Adam Jackson, Author at Green Market Report - Page 2 of 20

Adam JacksonNovember 30, 2022
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Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) stock rose more than 8% in trading early Wednesday after the company posted a much-improved balance sheet despite Hurricane Ian affecting sales in Florida toward the end of the period.

The U.S.-based cannabis company, which operates under the Fluent brand with locations in Florida, Pennsylvania, and Texas, released its financial and operating results for the third quarter ending Sept. 30.

Revenue rose 42% to $22.1 million versus $15.6 million in the same time period last year. Net loss was $5.5 million versus a net income of $7.3 million last year’s third quarter.

“We continued to execute on our profitability objectives during the third quarter, leading to another period of gross margin expansion and a record bottom line with strong cash flow generation,” said CEO Robert Beasley.

The CEO added that the company would have generated its eleventh consecutive quarter of revenue growth, “had it not been for Hurricane Ian driving store closures in late September.”

“As we exit the year and look to 2023, we expect to continue opening new stores in Florida while driving organic growth in our three Pennsylvania dispensaries,” he said. “We also have plans to begin building out our footprint in Texas and look forward to growing our presence in the state in 2023.”

In a statement, the company said that its newest dispensary in Annville, Pennsylvania, is “ramping and achieved a record month of sales in October 2022.”

Adjusted gross profit rose 71% to $16.7 million, or 75.5% of revenue, versus $9.8 million or 62.7% of revenue last year.

Adjusted EBITDA shot up 140% to a record $11.7 million or 53.1% of revenue, versus $4.9 million or 31.3% of revenue in 2021’s third quarter.

The company has also been maintaining its sheet, with cash from operations rising to $5.4 million versus a negative cash burn of $4.2 million during the same time last year.

Cansortium had around $9.1 million of cash and cash equivalents and $69.4 million of total debt by the end of the third quarter, with around 252.3 million fully diluted shares outstanding.

Being cash flow positive “helps us now build our stores without the need for any type of capital raise or any kind of loan funds,” the CEO told investors on a call to discuss the latest earnings.

“Start low and go slow is kind of the industry model and I believe that’s the right answer for us as well. We already did the over-expansion in the over-horizontal-expansion game, and that was no fun,” he said. “Pulling back from that was a tremendous effort. So, let’s just grow in sequence and grow in balance. To grow in balance at that point (you don’t need more stores. You’ve got to feed more stores. So, you’ve got to go back to the other end of the stream.”

Florida

Cansortium plans on opening one new store in the Sunshine State by the end of 2022, in addition to three stores in the first half of 2023. All of these locations are currently under contract and going through construction, the company said.

Beasley noted that Hurricane Ian gave the chain some trouble during the quarter, too, as twelve of its dispensaries having to temporarily closed. While stores saw spiked sales ahead of closings and right after reopenings, the company said that all of the stores eventually reopened by the following month.

“It just goes to prove that clean water or drinking water, toilet paper, and cannabis are the three things that you need in front of a storm,” he said, “because the sales were tremendous.”

Florida also allows a crop loss purchase, which means if you have an approved loss of crop by the Department of Health, an operator can replace that crop through wholesale purchase.

“We expected it be completely flattened and it wasn’t,” Beasley said on Tuesday’s earnings call. “And so the DOH said to us, do a rough calculation of what your losses could be and you can go ahead and buy” wholesale from other operators in Florida.

“We had this extraordinary scenario where we had multiple competitors reach out and say, ‘Hey, if you need to buy from us, we will sell to you.’ And that’s unusual in Florida. We’re not wholesale oriented. And so the idea of selling to your competitors is just not something that is available here. For them to reach out, it was just a tremendous, generous move on their part.”

Florida revenue increased 39% to $18.2 million versus $13.1 million by the end of the same quarter last year.

Outlook

While Cansortium said it continued to make progress on its strategy for shareholders, the company lowered its previously issued revenue projection for 2022. The company now expects revenue for 2022 to run between $85 million-$90 million, down from last quarter’s expectations of $90 million-$95 million. The company also expects to close the fiscal year with adjusted EBITDA surpassing its previously issued guidance of $25 million-$28 million.

“So and again, go back to our Q3 expectations. I was asked this at the end of Q2, which is — our Q2 was so great, why am I not adjusting guidance? It’s because we anticipated Q3 to be flat. We were hoping for it to be flat or slightly up. I think we would have been slightly up, but for a Hurricane no one could predict that,” Beasley told investors.

