Adam Jackson, Author at Green Market Report - Page 2 of 5

Adam JacksonAugust 10, 2022
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5min4140

Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF) second-quarter results missed expectations — showing how producers have been eating their own margins by lowering prices, as many have pivoted toward crisis mode amid a lack of regulatory action and a tightening economic landscape. The company released its financial results for the second quarter ending June 30, 2022.

The company missed total revenue expectations as it delivered approximately $13.2 million during the period — missing the Yahoo Finance Average analyst estimate for revenues of $19.98 million.

Lowell Farms reported revenues of $13.2 million for the second quarter of 2022, an increase of 6% sequentially and down 13% from the same quarter last year — reflecting a 51% reduction in bulk flower pricing year over year. Bulk flower revenue increased 94% sequentially while declining 37% from second-quarter levels last year due to lower pricing.

“California cannabis is in the middle of a fight for survival,” said board chairman George Allen. “There are fewer chairs at the table than there are attendees. We will prevail through innovation and branding, and not by lowering our prices.”

The company reported gross margin of 11.3% in the second quarter versus 12.7% sequentially and 37.9% year over year, reflecting strong bulk pricing in the prior year.

Operating expenses were $4.5 million or 34% of sales for the quarter, versus $4.0 million or 33% of sales in the previous quarter and $6.2 million or 41% of sales in the first quarter last year, reflecting cost reductions realized in the current year.

The company also reported a second-quarter 2022 GAAP net loss of $4.6 million versus a net loss of $4.1 million last quarter, and a net income of $700,000 in the same period last year. Diluted loss per share in the fourth quarter was $2.24 versus diluted earnings per share of $0.11 in the same period last year.

Non-GAAP income before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) was a loss of $1.1 million in the second quarter — down 22% from a loss of $900,000 in the previous quarter — versus earnings of $700,000 in the same period last year.

The company said it is focused on refining its cultivation processes, genetics, and facilities continue to improve the yield, potencies, and increase margins quarter over quarter.

“To compete with the illicit market, we have to do it with quality and value,” said CEO Mark Ainsworth. “Our whole plan is built on three pillars: exceptionally good cannabis, a brand that people trust, and automation. We are closer than ever to having all three.”

The legal industry will continue to languish behind an expansive illicit market that has always been able to offer more competitive pricing and bypass state taxes, rules and regulations that have burdened operators struggling make it in the world’s oldest legal marijuana market.

California’s Democratic Gov. Gavin Newsom signed into law last month solutions meant to remedy the tax burden for many businesses in the state – eliminating a weight-based tax for cannabis growers but leaving the 15% tax on retail sales. The bill also allows the state to eventually raise retail taxes to make up for the lost cultivation revenue.

Decelerating consumer growth in Western states such as California and Colorado “suggests that the most established markets are nearing saturation of consumer participation, which stands in sharp contrast to the rapid growth happening in new and emerging markets,” according to a report by Colorado-based cannabis data firm BDSA Analytics.


Adam JacksonAugust 9, 2022
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5min4510

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) slumped in trading on Tuesday as it posted second-quarter results that missed expectations — showing that consumer demand for hydroponics remained flat as a lack of regulatory guidance and recessionary pressures facing the sector persist. The company released its financial results for the second quarter ending June 30, 2022.

The company missed revenue expectations as it delivered approximately $97.5 million in revenue during the period — missing the Yahoo Finance average analyst estimate for revenues of $111.32 million.

Hydrofarm reported net sales of $97.5 million for the second quarter, versus $133.8 million for the same period last year, and is lowering its guidance for 2022 revenue. The company said that declining valuation trends within the industry and in the broader market “adversely impacted the company’s market valuation since its last quarterly report and triggered a full evaluation of the goodwill arising from prior acquisitions.”

The company’s new forecasted range for revenue is $330 million$347 million, far below a range of $480 and $520 in the previous quarter. Adjusted EBITDA guidance is estimated to be a loss of $16 million$25 million, down from previous quarter expectations of $46 to $54 million profit.

“Our second quarter results reflect the ongoing impact of the hydroponic industry recession in the U.S. and Canada,” CEO Bill Toler said. “Nonetheless, we took positive steps to lower our cost structure and maintain a solid liquidity position.”

