Editor-in-Chief

Debra BorchardtDebra BorchardtAugust 22, 2019
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4min400

Toronto-based TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF)  reported that its second-quarter revenue rose 21% sequentially to $17.6 million from $14.6 million for the first quarter. A huge jump for the quarter ending June 30, 2019 over last year’s $0.01 million in 2018.

The company raised its revenue guidance from $135 million which was projected in April to $141 million for 2019. On a pro forma basis, TerrAscend said it generated $42 million of revenue in the second quarter or over $168 million on an annualized basis.

The company still delivered a net loss of $21.5 million, which was much higher than last year’s net loss of $5 million. It is almost double the loss in the first quarter of $11 million.

“The company continues to experience strong growth in demand.  We are pleased to be in the position to raise our revenue guidance only four months after initially providing it.  We are seeing a substantial acceleration in sales growth in the third quarter and expect this to continue through the fourth quarter.  In Canada, our Haven Street Premium Cannabis brand is resonating with consumers. This sales growth will be driven by licensing of expanded space, scaled-up production, increased automation, improvements in operational efficiencies and continued growth in the adult-use, medical and international markets,” said Michael Nashat, TerrAscend’s CEO. “We continue to focus on improving margins, which will be fueled by cost effective strategic supply agreements that provide access to bulk dry flower and extract-based cannabinoids while maintaining TerrAscend’s standards for quality and consistency. We currently have nine existing bulk supply partners and several additional new partners coming online in the near term.”

Since The Quarter Closed

TerrAscend said that since the quarter closed it received its oil sales license and has begun sales in Canada. The company signed an agreement to purchase Ilera Healthcare, one of five vertically-integrated cannabis cultivator, processor, and dispensary operators in Pennsylvania. Ilera plans to open two additional dispensary sites in Pennsylvania within the year. TerrAscend made its first shipment to Germany through its sales and distribution agreement with iuvo Therapeutics GmbH, making it the first and only global cannabis operator with sales in the US, Canada, and the EU.

“TerrAscend continues to increase its global footprint with the build-out of our New Jersey operations, construction of multiple dispensaries in California, and the upcoming acquisition of Ilera Healthcare,” said Matthew Johnson, President TerrAscend Corp. & TerrAscend USA. “We are looking forward to opening new dispensaries in California, Pennsylvania and New Jersey in the coming months.  We are proud to have brought Valhalla Confections and The Apothecarium California into our family of companies this quarter with the closing of those transactions. Additionally, we are excited for the upcoming close of The Apothecarium Nevada.  Importantly, our recent and pending acquisitions are all margin accretive and generate strong cash flow.”


Debra BorchardtDebra BorchardtAugust 21, 2019
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4min1280

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) reported that its second-quarter revenue rose 253% to $29.9 million over last year in its unaudited financial results for the second quarter ending June 30, 2019. The revenue rose 42% sequentially. The company attributed the increase in revenue to new market expansion and continued growth in existing markets with a higher revenue generated in Pennsylvania, Illinois, and California.

Cresco Labs also delivered a net loss of $3.9 million versus last year’s net income of $1.6 million for the same period. The net loss was blamed on an income tax expense of $5.6 million, primarily driven by discrete tax items related to the legal close of the acquisitions of MedMar Inc. and PDI Medical.

“We delivered an outstanding quarter that reflects the leading positions we have established in some of the most attractive markets in the cannabis industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “We are seeing accelerating revenue growth driven primarily by market share gains and strong trends in registered patients in our established markets of Illinois and Pennsylvania, as well as our expanded presence and distribution in California. As we scale our operations in our established markets, we are seeing the positive impact on gross profit margin that we projected. The higher revenue and margins helped to drive a substantial increase in Adjusted EBITDA compared to the prior quarter.

The second quarter Adjusted EBITDA was $14.5 million versus $4.8 million in the prior-year period. Excluding the impact of biological assets, adjusted EBITDA for the second quarter was $2.3 million.

