sativa, Hybrid, and Indica cannabis strains to focus on the science behind unique combinations of THC and CBD.
  • In December, PLUS announced the transition of its primary distributor from Calyx Brands to HERBL. After an extensive review, the Company determined that HERBL was best positioned to scale with PLUS and reliably deliver products to retailers at the lowest cost.
  • According to BDS Analytics, for the second straight year, PLUS had the two best-selling products in California across all categories. The Company’s signature Sour Watermelon UPLIFT gummies and Blackberry Lemon UNWIND gummies topped the list of over a thousand products sold throughout the state during 2019.²

Post-Period End Business Updates

  • In February 2020, the Company entered the wellness and relief segment of the California adult-use market with the introduction of its PLUS CBDRelief brand. The launch represents a significant extension beyond the core PLUS lineup. The new PLUS CBDRelief products were designed with low THC and high CBD ratios to serve the roughly one-third of consumers in the market that are looking to cannabis for relief.³
  • In March 2020, the Company announced a series of material changes to the business in an effort to prioritize an accelerated path towards becoming cash flow generative and continuing to establish itself as a leader in the California edibles market. These changes included:
    1. Reduction of the Company’s workforce by 13 full-time employees, accounting for 20% of its non-production workforce.
    2. Salary reduction for three executive officers ranging from 20% to 50% in exchange for options that will be issued following the current executive financial blackout period.
    3. Marc Seguin, the Company’s Chief Revenue Officer, left the organization.
    4. PLUS and John Legend concluded their engagement. The Company would like to thank Mr. Legend for the part he played in helping to bring the PLUS hemp CBD line to the country.
    5. The Company announced a plan to restructure its equity incentive program to ensure that it continues to be consistent with the mandate of the shareholder-approved Equity Incentive Plan to “promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees.”

Management Commentary

“PLUS emerged from a turbulent year in the cannabis industry well positioned to pursue its vision of building a global portfolio of edibles brands,” stated Jake Heimark, co-founder and CEO. “For the second straight year, we were the largest brand in the largest category of the California edibles market and had the two best-selling products across all categories.4 Now more than ever, we believe that the most successful brands will be those that build a reputation for high-quality products that do not damage your lungs.

“Our home market of California has not been without its complications. The legal cannabis market faces growing pains as it competes with a highly active illicit market, works to streamline a disordered regulatory environment, and supports undercapitalized operators across a nascent supply chain. Despite these factors, we believe that California unequivocally remains the most valuable market for building a branded products company in cannabis. In 2019, the state made up 38% of the global adult-use market and is expected to remain 24% of that market through 2024.5

“In 2020, our strategic initiatives are built around three critical objectives: 1) ensuring the safety and health of our employees, customers, and partners during this pandemic; 2) establishing ourselves as the clear, long-term leader in California edibles; and 3) becoming a cash-flow positive business.

Objectives two and three will be driven by the launch of new brands here in California and the continued growth of our core PLUS brand in the markets in which we are operational today. By relying on core capabilities and known distribution channels to drive capital-efficient growth, we are confident in our ability to achieve both our market and financial goals for 2020 and beyond.

Jake Heimark, co-founder and CEO

Covid-19 Update

In March 2020, there was a global outbreak of COVID-19, which continues to rapidly evolve. The extent to which the virus may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, social distancing, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

While cannabis remains an essential business throughout most of California, it is still too early to understand how COVID-19 will impact PLUS or the market as a whole. To date, the Company has not seen a sustained downside impact on consumer demand in its core California market and has been able to fulfill orders without interruption. The Company believes it is well prepared to respond to this crisis. Please visit plusproductsinc.com/coronavirus to see the actions PLUS is taking to respond to this unique challenge.

(1) According Headset Insights in January 2019
(2) According to BDS Analytics GreenEdge Platform in 2019
(3) According to proprietary research conducted through HJR Associates, a third-party firm contracted by the Company
(4) According to BDS Analytics GreenEdge Platform in 2019
(5) According to Arcview | BDS Analytics – State of the Legal Markets 7th Edition

Conference Call Details

At 5:00 pm Eastern Time / 2:00 pm Pacific Time on Thursday, May 7, 2020 the Company will host a conference call and webcast to discuss the financial results and its recent corporate highlights.