The company also reported a second-quarter 2022 GAAP net loss of $203.3 million versus a net income of $2.3 million in the same period last year. Diluted loss per share in the fourth quarter was $4.53 versus diluted earnings per share of four cents in the same period last year.

Adjusted EBITDA saw a loss of $6.8 million in the second quarter of 2022, compared to earnings of $16.2 million in the same period last year. The company said that the decrease was primarily related to lower gross profit due to a decline in net sales and an additional inventory reserve of $10.2 million. It also attributes the losses to lower net sales and falling gross profit margins — as well as higher labor and freight costs.

The company said it had $27.4 million in cash, cash equivalents, and restricted cash, an aggregate principal amount of debt outstanding of $126.7 million — including $0 drawn on the company’s revolving credit facility, approximately $124.4 million in principal balance on its Term Loan and approximately $2.4 million in finance leases and other debt — $15.3 million in contingent payments and approximately $70 million of available borrowing capacity under its revolving credit agreement.

Hydrofarm decreased its net debt by approximately $14.1 million during the second quarter by improving its working capital position and controlling costs. The company said it was in compliance with all debt covenants as of June 30, 2022.

Lowered Outlook

With the new guidance, Hydrofarm expects approximately $330.0 million to $347.0 million in net sales “combined with some further reduction to account for the holiday-shortened months in the fourth quarter.”

In October 2021, Hydrofarm lowered its outlook from a range of $565 million to $590 million of net sales to approximately $470 million to $490 million – a sign of just how bad sales have plunged.

The company — whose president stepped down in June — also said that it incurred severance costs during the period as it cut part of its workforce “to optimize our cost structure.”


Adam JacksonAugust 9, 2022
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8min4850

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) missed expectations as the CBD company continues to struggle amid a patchwork regulatory landscape. The company reported its financial results for the second quarter ending June 30, 2022.

For the key metric of total revenue, Charlotte’s Web missed expectations as it delivered approximately $18.9 million during the period — missing the Yahoo Finance Average analyst estimate for revenues of $27.13 million. The revenue decreased 21.8% versus $24.2 million in the same period last year. The company said that the decrease was primarily due to lower comparable customer shipments, consumer shift to lower priced formats, a return reserve as well as lower comparable online traffic.

Charlotte’s Web also reported a second-quarter net loss of $7.9 million compared to a net loss of $5.9 million in the same period last year. The company said that the net result was primarily impacted by “lower net revenues, higher return reserves and increased inventory provisions, which were offset by significantly reduced operating expenses.” The earnings were for a loss of five cents per share, a cent below analysts’ loss estimates of four cents a share.

“While we are disappointed with the second quarter revenue, we achieved significant distribution and customer wins consistent with our growth priorities to expand our coverage in existing channels and enter new vertical,” CEO Jacques Tortoroli said. “We’re also focused on improving operating cash flow as we progress through the second half of the year. Operating expenses were down over 31.5% year-over-year in the second quarter. In July, we further lowered our staffing levels and administration expenses. In aggregate, our focus on right-sizing our business is bringing operating expenses below $70M on an annualized run rate.”

The company also saw a $2.4 million decline in the e-commerce platform versus $15.7 million at the same time last year. Charlotte’s Web maintains the largest e-commerce business in the CBD industry; and e-commerce represents the largest channel in the industry with an approximate 40% market share, according to the Brightfield Group.

Business-to-business net revenue was $5.6 million after a $0.9 million returns reserves — representing $2.9 million, or 33.9%, lower year-over-year “primarily due to lower comparable shipments to some of the company’s largest retail customers.”

“Charlotte’s Web holds the number one share position across major retail channels including food/drug/mass retail, natural grocery & vitamin retailers, and e-commerce, based on market share data from leading third-party analysts such as The Nielsen Company and Brightfield Group,” the release said.

Gross profit was $9.3M, or 49.4% of revenue versus $15.8 million and 65.5% of revenue respectively in same period last year. The company said the decrease was primarily related to lower net revenue “including a $0.9 million customer return reserve, and $1.9 million of inventory provisions.” Excluding the return reserve and inventory provisions, gross profit was 61.0% of revenue, it said.