It was a very expensive quarter as total expenses came to $20.6 million versus $3.2 million last year for the same quarter. The company said total expenses included $3.0 million in expenses related to share-based incentive compensation, $3.2 million in acquisition and other non-recurring costs and $0.9 million of depreciation and amortization. The balance of the increase represented investments made in talent and operational infrastructure to support the Company’s continued revenue growth

“While our increasing profitability demonstrates our ability to effectively execute and leverage the attractive model we have developed, we continue to operate with a long-term perspective and make investments to position Cresco Labs to lead the cannabis industry in the years to come. We are transforming the retail cannabis experience with the national rollout of our Sunnyside* dispensaries, expanding into the CBD market with the launch of our WellBeings product line, and expanding our cultivation and retail operations in Illinois to capitalize on adult-use legalization beginning in 2020. As we continue to capitalize on the strong organic growth trends in our current markets and complete our pending acquisitions of Origin House and VidaCann, we expect to deliver continued improvement in revenue and profitability, resulting in further value being created for our shareholders,” said Mr. Bachtell.

Balance Sheet

As of June 30, 2019, Cresco Labs had total assets of $355.0 million, including cash and cash equivalents of $61.1 million and a working capital position of $128.7 million with zero debt on the balance sheet.


Debra BorchardtDebra BorchardtAugust 21, 2019
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3min730

Tilray, Inc. (NASDAQ: TLRY) said that it has entered into an agreement with Cannamedical Pharma GmbH through its wholly-owned subsidiary Tilray Portugal Unipessoal Lda. to export a wholesale shipment of $3.3 (€3) million worth of medical cannabis from Portugal to Germany. The shipment, which is expected to be completed in fall 2019, will be Tilray’s first from its state-of-the-art EU campus in Portugal to supply patients in Germany.

“This is a significant milestone for Tilray as we ramp up our capacity to serve international markets and generate revenue from our EU campus through the end of 2019,” says Tilray CEO Brendan Kennedy. “We believe our 2.5 million square feet of cultivation and state-of-the-art processing space in Europe is an important differentiator, which will enable us to reduce costs and improve margins while hedging against regulatory risk.”

Roughly 5.5 % of Tilray’s revenues are generated in Germany, but Cowen & Co. analyst Vivien Azer believes international markets could represent approximately $2.8 billion in business as the company expands into other countries. She has forecast that by 2021, the international business could contribute 30% of the company’s total sales.

Germany based Cannamedical is fully licensed and GDP-certified to import and distribute high-quality medical cannabis products. The privately-owned company is a leading independent supplier of medical cannabis products to 2,500 pharmacies and clinical facilities across Germany.

“We at Cannamedical Pharma are committed to helping doctors, medical specialists and pharmacists improve their patients’ quality of life,” says Cannamedical CEO David Henn. “Tilray’s product has passed our strict quality control standards, and we’re excited to have found a partner able to deliver medical cannabis products for use in Cannamedical’s own brands. We look forward to increasing access for patients in need across the country.”

According to Azer, the international growth for Tilray is expected to be driven by Germany, then followed by Australia, New Zealand, and other countries. She thinks the three countries mentioned will be a $1.1 billion medical cannabis market by 2021.

“We are pleased to enter into an agreement with a partner who shares Tilray’s commitment to product quality and safety and patient access,” says Sascha Mielcarek, Tilray’s Managing Director, Europe. “This initial shipment will be the first of many from our EU Campus in Portugal to Germany as well as other European and international markets.”


Debra BorchardtDebra BorchardtAugust 20, 2019
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5min1860

Cannabis data company BDS Analytics announced that it closed on $7 million in new financing, led by KEY Investment PartnersAltitude Investment Management, and 7thirty, with participation from other investors. A part of the financing deal, Pete Karabas of KEY Investment Partners will be joining the board of directors. BDS said it will use the money to expand coverage of emerging cannabis markets and strengthen its operating infrastructure with investments in machine learning, marketing and sales, and strategic partnerships.