Participant Dial-In Numbers:

Toll-Free: (866) 220-4156

Toll / International: (864) 663-5231

*Participants should request the Plus Products Earnings Call or provide conference ID: 2867687

The call will also be webcast at https://edge.media-server.com/mmc/p/rwodgqqw. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. Following the conclusion of the call, there will be an archived audio webcast of the conference call available for replay on the Company’s website at PlusProductsInc.com.

Jake Heimark, Co-founder and Chief Executive Officer and Jon Paul, Chief Financial Officer, will be conducting a question and answer session following the prepared remarks.

About PLUS

PLUS is a cannabis and hemp food company focused on using nature to bring balance to consumers’ lives. PLUS’s mission is to make cannabis safe and approachable – that begins with high-quality products that deliver consistent consumer experiences. PLUS is headquartered in San Mateo, CA.

For further information contact:

Jake Heimark
CEO & Co-founder
ir@plusproducts.com

Investors:

Blake Brennan
Investor Relations
blake@plusproducts.com
Tel +1 213.282.6987

Media:

Megan Sekkas
Public Relations
megan@sekkas.com
Tel +310.279.6811

Non-GAAP Measures:

Adjusted uncompressed weighted average shares outstanding and loss per share.

The Company has additionally determined the adjusted uncompressed weighted average shares outstanding and loss per share, basic and diluted. The Company believes these measures to be representative of loss and comprehensive loss on a per share basis; however, these performance measures have no standardized meaning. As such, there are likely to be differences in the method of computation when compared to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with GAAP, some investors use this information to evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Original press release

Cannabis REIT Triples Revenue in Q1 to $21.1 Million – New Cannabis Ventures

May 06, 2020

Innovative Industrial Properties Reports First Quarter 2020 Results

Acquisitions Drive 210% Q1 Total Revenues, 249% Q1 Net Income and 236% Q1 AFFO Growth Year-over-Year

SAN DIEGO, May 06, 2020–(BUSINESS WIRE)–Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the medical-use U.S. cannabis industry, announced today results for the quarter ended March 31, 2020.

First Quarter 2020 and Year-to-Date Highlights

Financial Results and Financing Activity

  • IIP generated total revenues of approximately $21.1 million in the quarter, representing a 210% increase from the prior year’s first quarter.
  • IIP recorded net income available to common stockholders of approximately $11.5 million for the quarter, or $0.72 per diluted share, and adjusted funds from operations (AFFO) of approximately $17.8 million, or $1.12 per diluted share. Net income available to common stockholders and AFFO increased by 249% and 236% from the prior year’s first quarter, respectively.
  • IIP paid a quarterly dividend of $1.00 per share on April 15, 2020 to common stockholders of record as of March 31, 2020, representing an approximately 122% increase over the first quarter 2019’s dividend.
  • In January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $239.6 million.
  • In January, IIP issued shares of common stock for net proceeds of approximately $78.2 million under an “at-the-market” equity offering program.

Investment Activity

  • From January 1, 2020 through today, IIP acquired nine properties, totaling approximately 1.1 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Colorado, Florida, Illinois, Massachusetts, Michigan, Ohio and Virginia.
  • These nine properties represented an aggregate investment by IIP of approximately $202.1 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs).
  • In these transactions, IIP established a new tenant relationship with Parallel (the corporate parent company of Surterra Wellness), while expanding existing tenant relationships with Ascend Wellness Holdings, LLC, Cresco Labs Inc., Green Leaf Medical, LLC, Green Thumb Industries Inc. and LivWell Holdings, Inc.

Balance Sheet Highlights (at March 31, 2020)

  • Approximately $108.3 million in cash and cash equivalents and approximately $272.9 million in short-term investments, totaling approximately $381.2 million.
  • No debt, other than approximately $143.7 million of unsecured debt, consisting solely of 3.75% exchangeable senior notes maturing in 2024, representing a fixed cash interest obligation of approximately $5.4 million annually, or approximately $1.3 million quarterly.
  • 13% debt to total gross assets, with approximately $1.1 billion in total gross assets.