Adjusted EBITDA fell to $5.4 million in the second quarter, versus a loss of $5.1 million in the same period last year.

Net cash used from operations during the first half of the current fiscal year was $4.3 million versus $16.2 million for the same period last year.  The company’s cash and working capital as of the second quarter were $14.8 million and $64.6 million, respectively, versus $19.5 million and $75.6 million in the latter half of the previous fiscal year.

Total selling, general and administrative expenses of $17.3 million improved 31.5% year-over-year due to a $7.9 million reduction versus the second quarter last year. The company said the improvement reflects lower staff levels and compensation as well as increased operating efficiencies “resulting from actions implemented year-to-date.”

New Pathways For CBD

As companies in the cannabis sector suffer from a lack of regulatory guidance from the federal government, new opportunities are opening up for CBD companies.

Overseas, the company’s original CBD oil formula has been placed on the Foods Standards Agency list of products allowed to be sold in the U.K — making Charlotte’s Web the only substantially vertically-integrated U.S. company with a full-spectrum hemp extract to have passed the validation phase and advance to the safety assessment phase in the United Kingdom, it said.

Also, the Scientific Advisory Committee for Health Canada unanimously agreed CBD is “safe and tolerable for short-term use” — recommended hemp CBD products should be considered for mainstream retail availability.

Cory Pala, Director of Investment Relations, told The Green Market Report at the time that the company is “particularly excited” about the recommendation.

The company cannot legally export its products to Canada under current law “which is sort of ironic” considering it is federally legal in both countries, he said, so it has partnered with cultivators in the country instead. The new recommendation presents a juncture for the company.

“In the US, we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

The health board will take consultation with stakeholders and advocates to hash out regulation guidelines and figure out whether it actually wants to move in that direction before seeking approval from the Canadian government.


Adam JacksonAugust 9, 2022
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5min4810

Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF) delivered positive results in the second quarter as the company moves away from established western markets in favor of emerging markets east of the Mississippi. The company reported its financial results for the first quarter ending June 30, 2022 after the market closed on Monday.

Acreage reported total revenue of $61.4 million, an increase of $17.1 million or 39% versus the second quarter of last year. The company posted a gross margin of 50% versus 52% in the previous quarter and 54% in last year’s second quarter. Acreage also posted a net loss of $9.9 million, versus $2.5 million in the same period last year.

New Jersey For the Win

Acreage said that growth over the past year was primarily driven by expansion into Ohio in addition to the green-lighting of adult-use sales in New Jersey, “which was somewhat offset by declines within the company’s operations that were held for sale.” The Botanist (Acreage’s dispensary name) is now available to adult-use consumers at the Egg Harbor Township and Williamstown dispensaries in southern New Jersey. Acreage also closed the sale of its four Oregon retail dispensaries branded as Cannabliss & Co.

“We were thrilled to execute on a significant milestone with the launch of adult-use sales in the state of New Jersey during the second quarter,” said CEO Peter Caldini. “The initial performance of our retail stores during the roll-out has been strong, and we believe there is an even bigger opportunity to further optimize our cultivation and wholesale capabilities to serve this growing market. We are working diligently to improve our New Jersey cultivation and processing operations to take advantage of the market opportunities that are available to us.”

Additionally, total revenue for the second quarter improved sequentially by $4.5 million or 8% versus the first quarter. The company said it was able to “overcome challenges associated with industry pricing pressures which negatively impacted revenues.”

Total operating expenses for the second quarter decreased by $3.3 million, or 11%, to $27.3 million, from the same quarter last year. Increases in compensation and general and administrative expenses were more than offset by reductions in equity-based compensation expenses, losses on notes receivable, and depreciation and amortization expenses, the company said.

Adjusted EBITDA was $10.4 million in the second quarter, versus $8.1 million in the same period last year and $8.6 million in the previous quarter this year. Adjusted EBITDA as a percentage of consolidated revenue was 16.9% for the quarter.

Looking Ahead

The company said it ended the quarter with $29.3 million in cash and cash equivalents. Additionally, $100.0 million was drawn under the credit facility entered in the fourth quarter last reporting year. A further $50 million is available in future periods under a committed accordion option once certain predetermined milestones are achieved, Acreage said, as it intends to use the money to “fund expansion initiatives, repay existing debt and provide additional working capital.”