“As the global cannabis economy continues to expand, it is imperative that we’re able to scale alongside it to remain an indispensable asset for key decision-makers in the industry,” said Roy Bingham, CEO, and Founder of BDS Analytics. “We’re excited about this new round of funding, which will allow us to further enhance our GreenEdge platform and expand our capabilities to the entire addressable cannabinoid market.”

Micah Tapman, Managing Partner and co-founder of 7thirty has been named the chairman of BDS Analytics.  Tapman was an early investor in BDS Analytics and has had a hand in advising the company ever since. The company said that Tapman will use his technology background to help lead the next generation of technological innovation and operational efficiencies.

“I am thrilled to be taking on a more formalized role within the company, which has demonstrated its market value time and time again,” said Mr. Tapman. “No industry can survive without hard data to drive business decisions, and that is what has been most appealing to me since day one. BDS Analytics found an opportunity and capitalized on it, which from a VC perspective demonstrates pragmatic leadership and lays the groundwork for successful long-term operations.”

“We are extremely impressed with what the BDS Analytics team has accomplished since the company was founded in 2015. BDS Analytics provides a critical service to the cannabis industry today that did not exist just a few years ago. As the players in the cannabis industry continue to grow and become more forward-thinking, BDS Analytics’ data and analytics tools will become a necessity for any company looking to maintain its competitive edge. The KEY team could not be more excited to work closely with BDS Analytics to expand the platform, grow the business, and cultivate new relationships, while further establishing the company as the premier market leader in data analytics for cannabis,” says Tiby Erdely, Founding Partner of KEY Investment Partners.

“We’ve seen BDS Analytics surpass its’ milestones and are proud to be co-leading this round of financing as it continues to grow. It’s an exciting time for the company as it expands product lines into new geographies, grows its industry-leading team, and improves its cutting-edge technology and services,” said John Brecker, Partner at Altitude Investment Management, LLC.


Debra BorchardtDebra BorchardtAugust 20, 2019
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4min1460

Multi-state operator iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) said that it has entered into a senior secured term loan of up to $50 million from one or more investment funds managed by Torian Capital Partners. The loan will be doled out in two tranches of $25 million each with similar terms.

iAnthus said it will use the money for its expansion efforts in Florida and the company’s new Be. retail locations in NevadaNew Jersey and New York. The company is expected to report its second-quarter earnings on August 27.  Last month the company noted that its CBD For Life products will be sold in Dillards Department Stores.

“Reducing our cost of capital has been one of our key goals for this year.  We believe this is a great opportunity to add strength to our balance sheet as we continue to invest in our key expansion initiatives, along with people, systems, and brands,” said Hadley Ford, CEO of iAnthus. “This transaction will position us well as we continue our strategic investments to take advantage of the once-ever opportunity presented by the cannabis industry.”

Terms

iAnthus said that the loan will be secured by a first-priority lien on all current and future assets of the company and its affiliates, subject to certain exceptions, including applicable cannabis regulations, and will be guaranteed by all current and future affiliates of the Company.  Each tranche of the Term Loan will bear interest at a rate of 9.0% per annum, payable quarterly in arrears during their respective terms and each tranche will mature 36 months from the date of its advance. Following the 12-month anniversary from the date of advance of each tranche, iAnthus may prepay the outstanding principal amount of the such tranche: (i) in year two, upon payment of 109% of the principal amount outstanding and (ii) in year three, upon payment of 104.5% of the principal amount outstanding.

Further, upon completion of each tranche, Torian Capital will be issued share purchase warrants (“Warrants”) from iAnthus in an amount equal to 20% coverage of each tranche. Each Warrant will entitle Torian Capital to purchase one common share for a period of 36 months from the date of issue. The Warrants issued will, subject to the policies of the Canadian Securities Exchange (“CSE”), have an exercise price equal to a 25% premium to the closing price of iAnthus’ common shares on the CSE on the day prior to the applicable closing of the relevant tranche. The Warrants may be called by iAnthus if the volume-weighted average price of iAnthus’ common shares on the CSE exceeds 2.0x the exercise price for 20 days within any 30-day period, and the daily average trading volume of iAnthus’ common shares on the CSE equals or exceeds 25% of the Warrants then outstanding.