Rent Deferrals (as of May 6, 2020)

  • IIP has undertaken in-depth discussions with each of its tenants in March and April as they navigate this unprecedented pandemic.
  • In light of those discussions, IIP worked with three of its 21 tenants to provide temporary rent deferrals, structured to apply a portion of the security deposit IIP holds under each lease to pay April rent in full, defer rent for May and June in full, and provide for the pro rata repayment of the security deposit and deferred rent over an 18 month time period starting July 1.
  • Pursuant to these amendments, a total of $743,000 of security deposits that IIP holds in cash were applied to the payment of rent for April; and a total of approximately $1.5 million in rent was deferred for May and June. The total of this amount, $2.3 million, represents approximately 3% of IIP’s total revenues as reported for the three months ended March 31, 2020, annualized.

“One of the pillars of our business strategy has consistently been a conservative, flexible balance sheet, and we believe we are exceptionally well positioned to not only weather this unprecedented health crisis and economic disruption, but to continue to make real estate investments on a long-term basis with best-in-class tenant operators,” said Alan Gold, Executive Chairman of IIP.

We remain steadfast in our support of this industry and its bright long-term future, and are working every day through this crisis with our tenant partners toward continuing to build a tremendous future forward of growth and strength for many years to come.

Alan Gold, Executive Chairman of IIP

When we overcome this crisis through the collective ingenuity of our top medical professionals and researchers, the regulated cannabis industry will continue to thrive and be one of the top drivers of growth and good jobs across the country.

COVID-19 Regulatory Update

In the vast majority of states, state and local governmental authorities have recognized both medical-use and adult-use cannabis operations as “essential businesses” per state guidelines, allowing them to remain open and operational, extending as well to the supply chain of the regulated cannabis industry, including cultivation, processing, distribution and dispensary activities. State and local governmental authorities and regulated cannabis businesses have taken additional measures to ensure the safety and well-being of employees, patients and consumers, including but not limited to restrictions associated with social distancing requirements and additional levels of protection for medical cannabis patients with more vulnerability to health complications with COVID-19.

Portfolio Update and Acquisition Activity

Portfolio Update

IIP acquired the following properties and made the following additional funds available to tenants for improvements at IIP’s properties during the period from January 1, 2020 through May 6, 2020 (dollars in thousands):

 

As of May 6, 2020, IIP owned 55 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.1 million rentable square feet (including approximately 1.3 million rentable square feet under development/redevelopment), which were 99.1% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.9 years. As of May 6, 2020, IIP had invested approximately $719.7 million in the aggregate (excluding transaction costs) and had committed an additional approximately $143.2 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $10.7 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Illinois properties, or approximately $23.8 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.

Financing Activity

In January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $239.6 million.

In January, IIP issued shares of common stock for net proceeds of approximately $78.2 million under an “at-the-market” equity offering program.

IIP expects to use the net proceeds from these offerings to invest in specialized industrial real estate assets that support the regulated medical-use cannabis cultivation and processing industry and for general corporate purposes.

Financial Results

IIP generated total revenues of approximately $21.1 million for the three months ended March 31, 2020, compared to approximately $6.8 million for the same period in 2019, an increase of 210%. The increase was driven primarily by the acquisition and leasing of new properties, in addition to contractual rental escalations at certain properties. Total revenues for the three months ended March 31, 2020 also included approximately $422,000 of tenant reimbursements, rent collected and associated lease penalties through the drawdown of the security deposit at our Los Angeles, California property, as a result of the tenant’s ongoing lease default, and the drawdown of part of the security deposits totaling approximately $195,000 at certain properties in southern California leased to Vertical to pay part of the rent and associated lease penalties for March.