“With the conclusion of our operations in Oregon following the end of the quarter, we are in a more favorable position to drive development in our core markets, where we see the best opportunity to foster long-term growth and enhance shareholder value,” Caldini added. “During the latter half of the year, we will continue our preparation for pending adult-use sales in these developing Northeastern markets, such as New York and Connecticut, in addition to strengthening our presence in New Jersey.”


Adam JacksonAugust 9, 2022
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8min5960

The word “inflation” has dominated headlines and earnings calls this year, and a survey from a leading national cannabis accounting and advisory firm solicited feedback to gauge how such rising costs are affecting the sector.

In a month-long survey this year asking operators a series of questions regarding the impacts of inflation on their cannabis operation, GreenGrowth CPAs found that one in four operators reported planning to raise prices in the near or immediate future to combat rising inflation costs.

Based on its findings, the firm believes customers could see as much as a 10% price increase on retail purchases.

Out of the respondents who participated in the inaugural Cannabis CFO Survey, more than 50% believe the cannabis business environment has declined in the last 12 months.

“The cannabis business landscape is ever-changing,” GreenGrowth Founder & CEO Derek Davis said. “And, in order to provide accurate financial data to our clients, we have to consider the economic impacts of rising inflation costs, as well as other factors that can impact the business performance of cannabis companies. Through surveying our customers and cannabis operators in general, we’re able to compile enough data to provide a detailed analysis of how cannabis operators are feeling the economic pressures of today.”

Last year, GreenGrowth CPAs’ findings showed a 76.6% positive or very positive assessment of the current cannabis business environment. This year, only 44% of cannabis leaders reported a positive or very positive assessment of the current business environment — a decrease of more than 30% in the past year.

GreenGrowth CPAs found last year that more than 70% of operators saw some or significant improvements in the cannabis business environment. According to this year’s data, 50% of operators reported some or significant decline in the cannabis business environment in the last 12 months.

In last year’s data set, the firm found that more than 70% of respondents who reported some or significant decline in the cannabis business environment were in western states. The firm’s updated survey showed a similar stance, with 66% of respondents claiming some or significant decline in the cannabis business environment across the west. Only 16% of operators east of the Mississippi rated the business environment in a decline.

Almost two-thirds — 70% — of operators intend to absorb the additional costs and “ride it out” before increasing costs to their customers, versus the other 30% of retailers who reported plans to increase prices to combat rising inflation costs.

The Blame Game

GreenGrowth CPAs allowed respondents to rattle off as many contributing factors they blame for the rising inflation issues currently impacting the economy, “since there are generally various reasons contributing to rising inflation and economic downturns.”

According to last year’s data set, the top two reported issues facing operators were supply chain snarls and difficulty hiring labor.

This year, the difficulties and shortcomings are being attributed to “the challenging political landscape” between “the impacts” of the Biden Administration and the “lingering effects” from the Trump Administration — in addition to supply chain challenges.

In the survey, over 40% blame the Biden Administration for the current inflation issues while more than 30% still blame the Trump Administration.

More than 20% blamed foreign influences such as Russia, China and the full-scale proxy war in Ukraine for rising inflation. Elevated energy prices continue to eat at company margins and consumers’ wallets, too, with nearly 20% of respondents blaming petroleum companies for costs associated with rising inflation — especially as oil giants continue to report raking in record profits this year.

However, supply chain issues take the cake — with more than 40% of respondents attributing rising costs to supply chain challenges.

How sticky?

While cannabis CFOs are indicating to the firm that they plan on raising prices by at least 10% this year, BDSA analyst Andy Seeger does not believe such a move necessarily reflects the limited pricing power operators currently wield.

While price compression “is happening almost everywhere,” the degree to which operators try to squeeze out margins through passing along costs differs among markets. In a saturated legacy market such as California, prices have dropped 25-30% in a year. Other legacy markets such as Colorado, Oregon, and Washington are seeing prices fall as well. Prices in Illinois are still elevated, though.

“I don’t really see cannabis rising as an economic good,” Seeger said in an interview. “The consumers are still price searching. Everything’s still coming down. Rising in price would kind of go against a lot of that movement.”