Debra BorchardtDebra BorchardtAugust 19, 2019
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6min1920

It’s time for your Daily Hit of cannabis financial news for August 19, 2019.

On The Site

MidAtlantic States

New Jersey May Renew Push to Legalize Marijuana in 2019

Recent comments from Governor Phil Murphy and Senate President Steve Sweeney suggest one final legislative effort to legalize marijuana in 2019.

“I think I’ve been consistent that I hoped we could have one more shot at this,” Murphy told reporters last week. “Getting something to happen sooner, if we have a real shot at that, I’d be all in. … Count me all in to try and work toward that.”

The New York legislature passed a decriminalization bill in June. Governor Andrew Cuomo signed the bill into law in late July. The law both expunges many past convictions for marijuana possession and reduces penalties in the future. Advocates initially proposed full legalization but shifted strategy after it became clear they lacked enough votes.

“It does do two good things,” said Emma Goodman, a staff attorney in Legal Aid Society’s special litigation unit. Goodman worked with legislators to lobby for legalization.

Florida’s Medical Marijuana Program Part 9

Through late July, the 2019 Cannabis Crusade saw daily cannabis-related news and a literal state of medical marijuana commotion. A timeline of Florida’s battle for solid ground has been outlined in depth throughout my previous articles.

While the strong Florida medical marijuana Crusaders marched forward, the state itself and the legislators who comprise the Rear Battalion lost some footing.

On July 11, 2019, a Florida Appellate Court ruled in the highly-publicized Florigrown lawsuit that the state’s vertical integration was unfair and unconstitutional.

Further explanation and clarity was offered by Beau R Whitney, Vice President and Senior Economist at New Frontier Data, with his insightful Florida Court Rules Vertical Integration Unconstitutional: So, What Now? :

In Other News

CannTrust

CannTrust Holdings Inc. (TSX: TRST)(NYSE: CTST) has received a notice from the Ontario Cannabis Store, the Crown corporation in charge of wholesale distribution of cannabis products to licensed cannabis retailers in Ontario and the operator of Ontario’s online recreational cannabis store, advising the company that the OCS has determined that some of CannTrust’s products sold to the OCS are Non-Conforming Products under the terms of the Master Cannabis Supply Agreement between the Company and the OCS has elected to return these products to the Company.  Under the terms of the Master Agreement, any product that does not comply with applicable law is considered to be Non-Conforming Product and the OCS may elect to exercise its right, among others, to return such product to the Company at the Company’s expense.

The products listed in the OCS return notice constitute all or substantially all of the Company’s products currently held at the OCS and are valued at approximately $2.9 million in the aggregate.  The Company intends to fully perform its obligations under the Master Agreement.  The OCS operates independently of Health Canada.  Health Canada has not ordered a recall in respect of any of the Company’s products.

Kona Gold

Kona Gold Solutions, Inc. (OTC Pink: KGKG) said it has beat Second Quarter projected revenue of $400,000 by $329,000 on revenue of $729,000. Sales from the Company’s Kona Gold Hemp Energy Drinks and HighDrate CBD Energy Waters beat Company estimates by a huge margin.

Valens GroWorks

Valens GroWorks Corp. (TSXV: VGW) (OTCQX: VGWCF)  has qualified to trade on the OTCQX® Best Market in the U.S. The Company’s shares will begin trading, at market open today, on OTCQX under the ticker symbol “VGWCF”. Quotes and market information are now available at: www.otcmarkets.com/stock/VGWCF/quote

“We are excited to begin trading on the OTCQX Best Market.  Access to trading on OTCQX, combined with the current work underway to finalize the Company’s DTC eligibility, will increase Valens’ presence with United States investors, providing increased liquidity to the Company’s growing shareholder base,” says Tyler Robson, Valens CEO.