For the three months ended March 31, 2020, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of approximately $11.5 million and $0.72, respectively; funds from operations (“FFO”) and FFO per diluted share of approximately $16.4 million and $1.03, respectively; and AFFO and AFFO per diluted share of approximately $17.8 million and $1.12, respectively. First quarter 2020 AFFO and AFFO per diluted share for the quarter increased by 236% and 107% from the prior year period, respectively.

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, May 7, 2020 to discuss IIP’s financial results and operations for the first quarter ended March 31, 2020. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIP’s website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, May 7, 2020 until 12:00 p.m. Pacific Time on Thursday, May 14, 2020, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10143382.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.”

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be important supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of IIP’s properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. FFO and FFO per share are used by management to evaluate the REIT’s operating performance and these measures are the predominant measures used by the REIT industry and industry analysts to evaluate REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REIT’s operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIP’s computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for management’s discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIP’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIP’s liquidity, nor is it indicative of funds available to fund IIP’s cash needs, including IIP’s ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIP’s operations.

Original press release

Pandemic Pushes Cannabis Company Q4 Financial Reporting into Q1 Earnings Season – New Cannabis Ventures

May 03, 2020

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5 million per quarter (C$10.5 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR to be considered for inclusion. Please note that we raised the minimum quarterly revenue in May 2019 from US$2.5 million and from US$5.0 million in October 2019.

44 companies currently qualify for inclusion, with 27 filing in U.S dollars and 17 in the Canadian currency, which is the same as when we reported in mid-April. Several companies that had been expected to report by the end of April have taken advantage of an extended deadline to accommodate delays due to the COVID-19 crisis, including six that report in U.S. dollars and one that files in Canadian dollars. We expect some delays in Q1 reporting as well.

In May 2019, we added an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments.

One trend we have observed is that many of the companies are now providing pro forma revenue as well, which is an attempt to more accurately portray the operations by taking into account the results of closed and pending acquisitions as the multi-state operator (MSO) space rapidly consolidates. Our rankings include only actual reported revenue.

For companies that report in U.S. dollars, Cresco Labs (CSE: CL) (OTC: CRLBF) saw revenue increase 14% sequentially to $41.4 million. The company, which closed the acquisition of Origin House in January, also pre-announced Q1 revenue at $66.5 million.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

Several companies will be reporting results for the March quarter in the first half of May, including GW Pharma (NASDAQ: GWPH), Green Thumb Industries (CSE: GTII) (OTC: GTBIF), Tilray (NASDAQ: TLRY), GrowGeneration (NASDAQ: GRWG), Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), Innovative Industrial Properties (NYSE: IIPR), cbdMD (NYSE American: YCBD) and CV Sciences (OTC: CVSI), all of which report their Q1 results with the exception of cbdMD, which will be reporting its fiscal Q2 financials.

GW Pharma, according to Sentieo, is expected to have generated revenue of $108 million, down 1% from Q4 but up about 175% from a year ago. Analyst forecasts range from $95 million to $112 million. The company discussed seasonal factors that weigh upon Q1 on its conference call in February. The company reports on May 11th.

GTI, which reports on May 14th, is expected to increase revenue by 22% compared to Q4 to $92.1 million, which would be 230% above year-ago sales. Q1 includes the first sales of adult-use cannabis in Illinois. The company guided in late March for revenue to increase 20-25% sequentially.

Tilray and GrowGeneration haven’t yet scheduled earnings calls. Tilray is expected to see overall revenue increase 8% to $50.6 million. The company generates most of its revenue from its Canadian LP operations, but it also includes sales of hemp food products and a small amount of CBD sales in the U.S. GrowGeneration, which guided for full-year revenue of $130-135 million and Q1 at $$31.5-32.5 million when it reported Q4 on March 30th, is expected by analysts to have generated $31.6 million revenue in Q1, up 24% sequentially. Analysts also project EPS of $0.03.

Charlotte’s Web is expected to see a sequential decline in revenue to $20.8 million, which would represent -4% growth from a year ago. On March 24th, when it released Q4 financials, it guided to revenue of about $20 million. For the full year, the company projected revenue growth of 10-20% above 2019 revenue of $94.6 million.