Consumers in the nascent industry are also still curious, he said, as falling prices have given those the chance to try a range of products rather than establish brand loyalty.

“Blue Dream is not always going to be on the shelf like a Bud Light,” he said. “It’s harder to maintain that consistent shelf set in cannabis, so there’s this constant churn. And because consumers are already highly promiscuous, there’s this idea that the stoners are just trying everything for the first time.”

This is the first time legalized cannabis has faced a recessionary downturn. If it can weather the storm has yet to be seen. Companies have been eating their own margins, and many have pivoted toward crisis mode as a lack of regulatory action and a tightening landscape threatens the sector.

“Is it a sticky good such as beer?” he added. “It’s one of the last ones you put down if you’ve been laid off and one of the first ones you pick up when times get better again. We’re not sure if cannabis is as sticky as alcohol.

People have ingrained alcohol into their daily and natural habitual uses. Cannabis is not as normative. It’s not as ingrained or integrated into consumers life choices yet, except for maybe some who are heavy stoners. So, it might be a little bit easier to put down for the average consumer.”


Adam JacksonAugust 8, 2022
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7min4890

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) posted positive results on Monday — driven by new retail store openings in key emerging states and the green light for adult use in New Jersey. The company reported its financial results for the second quarter ending June 30, 2022.

For the key metric of total revenue, Curaleaf beat expectations as it delivered approximately $338 million during the period — beating the Yahoo Finance Average analyst estimate for revenues of $334.15 million.

Revenue from retail sales rose 13% totaling $252 million — 75% of total revenue — an 8% uptick versus $312 million in the same quarter last year. The company said that growth in retail revenue was primarily due to the opening of 28 stores over the year — seven dispensaries since the last quarter alone — in emerging states such as Arizona (including the acquisition of Bloom Dispensaries), FloridaMaine, and Pennsylvania and the commencement of adult-use in New Jersey.

However, the company also saw wholesale revenue fall 6% to $84 million versus $89 million during the same time last year. The decline in wholesale revenue during the quarter was largely due to the company’s continued assessment of the wholesale marketplace in California and Colorado, it said.

Curaleaf also reported a second-quarter net loss of $28 million compared to a net loss of $5 million in the same period last year. The company said that the net result was primarily impacted by an “unfavorable net change in fair value of biological assets coupled with the increase in operating expenses, which were partially offset by higher revenues.”

Gross profit on cannabis sales was $175 million for the quarter, versus $155 million the year before. Gross profit margin reached 51.9%, versus 49.6% last year — largely resulting from the increase in vertically integrated products sold in its dispensaries and the mix of revenue from higher margin states, the company said.

The earnings were for a loss of four cents per share, which met analysts’ estimates.

Adjusted EBITDA rose to $86 million in the second quarter, versus earnings of $84 million in the same period last year. The year-over-year gain was “primarily driven by solid revenue growth combined with operating leverage,” the company said, adding that “The year-over-year decrease in Adjusted EBITDA margin reflects greater SG&A expenditures due to increased headcount in support of new store openings, higher levels of expenses related to research and development activities, as well as higher sales and marketing spend and an increase in professional fees.”

This quarter, Curaleaf had $187 million of cash and $587 million of outstanding debt net of unamortized debt discounts, which had a weighted average interest rate of 7.3% per annum.

During the first half of 2022, Curaleaf invested $60 million net in capital expenditures during the first half of the year — mostly for cultivation, processing, and retail site development activities. The company said it expects to invest approximately $125 million in capital expenditures in total this year.

“Our record-breaking second quarter got off to a great start with the launch of adult use in New Jersey and a historic 4/20,” said Boris Johnson, Curaleaf’s executive chairman. “We bounced back from earlier headwinds to grow revenue 8%, and AEBITDA 18% sequentially while continuing to execute on our growth strategy for Europe, a key differentiator for Curaleaf and a significant advantage over our competitors. I am also very pleased to report that thanks to our vertical penetration and operating efficiencies, Adjusted EBITDA margins expanded to 26%. The fundamentals of our business are strong, and our leadership team is moving with speed and discipline, continuing to set-up 2022 as another milestone year.”