“But you got to remember, we’re in Florida and our patients all leave town in the summer because it’s hot, so we traditionally see decreased sales in August in July. So, we knew that was coming and we were hoping to hold on to flat. We would have, but for the Hurricane.”


Adam JacksonNovember 28, 2022
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Canadian mega-producer Cannara Biotech Inc. (TSXV: LOVE) (OTCQB: LOVFF) posted positive results that illustrate the company’s efficiency amid a crowded supply side market and pinching margins. The Québec-based operator released its fourth quarter and fiscal year 2022 financial results for the three-month and full year periods ending August 31.

Cannara reported C$12 million in revenue, an 84% increase versus the fourth quarter last year and a 19% rise from the previous quarter. The company brought in C$36 million worth of revenue for the 2022 fiscal year, a 108% increase rise versus 2021’s annual financials.

Cannara saw a net income of C$2.6 million for the fourth quarter and C$2.3 million for the 2022 fiscal year.

“This past year was a tremendous success, and I am very proud of the team at Cannara for their dedication, hard work and support as we continue to strive towards being one of the premier cannabis cultivators in the country,” said CEO and president Zohar Krivorot.

Cannara posted a gross profit before fair value adjustments of C$4.8 million, an increase of 38% versus the same time last year and a 27% increase from the previous quarter.

CFO Nicholas Sosiak touted the company’s sixth straight quarter of positive adjusted EBITDA, which came out to C$2.5 million, an 83% increase versus the fourth quarter last year. Adjusted EBITDA was C$5.3 million for the fiscal year 2022, a 254% rise vs fiscal year 2021.

“Revenues, profits, and net income have all increased over the past 12 months while simultaneously adding new products for our customer base and none of this would be possible without the hard work of the entire Cannara family,” said Sosiak. “Over the last twelve months, we have achieved a ramp-up in production which was necessary to support the recent expansion plans to the other provinces.”

The company said it moved around 26% more kilograms of cannabis since the previous period, with 2,570 kg or 730,000 units sold across 3 flagship brands during the fourth quarter.

The increase in production coming from the company’s new Valleyfield Facility, which came online by the second half of the year, provided a boon for the company, with the number of kgs sold rising by 69% versus the first half of the year.

Around 7,300 kg of cannabis or 2 million units sold during the fiscal year, an increase of approximately 1.5 million of units sold or 286% versus the fiscal year in 2021.

“Our state-of-the-art Valleyfield Facility is producing, as of today, seven of its twenty-four growing zones, each containing 9,600 plants each,” said Krivorot. We remain confident in fulfilling the remaining grow zones over the coming quarters, and our successful harvests should shed any doubt regarding our ability to achieve all of our expansion milestones and bring more premium-grade cannabis to market.”

Cannara said it has C$29 million in working capital as of August 31.

Taking it to the bank

The company said in December that it planned to optimize additional debt financing from CIBC to finalize the redesign of several zones at the Valleyfield Facility as a way to replicate the indoor cultivation environment, including growing without utilizing the sun and launching the operations at the site – all while leveraging Québec’s low electricity costs.

Following the report, the company intends to fashion its long-term goals with the help of a C$50 million credit facility secured by BMO Commercial Banking. The credit facility includes a three-year term loan for C$39.3 million with an accordion for up to an additional C$10 million, a C$5 million line of credit, and C$5.7 million for the issuance of a letter of credit. Funding was received after the quarter-end in May.

In June, Cannara used part of the C$39.3 million from that term loan to repay the existing C$21.8 million loan with CIBC and $5.7 million for the issuance of a letter of credit to cover certain deposit requirements. The company also granted a total of 600,000 stock options to employees and 613,333 stock options to consultants at an exercise price of C$0.18.

Sosiak said last quarter that the credit facility gives the company the “necessary liquidity” to continue its expansion, adding that the financial resources would help drive capital investment at the Valleyfield Facility and its cannabis supply in a way that allows the company to offer premium products “market-disrupting” price points.


Adam JacksonNovember 23, 2022
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New York’s Office of Cannabis Management on Tuesday asked a federal judge to narrow the scope of a Nov. 10 order limiting the issuance of marijuana retail licenses to just Finger Lakes region rather than several localities, Law360 first reported.

The news comes as the OCM had been gearing up to award its first cannabis licenses to New Yorkers who have been incarcerated or arrested for the plant. The injunction prevents the OCM from issuing licenses under the conditional adult-use retail dispensary (CAURD) program.