Debra BorchardtDebra BorchardtAugust 16, 2019
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4min2210

The Ontario Securities Commission approved a request by CannTrust Holdings Inc. (NYSE: CTST) for a management cease trade order (“MCTO”) under National Policy 12-203 – Management Cease Trade Orders. Such a request means that the Chief Executive Officer, Chief Financial Officer and members of the board of directors or other persons who had or may have access to material information that has not been publicly disclosed can not trade shares of the company. CannTrust said that it does not affect the ability of investors who are not insiders to trade.

In addition to that, CannTrust said it will probably miss its filing deadline of August 14, 2019, to file an interim financial report for the three and six month periods ending June 30, 2019. CannTrust is now in a holding pattern waiting on decisions from Health Canada as a result of the company’s facilities not complying with the regulations as stated by law. “Health Canada has advised the Company that it is unable to provide any guidance about the timing or content of its decisions concerning the Company.”

Health Canada could order total destruction of the seized inventory, but so far hasn’t indicated if it will do so. CannTrust also said that has not had any discussions with Health Canada with regards fixing the situation it finds itself in.

NYSE

CannTrust is currently listed on the New York Stock Exchange and said it has kept the exchange up to date on its interactions with Health Canada. The company said in its statement that “The NYSE advised the Company that as a consequence of the Company’s announcements concerning its audited financial statements for the year ended December 31, 2018 and its unaudited financial statements for the quarter ended March 31, 2019, the Company is viewed as no longer having a complete annual report on Form 40-F on file for the year ended December 31, 2018.”

For now, CannTrust shares will continue to trade on both the Toronto Securities Exchange and the NYSE. “However, the NYSE advised the Company that (a) it will closely monitor the status of the Company’s late filing and any related public disclosures for up to six months from its due date, and (b) if the Company fails to file its annual report and any subsequent reports within six months of their filing due dates, the NYSE will determine, in its sole discretion, whether to halt trading in the Company’s securities or whether to allow the Company’s securities to trade for up to an additional six months, depending upon the circumstances.” The NYSE also noted that it could begin delisting the company shares at any time if the circumstances warranted it.

Financial Impact

At the beginning of the scandal, CannTrust repeatedly stated that it expected to take some sort of financial hit, but couldn’t determine what that would be. At this time, CannTrust says the estimated value of the inventory affected by the Health Canada decisions is roughly $51 million. This accounts for 53% of the total company inventory and about 30% of the total biological assets. CannTrust still has approximately $250 million in cash and cash equivalents.

 


Debra BorchardtDebra BorchardtAugust 15, 2019
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3min3610

Aurora Cannabis

Aurora Cannabis Inc.  (NYSE | TSX: ACB) said that it has secured commitments from an expanded syndicate of lenders led by the Bank of Montreal to amend and upsize its existing C$200 million secured credit facility.

The company said that its amended secured credit facility will consist of an additional C$160 million allocated between both term loans and a revolving credit facility, both of which will mature in August 2021. The credit facility will have a first ranking general security interest in the assets of Aurora. The loans can be repaid without penalty at Aurora’s discretion.

“The upsizing of our credit facility to approximately C$360 million and the broadening of the lending syndicate to include additional Schedule 1 Canadian Banks is further recognition that our best-in-class production facilities lead the industry,” said Glen Ibbott, CFO of Aurora.  “Access to this non-dilutive capital is a core funding source the Company intends to utilize as it further executes on its strategic growth initiatives. In addition to cash being generated from operations, the Company also has access to other unsecured debt alternatives, a number of equity investments, and has access to a C$514 million (US$400 million) At-The-Market equity program (“ATM”).”

Green Growth Brands

Green Growth Brands Inc. (CSE:GGB) (OTCQB:GGBXF) said that it has entered into backstop commitment letters with each of All Js Greenspace LLC, Park Lane Capital Limited, and Chiron Ventures Inc. in which they have committed to subscribe for and purchase up to C$102,796,241 in the aggregate or roughly $77 million of convertible debentures to support the Company’s operations and capital needs.