New Faces

In newly-minted CEO Matt Darin’s bid to reorganize the company at the top, Curaleaf today said that it has tapped Ed Kremer and Camilo Lyon as new CFO and CIO, respectively. Mitch Hara was named new CSO and started last week.

Ed Kremer has served as a public CFO and held leadership positions at Oakley, Beats by Dre, and Oliver PeoplesNeil Davidson, Curaleaf’s Interim CFO, will work closely with Mr. Kremer during the transition period, the company said.

Lyon most worked as a managing director at BTIG covering the consumer and cannabis sectors.

“Ed, Camilo, and Mitch all bring robust industry experience; track records of business discipline, growth, and success; and smart strategic insights that will drive Curaleaf towards fulfilling our long-term goals,” Darin said at the time. “I’m thrilled to welcome them to the leadership team, and I’d like to thank Neil Davidson for his continued commitment and contributions to Curaleaf.”

Tyneeha Rivers — who joined as the company’s first Chief People Officer in June — has made an immediate impact on organizational dynamics and leadership culture, the release said.


Adam JacksonAugust 8, 2022
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3min5330

Agrify Corporation (Nasdaq: AGFY) will postpone its earnings call for an additional week as preliminary second-quarter results show that it missed expectations during a time when consumer demand for hydroponics is fading. The company announced the unaudited results for the second quarter ending June 30, 2022.

While revenue is expected rose 64% to $19.3 million versus $11.8 million in the second quarter of last year, it’s expected to fall sequentially. The company also reported a second-quarter net loss of $23.5 million, a 320% rise versus a loss of $5.6 million in the same period last year. Adjusted EBITDA (a non-GAAP financial measure) is expected to be a loss of $19.4 million, up 331% versus a $4.5 million loss in the second quarter last year.

Warnings

The company also gave the market a heads-up that it will be taking a big write-off in the quarter saying it is conducting an impairment analysis. That writeoff is expected to result in “significant non-cash impairment charges.” In addition to the write-downs, Agrify said it talked to its lenders to change some of the financial covenants regarding its debt.

Agrify withdrew its most recent guidance “Given the current difficult macro business environment, and specifically a drastic downturn in the cannabis industry.”

“Management will provide additional information regarding its revenue guidance for the Fiscal Year 2022 in conjunction with the upcoming release of its full second quarter 2022 financial results,” it said. In May, Agrify reported its first quarter revenue increased 271% to $26 million for the first quarter versus $7 million for the prior-year period. It also reiterated its previously provided revenue guidance for the Fiscal Year 2022 to be in the range of $140 million to $142 million.

Stifel analysts Andrew Carter and Christopher Growe recently published an earnings preview report, saying that the  “2021/2022 hydroponics recession has been deeper and longer than we originally anticipated with a significantly greater impact to our covered companies than we originally anticipated.”

“But, we contend the hydroponics category will at minimum regress to the underlying demand for cannabis (HSD) with an improvement in durables demand eventually taking hold,” Carter said, adding that he believes it will take time for enthusiasm to return to the sector of hydroponics.

 


Adam JacksonAugust 5, 2022
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5min8070

GRN Holdings Corporation, Inc. (OTC Pink: GRNF) will become known as Marijuana Inc. from now on, pending approval. The company also announced new changes in management and its business model as well as a corporate restructuring.

The company said it amended articles with the Secretary of State of Delaware and a related Financial Industry Regulatory Authority (FINRA) corporate action to change the company name to Marijuana Inc. The company announces the appointment of a new Chief Executive Officer, Donald Steinberg, who is focused on implementing a new business model based on retail and international distribution.

“We see now that countries worldwide are going through different stages of decriminalization including the beginnings of legal import and export,” the newly-minted CEO said. “The name change to Marijuana, Inc. is fundamental to the company’s shift from an acquisition company to a company focused on the legal global distribution of marijuana. I look forward to participating in the enormous change taking place on a global scale regarding marijuana.”

Marijuana Inc. said it will have two new divisions. The first is VivaBuds, which is established as a retail model starting in Los Angeles. The VivaBuds program uses a “Tell A Friend” marketing approach to break through established and traditional supply lines by going direct from farm to consumer.

The second, One World Legends, will focus on Colombia and the preparations for export from there.