In a motion filed by the state, regulators are have asked the court to lift the temporary block to prevent “manifest injustice”, adding that by “unnecessarily” grouping the four other regions in the injunction (Central New York, Western New York, Mid-Hudson and Brooklyn), an additional 54 dispensaries will not be able to open.

“This will cause hardship to multiple stakeholders who have taken actions in reliance on the CAURD Program, most prominently licensed cultivators—mostly small family farms—who will have great difficulty selling their recently harvested product,” the state wrote. “The resulting retail bottleneck can be significantly alleviated by narrowing the geographic scope of the injunction as requested.”

The state argued that since CAURD applicants are only considered for their first preferred geographical location, the court should modify the injunction to be limited to only Finger Lakes, the first choice of plaintiff Variscite NY One, an LLC majority-owned by Michigan resident Kenneth Gay.

The company argued at the time that New York’s social equity program runs afoul of the dormant commerce clause, in part because it is not narrowly tailored enough to serve a “legitimate local purpose.”

In the Wednesday motion, the state added that because Finger Lakes was the plaintiff’s top choice, his initial application would not have even be considered in the other regions.

If the court were to deny the request to limit the scope, the state would request a stay of the order while it pursued an appeal.

According to OCM’s twitter, the state had been “blocked” from awarding 18 CAURD licenses due to “active litigation,” which included four licenses in Brooklyn, one in the Central New York region, four in the Western New York region, six in the mid-Hudson region, and three in the Finger Lakes region.

The development illustrates the challenges the state has faced as it hurries to dole out permits and open its first legal adult-use shops by the end of the year. The underground market continues to thrive as legal operators wonder whether they will be able to sell $740 million worth of crop yield.


Adam JacksonNovember 23, 2022
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Cannabis investment veteran Emily Paxhia has resigned from her post as board member of Ascend Wellness Holdings (CSE: AAWH.U) (OTCQX: AAWH).

The company on Wednesday said that Dan Neville, AWH’s interim co-CEO and CFO, as well as longtime investment strategist Joshua Gold, has been tapped to rotate into the board roster. Gold is a general partner of Boston firms Inverness LLC and Blue Flag Partners LLC. He served as a managing director at Jefferies & Co, as well as in various roles at Goldman Sachs and Bear Stearns. Gold was also on the board of the San Diego cannabis boutique chain Urbn Leaf.

In a statement, AWH said that it would be reshuffling its board, “in connection with the company’s ongoing leadership transition.”

“On behalf of the Board and everyone at AWH, we would like to thank Emily for her contributions and dedication during her tenure here,” said former CEO and now executive chairman Abner Kurtin. “Emily was one of our earlier investors and has supported Ascend from the beginning. We wish her the very best in her continued leadership in the industry.” The company went on to say that Paxhia’s resignation letter indicated that her decision to resign from the Board was not the result of any disagreement with the corporation’s operations, policies, or practices.

The news comes weeks since the ex-chief was charged with battery after a witness told authorities that they saw him “striking” his girlfriend while they were parked in a car. Police arrested him later that day based on the witness statement and the marks officers observed on his partner’s head. State prosecutors decided to forgo pursuing criminal charges while Kurtin transitioned to a post as executive chairman of the board.

In a statement after the case dismissal, Kurtin thanked Miami Beach police and the “due process of law,” adding that the two “were involved in a verbal argument that was never physical at any point.”

Domestic violence charges can be dropped if there are questionable facts or if the victim decides not to pursue charges.

“I have apologized to her privately for my verbal actions, and we both moved on with our relationship in a positive manner,” Kurtin said at the time.

Mum was the word from the board of directors as the company launched an internal investigation into the circumstances around his arrest.

“As the company prepares to enter the next phase of its growth story, the board determined that now was the right time to initiate this transition,” the Sept. 6 statement read.

Offering

After the market closed on Tuesday, Ascend filed for an offering to issue  $100 million of shares. The use of proceeds is stated for general corporate purposes, but the company could use the money to make acquisitions. Currently, 36% of the common stock voting power is held by former CEO and Co-Founder Kurtin and the current interim Co-CEO Francis Perullo.

“While we do not have immediate plans to issue Securities under the Registration Statement or the Canadian Prospectus, we deemed it prudent to prepare ourselves to take advantage of markets should they evolve into a more accretive financing alternative,” said Dan Neville, Interim Co-CEO and CFO. “This filing allows us the flexibility to pursue additional financing opportunities should they become in the best interest of our shareholders.”


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