In addition,  Green Growth said that it is having discussions and has signed a letter of intent with United Capital Partners LLC to obtain additional debt financing of up to $50 million. If secured, it is anticipated that the Proposed Debt Financing would be used by Green Growth to fund, in part, the company’s presently identified capital and operating expenditures related to the opening of new dispensaries, new mall-based CBD kiosk shops and the acquisition or build-out of a cultivation facility in Florida.


Debra BorchardtDebra BorchardtAugust 15, 2019
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7min2570

Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC) stock dropped over 10% after the company announced its financial results for the first quarter ending June 30, 2019. The worst of the news in the release was that the company’s fiscal first-quarter net losses of C$1.28 billion, or C$3.70 a share, dwarfed last year’s losses of C$91 million, or 40 cents a share. The loss was attributed to a non-cash charge of $1.2 billion in Canopy’s extinguishing warrants related to the Constellation Brands Inc. (NYSE: STZ)  investment.

“The Company has two primary objectives as we complete Q1 2020 and look to the remainder of the fiscal year,” said Mark Zekulin, CEO, Canopy Growth.  “First, the Company remains focused on laying the foundation for dominance in an emerging global opportunity. This means investments in developing intellectual property, building brands, building international reach, and ensuring scaled production capability for current and future products.  Second, we are fixated on the process of evolving from builders to operators over the remainder of this fiscal year, meaning that as our expansion program comes to a close in Canada, and as new value-add products come to market in Canada, we demonstrate a sustainable, high margin, profitable Canadian business.”

The company reported that its gross revenue in the medical market was $23.6 million, of which $16.4 million dollars or 70% of gross medical revenue was generated by oil sales. Oil sales in the medical market include sales by subsidiary C3, as well as the company’s traditional finished oils and softgels.  Dried flower sales accounted for $7.2 million dollars of gross medical revenue. When it came to adult-use sales, Canopy delivered gross revenue of $60.8 million from the sale of dry flower format products in the Canadian recreational market, representing an increase of 88% from dried flower sales in Q4 2019. Included in dried cannabis sales in Q1 2020 are sales of 1.4 million higher-margin, pre-rolled cannabis products which represented $9.7 million – or 16% – of our total recreational cannabis revenue.

Gross Margins Fall

Last year’s first-quarter gross margins were $11.1 million or 43% of net revenue. This year the gross margins were $13.2 million or 15% of net revenue. The company blamed that drop on the impact of operating costs of $16.2 million relating to facilities not yet cultivating cannabis or producing cannabis-related products, or which had an under-utilized capacity that resulted in adjustments related to the net realizable value of inventory.  “Additionally, there was a shift in product mix in Q1 2020 away from higher-margin, advanced manufactured products due to inventories evening out.”

Expenses Mushroom

The adjusted EBITDA in Q1 2020 accounted for a loss of $92.0 million, as the company said it reflected continuing losses in core operations in Canada and Europe. The company had a laundry list of reasons why the expenses had risen:

  • Increase in sales and marketing expense in Q1 2020 primarily due to increased staffing as it builds-out the network of Tweed and Tokyo Smoke-branded retail stores in Canada
  • Increased number of employees in our marketing and sales functions supporting domestic and international markets
  • Investing ahead of revenue to prepare for marketing campaigns for the launch of the second phase of recreational cannabis consumer products in Canada, as well as CBD products in the United States, both expected later this year.
  • Increase in research and development expense in Q1 2020 over Q1 2019 was due to Canopy Growth’s investment in new research and development efforts. Costs associated with hiring advanced degree researchers and engineers, in areas of vape R&D, plant genetics, applied technology and cannabis-based medical therapy clinical research.
  • Increase in costs associated with enhancing our finance and information technology capabilities, higher public company compliance and regulatory requirements, and administrative costs associated with expanding our operations.
  • Acquisition-related costs in Q1 2020 increased significantly over Q1 2019 due to higher merger and acquisition activity during the current period, most notably entering into and implementing the plan of arrangement with Acreage and closing the acquisitions of C3 and This Works
  • Increase in share-based compensation expense is primarily attributable to the continued increase in the number of stock options granted to employees, which is primarily related to the increase in the number of employees of the Company from approximately 1,400 at June 30, 2018, to approximately 3,850 at June 30, 2019.