“Global distribution of marijuana is in the early stages and we are structuring the company to meet the demand,” said Rocky Petrullo, President of One World Legends (OWL). “After completing several trips to Colombia which consisted of establishing partnerships with licensed farms and industry leaders, I affirmed that the cannabis industry in Colombia is ready to grow high quality, large volume, cannabis flower. I have also traveled to Spain and Amsterdam to get a healthy understanding of the European market where we are aiming for importation from Colombia.”

OWL said it will distribute the Colombian strains, as well as landrace strains such as Durban Poison, and Afghan Kush from Colombia to legal customers. The term “landrace” is used in reference to the limited number of surviving cannabis strains which evolved naturally in the geographic region in which they were discovered by human beings in the 20th century. Landrace strains represent the original cannabis strains and are therefore the origins of all modern cannabis strains across the world, the release said.

“I have worked hard to find the landrace strains from different parts of the world and have secured seeds for grows in Colombia,” Petrullo said. “I am passionate about the quality of Colombian grow coupled with the seeds of old. This is our niche and I believe it will be invaluable to the preservation of cannabis history and enjoyment of the plant.”

The company launched a new website www.marijuanainc.com “as part of the overall refocus of the company,” it said. It also said it will change the name and symbol to help to better align the company with its new business model.

The company has recently filed a 20:1 reverse split with the FINRA. The split has not yet been approved but the company expects it to be effective soon.

“The reserve split may help make our company more attractive to institutional investors, ensure the company maintains the criteria for an up-listing to OTCQB, as well as make the stock more attractive for mergers and acquisitions,” it said in the release.

Former CEO Justin Costello resigned with the appointment of Donald Steinberg as CEO and Director, Steinberg as the company’s sole director.


Adam JacksonAugust 5, 2022
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5min6281

Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) slid in early trading on Friday after the company said it lost over C$2 billion in the second quarter– as falling margins and weak sales continue to plague the industry. The company announced its financial results for the first quarter ending June 30, 2022

The Smiths Falls, Ontario-based cannabis company delivered total revenue expectations of approximately C$122.9 million during the period — eking out over the Stifel analyst estimate for revenues of C$112 million — yet, the company also said it lost C$2.08 billion, or $5.23 a share, versus a profit of C$392.42 million, or C$1.02 a share, in the same time the previous year. The loss was driven by a non-cash, C$1.73 billion goodwill impairment.

Cash Burn

Net revenue dropped 19% to C$110.12 million from C$136.21 million, the company reported. Analysts expected Canopy Growth to lose C$0.29 a share on revenue of C$112.7 million. The company said it held C$1.2 billion in cash and short-term investments at the end of the quarter. The company burned through C$200 million in one quarter as it ended March with $1.4 billion. The company attributed the spending to primarily EBITDA losses, and the upfront payment made as consideration for the options to acquire Jetty Extracts upon federal permissibility of THC in the U.S.

Diluted loss per share in the fourth quarter was C$5.23 versus diluted earnings per share of C$0.84 in the same period last year. Non-GAAP income before interest, taxes, depreciation, amortization, and share-based compensation (Adjusted EBITDA) was a loss of C$75 million in the second quarter of 2022, compared to losses of C$64 million in the same period last year.

“The cost-saving program announced earlier in the quarter combined with sound expense discipline contributed to a meaningful decline in operating expenses during the quarter,” said CEO David Klein. “We expect cost savings to ramp in the second half of the year, enabling us to execute on our path to profitability even as we continue to invest in strategic growth initiatives including in BioSteel and our U.S. THC ecosystem.”

What Went Wrong

The company blamed its poor showing on its decision to focus on higher margin, premium and mainstream products in the adult-use market. Canopy also noted that it was dealing with the continuing impacts of price compression resulting from increased competition and lower sales in the value-priced dried flower category.  Several regions in Canada were affected by a rapid increase in licenses resulting in a boom of dispensaries. Having said that, the company acknowledged the decrease in the volume of value-priced dried product sold while also enjoying a full quarter of net revenue contribution from Supreme Cannabis. On the medical side, Canopy said that while it did have higher average orders, it was offset by a fewer number of orders.