Innovative Industrial Properties will report on May 6th after the close and host a call on the 7th. Analysts expect revenue to increase 21% from Q4 to $21.4 million. This would represent 214% growth from a year ago. The company has raised a substantial amount of capital over the past two quarters, which has increased the share count and will dampen EPS growth in the near-term. Analysts project Q1 EPS will decline by 4% from Q4 to $0.75, which represents 127% growth from a year ago.

CBD marketer cbdMD is expected to have generated $11.3 million revenue in its fiscal Q2, up 12% from Q1 and 100% from a year ago. Peer CV Sciences, which guided for Q1 revenue of $6-8 million, is projected to have generated $6.5 million a decline of 30% from Q4 and 56% from a year ago. The company has scheduled a call for May 8th.

Among the companies that haven’t yet filed Q4 financials, TILT Holdings (CSE: TILT) (OTC: TILTF), which hasn’t yet announced the date, is projected to have generated $47 million in revenue, up 2% from Q3 as the company was likely impacted during the quarter by the vaping crisis. Vireo Health (CSE: VREO) (OTC: VREOF), which will host a call on May 14th to discuss its Q4 results, is projected by analysts to have generated $8.9 million, up 11% from Q3.

For many of these companies, we publish comprehensive earnings previews for subscribers at 420 Investor.

Of the companies that report in Canadian dollars, TerrAscend (CSE: TER) (OTC: TRSSF) experienced strong growth in its U.S. operations, which represented 93% of revenue, but saw a decline in its Canadian operations due to a write-down of inventory, with overall revenue falling 3% from Q3 but increasing 414% from the prior year on the back of acquisitions in California and Pennsylvania. The company guided to Q1 revenue of C$35 million. Fire & Flower (TSX: FAF) (OTC: FFLWF) beat analyst expectations as it wrapped up its fiscal year, with revenue growing 23% sequentially to C$16.8 million.


Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

During the first half of May, we will receive updates from Aurora Cannabis (TSX: ACB) (NYSE: ACB), MediPharm Labs (TSX: LABS) (OTC: MEDIF). Sundial Growers (NASDAQ: SNDL), Alcanna (TSX: CLIQ) (OTC: LQSIF), Zenabis (TSX: ZENA) (OTC: ZBISF) and Delta 9 Cannabis (TSX: DN) (OTC: VRNDF), all of which are reporting their Q1 financials except for Aurora Cannabis, which will be detailing its fiscal Q3 results.

Aurora Cannabis is expected, according to Sentieo, to see revenue rise 18% from fiscal Q2 to C$66.2 million, which would be up just slightly from a year ago. The company, which has scheduled its call for May 14th, reaffirmed prior guidance on April 13th that its revenue will show “modest growth” relative to fiscal Q2, suggesting that the consensus may be too aggressive.

MediPharm Labs is expected to see its second consecutive sequential quarterly decline in revenue, with analysts projecting revenue of C$24.6 million, which would represent 12% growth from a year ago. Sundial, which has scheduled a call for May 14th, is expected to report overall revenue of $22.4 million, up modestly from Q4. The company generates substantial non-cannabis revenue. The vast majority of Alcanna’s revenue is from the sale of alcohol, and its Q1 revenue is expected to be $163 million, up 9% from a year ago.

Meta Growth is expected to have generated revenue of C$14.5 million for its fiscal Q2 ending in February, a decline sequentially from its fiscal Q1.

For many of these companies, we publish comprehensive earnings previews for subscribers at 420 Investor.

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update the Cannabis Investor Earnings Conference Call Calendar.