Life After Linton

Mark Zekulin was appointed as the company’s sole Chief Executive Officer and Rade Kovacevic was appointed President of the Company upon the termination of Bruce Linton as Co-Chief Executive Officer of the Company. A search has begun to find Mr. Zekulin’s replacement as the company’s Chief Executive Officer. The stock went into a tailspin after Linton’s public dismissal and had only just begun to recover when the earnings were announced following the close of trading on Wednesday.


Debra BorchardtDebra BorchardtAugust 14, 2019
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5min2730

Zenabis Global Inc. (TSX:ZENA) (OTC: ZBISF) reported that its second-quarter net revenue rose 78% to $25 million from last year’s $4.1 million for the period ending June 30, 2019. The company said that the results were achieved “despite being negatively impacted by temporary price reductions on inventory sold to provincial counterparties designed to help Zenabis to capture a larger share of the recreational cannabis market.” 

The company also delivered a net loss of $18.5 million, or $0.09 loss per common share, compared to a net loss of $4.0 million, or $0.02 loss per common share, for the same time period last year.

The company noted that in a May 30, 2019 press release, Zenabis said that it expected net cannabis revenue to be in the range of $10,000,000 to $12,000,000, but the actual net cannabis revenue for the period was $7,251,860. The company blamed the shortfall on those price cuts which hurt the company by $790,000. Zenabis also said that a $310,000 shipment got delayed due to logistical issues and a third-party provider caused the company to reject or return 554 kg of cannabis. The company said that it has ended this relationship.

The net revenue per gram fell 29% to $4.22 from $5.92 in the previous quarter. The net revenue per gram for cannabis flower, oil and pre-roll sold fell 16% to $4.97 from $5.92. The company said it expects further price declines as competition heats up. 

“We executed at or above plan in the second quarter and, in so doing, continued to make significant progress towards our goal of becoming one of the largest licensed producers of medical and adult-use recreational cannabis in Canada,” said Andrew Grieve, Chief Executive Officer of Zenabis. “Notably, the buildout and completion of our growing facilities has progressed generally on time and on budget. The completion of Zenabis Atholville and Zenabis Langley Site A – Part 1 helped us increase our licensed annual production capacity from 10,200 kg of dried cannabis as at March 31, 2019 to 54,000 kg of dried cannabis today. We are on track to achieve our new target of 143,200 kg of annual cannabis cultivation capacity under our existing capital program.”

Cost per Gram

The company said that in the second quarter of 2019 the cash cost per gram was $0.78 per gram, which is $0.32 per gram lower than Zenabis’ previously announced estimated cultivation cost per gram of $1.10. Zenabis said it now expects its cost of cultivation at Zenabis Langley to be approximately $0.50 per gram. “This is $0.25per gram, or 33%, lower than the $0.75 per gram estimate previously provided by the Company. This cost of cultivation estimate is based on the Company’s estimates for facility staffing costs (inclusive of facility overhead), utility costs and material costs based on Zenabis’ experience at Zenabis Atholville. Zenabis believes this figure indicates the expected cost competitiveness of Zenabis Langley.”

Looking Ahead

Zenabis is forecasting the actual production capacity at Zenabis Atholville to be higher than the originally announced design capacity estimate. “As a result, Zenabis is increasing its annual production capacity estimate for Zenabis Atholville, upon full licensing, to 46,300 kg from 34,300 kg of dried cannabis. As a result of the Zenabis Atholville Capacity Amendment, Zenabis’ target production capacity by the end of the third quarter of 2019 is now 143,200 kg of dried cannabis, a 12,000 kg increase from 131,200 kg previously estimated.”

 

 



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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