In the adult-use market, sales fell for all form factors including flower, concentrates and edibles. On the medical side, sales fell for oils and soft gels, but did grow for flower and edibles. In the company’s other consumable products, Bio Steel was the only category that did well and increased 169%. This Works and Storz & Bickel both fell.


Adam JacksonAugust 5, 2022
CBDoil.jpg?fit=960%2C640&ssl=1

7min13820

Health Canada recently published a long-awaited report that experts say provides a regulatory pathway to expand the country’s cannabidiol (CBD) market.

CBD — Delta-9 THC’s chemical cousin — is a hemp-derived ingredient that can be converted into products with a variety of types and formats such as oils, gummies, capsules or topicals. It cannot produce a THC high and is typically marketed to relieve pain and anxiety, as well as insomnia.

The recommendation stems from a 2019 request by Health Canada to solicit feedback about the potential market for non-prescription health products containing cannabis.

Canadians can currently purchase CBD products through a licensed cannabis retailer or through prescription by a doctor, though the report written by the Science Advisory Committee on Health Products Containing Cannabis, an independent body, lays the foundation for purchasing them over the counter at common local retailers.

The absence of a regulated CBD regime in Canada has created confusion for consumers — fueling an illicit market that supplies unauthorized CBD products Canadians have difficulty finding at licensed dispensaries due to regulatory restrictions hemp faces under the Cannabis Act.

Retailers also have strict limits as to how they can market these products. CBD and other hemp derivatives are subject to the same restrictions as THC-oriented products, “which makes it almost impossible to build brand identity,” said Omar Khan, Senior VP of Corporate & Public Affairs at High Tide Inc.

“It is a bit of an onerous process for somebody who is not a frequent cannabis consumer,” he said. “Opening it up and allowing these products to be sold in broader retail settings I think — and we think — will help translate what is an existing demand.”

A lack of research has stifled the committee’s ability to draw conclusions on guidelines. The report said committee members agreed that “implementing a less complex regulatory framework and providing easier access to quality products to conduct studies would support the research community.”

Studying CBD in Canada currently has strict clinical trial standards and requires research and development licenses under the country’s Cannabis Act.

Sean Karl, a Vancouver-based supply-chain consultant who specializes in cannabis logistics, said that recognition for better ways to study CBD is “really encouraging.”

“We’re excited about potentially kickstarting a significant clinical trial that we had to put on ice because the sponsoring institution’s legal department won’t touch it,” he said.

CBD Is Safe

While the advisory panel concluded that CBD is “safe and tolerable for short-term use (a maximum of 30 days) at doses from 20 milligrams per day to a maximum dose of 200 mg/day,” the report recommended that separate avenues be taken to measure CBD products depending on their form and application.

“I think that the dosing guidelines reflect a fairly cautious deployment of the precautionary principle,” said George Smitherman, president of the Cannabis Council of Canada.

As stakeholders and advocates begin to provide input on the path moving forward, industry interests reflect a range of national and regional groups with varied priorities often based on the products they produce and their positions in the supply chain.

Cory Pala, Director of Investment Relations at CBD-maker Charlotte’s Web (OTC: CWBHF) said that the company — which is based in the U.S. — is “particularly excited” about the recommendation.

Charlotte’s Web cannot export its products to Canada under current law “which is sort of ironic” considering it is federally legal in both countries, he said, so it has partnered with cultivators in the country instead. The new recommendation presents a juncture for the company.

“In the US, we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

Smitherman wonders how local dispensaries in Canada will feel about competing with general retailers.

“I think that there is going to be an articulation of a voice from within the currently regulated landscape that says, hey, this was an important part of my business,” he said. “Maybe it’s not the biggest part of my business, but my business is tough, so what are you going to do to actually make sure that — as this regulatory model evolves — the Canadian dispensary experience can evolve alongside it so that dispensary owners aren’t faced with loss of business in the CBD vertical.”

Such discussions will take place during stakeholder sessions in the coming months.

Despite the hefty task ahead, those with a stake in the process are excited — even if cautiously optimistic — about the future. Health Canada still has to decide on the regulations and figure out whether or not it actually wants to move in that direction before seeking approval from the Canadian government.

“Patience is the call of the day on this one,” Khan said.


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