Canadian Cannabis Stocks Score First Monthly Gain in More Than a Year – New Cannabis Ventures

April 30, 2020

Canadian licensed producers finally broke a twelve-month streak of monthly declines during April, with the Canadian Cannabis LP Index rising 7.6% to 265.65, slightly lagging the S&P/TSX Composite, which rose 10.5%:

Over the past year, the index has declined 75.5%:

The index remains substantially below the all-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. In March, it posted a new 52-week closing low of 196.10, a level not seen since late 2016, and it closed 35.5% above that level. The index has declined 32.5% from its close of 393.78 at the end of 2019:

The index, which included 32 publicly-traded licensed producers that traded in Canada at the end of March, with equal weighting, is rebalanced monthly. Each of the members is also included in a sub-index, with 9 in the Canadian Cannabis LP Tier 1 Index, 9 in the Canadian Cannabis LP Tier 2 Index and 14 in the Canadian Cannabis LP Tier 3 Index during the month. Please note that at the end of 2019 we began excluding companies with a price below C$0.20 unless they generate quarterly industry revenue in excess of C$1 million. There are currently almost two dozen publicly traded LPs that fail to qualify.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$10 million per quarter (in 2018, we used C$4 million as the hurdle), declined during the month, falling 5.7% to 371.95, which followed a 2019 decline of 38.5%, when it ended the year at 642.23. Tier 1 has declined 42.1% so far this year. This group included Aphria (TSX: APHA) (NYSE: APHA), Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth (TSX: WEED) (NYSE: CGC), Cronos Group (TSX: CRON) (NASDAQ: CRON), HEXO Corp (TSX: HEXO) (NYSE American: HEXO), MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSXV: OGI) (NASDAQ: OGI), Radient Technologies (TSXV: RTI) (OTC: RDDTF)  and Valens Company (TSXV: VGW) (CSE: VGWCF). HEXO, Organigram and Aurora Cananbis all declined by more than 19%, while MediPharm Labs and Aphria were the only double-digit gainers.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$2.5 million and C$10 million, posted a positive return but lagged the overall market, rising 1.4% to 410.58. In 2019, it lost 44.3% in 2019 after closing at 569.54 and is down 27.9% in 2020. This group included Aleafia Health (TSX: ALEF) (OTC: ALEAF), Delta 9 (TSXV: DN) (OTC: VNRDF), Emerald Health (TSXV: EMH) (OTC: EMHTF), Heritage Cannabis (CSE: CANN) (OTC: HERTF), Supreme Cannabis (TSX: FIRE) (OTC: SPRWF), TerrAscend (CSE: TER) (OTC: TRSSF), VIVO Cannabis (TSX: VIVO) (OTC: VVCIF), WeedMD (TSXV: WMD) (OTC: WDDMF) and Zenabis Global (TSX: ZENA) (OTC: ZBISF). Aleafia and TerrAscend posted double-digit gains, while Zenabis, Emerald Health and WeedMD posted double-digit declines.

Tier 3

Tier 3, which included the 14 qualifying LPs that generate cannabis-related quarterly sales less than C$2.5 million, soared 20.1% as it closed at 70.06. It ended at 96.76 in 2019, declining 45.0%, and is down 27.6% in 2020. Indiva (TSXV: NDVA) (OTC: NDVAF), Neptune (TSX: NEPT) (NASDAQ: NEPT and GTEC Cannabis (TSXV: GTEC) (OTC: GGTTF) all rallied by more than 50%, while just one name fell by more than 20%.

The returns for the overall sector varied greatly, with 12 names posting double-digit gains, while 11 declined by more than 10%, with the entire group posting a median return of 2.5%, well below the 7.6% average return:

For May, the overall index will have 35 constituents, as we have added CannTab (CSE: PILL) (OTC:CTABF),  Rapid Dose Therapeutics (CSE: DOSE) (OTC) (RDTCF ) and RMMI (CSE: RMMI), all of which join Tier 3.  Additionally, Cronos Group has moved from Tier 1 to Tier 2 and TerrAscend from Tier 2 to Tier 3, while Zenabis has moved to Tier 2 from Tier 1.

In the next monthly review, we will summarize the performance for May and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

George Scorsis has been in the highly regulated sector for nearly two decades. He worked with companies that provide energy drink, medical cannabis, and alcoholic beverages. His over 15 years of work experience made him an asset to the company. He was the CEO and director of Liberty Health Sciences, a cannabis provider in the United States. He was the President of Red Bull Canada for over four years and generated total sales of $150 million. He was the President of Mettrum Health Corporation and the chairman of the board of directors of Scythian Biosciences Corporation.

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