Business Archives - Green Market Report

StaffStaffFebruary 14, 2020
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4min3490

Data analytics company, Headset, and cannabis wholesale marketplace LeafLink have released some steamy stats about top cannabis products that are sold leading up to Valentine’s Day and some interesting stats on cannabis-infused massage oils and lubes. (like the self-care line Quim that makes CBD and THC infused intimate health products).

According to LeafLink 

  • Top Product Categories in the month before Valentine’s Day 2019 (by sales $)

    • Cartridges

    • Flower

    • Edibles & Ingestibles

  • Top Products in the month before Valentine’s Day 2019 (by sales $)

    • Sour Gummies, Assorted Flavors – Wana Brands, CO

    • PR OG Indica 28g pouch – Pacific Stone, CA

    • Wedding Cake Cartridge – Platinum Vape, MI

    • Gummy Sour Smash 100mg – Dixie Elixirs & Edibles, CO

    • Estate Eighth Jar, Sativa Crescendo – THC Design, CA

  • Number of products on the LeafLink platform with the word “love” in the title

    • 618

According to Headset:

  • Massage oil/lube grew faster than total California market between 2018 and 2019; an increase of 119% vs 91%
  • During the week of Valentine’s Day the highest amount of sales for Massage Oil/Lube was on an actual day (2/14) but the highest average discount occurred the day before followed by Valentine’s Day.
  • The average price of Massage Oil/Lube during the week of Valentine’s Day is $28.76 with an average discount of 8%, while the previous week was $31.83 with an average discount of 6%.
  • While males do most of the cannabis shopping on any given day and did so on 2/12-2/14, females strongly over-indexed (+29%) in the Massage Oil / Lube segment during that time period in 2019.

Feeling Crafty?

If a handmade gift is more your speed, LEVO is a great Valentine’s Day gift for your significant other who enjoys creating infused recipes at home. The high-tech oil infuser for kitchen and beauty use simplifies the complicated and tedious process of small-batch oil infusion. Not to mention an easy cleanup! It doesn’t come cheap, the LEVO II retails for $349.99 and the LEVO I, the original infuser, designed for consumers who only require simple infusion capabilities, is available for $149.99.


Debra BorchardtDebra BorchardtFebruary 14, 2020
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8min2920

Cannabis venture capital firm Canopy Rivers Inc. (TSX: RIV)(OTC: CNPOF) reported its third-quarter financial results in Canadian Dollars for the three and nine months ending December 31, 2019. The operating income for the quarter was $1.8 million, a big drop from last year’s $8.3 million for the same time period.  The company also delivered a net loss of $2.6 million versus last year’s net income of $1.4 million. The earnings per share were a negative $0.01 versus last year’s earnings per share of $0.01.

“It was a challenging end to 2019 for the valuations of publicly-traded cannabis companies, which naturally impacted our results for the quarter,” said Eddie Lucarelli, CFO, Canopy Rivers. “However, we continue to believe that these headwinds for the cannabis sector are temporary and that the strength of our balance sheet positions us well to weather the storm. A strong pipeline of global investment opportunities, positive trends in supply chain and retail developments in Canada, and impending milestones at our portfolio companies truly excite us for what’s to come in 2020.”

Revenue Sources

The company’s revenue was primarily driven by royalty, interest, and lease income of $5.0 million from Agripharm Corp., 10831425 Canada Ltd. d/b/a/ Greenhouse Juice Company, James E. Wagner Cultivation Corporation, Radicle Medical Marijuana Inc., and The Tweed Tree Lot Inc. In addition to that, revenue came from a loan agreement with TerrAscend Canada Inc., a shareholder loan agreement with PharmHouse, Inc. and a lease agreement with Tweed Tree Lot.

The company noted that the income was partially offset by a $1.9 million net decrease in the fair value of certain financial assets that are reported at fair value through profit or loss. Operating income was further offset by a $1.3 million share of loss from the company’s equity method investees. This share of loss was recorded one quarter in arrears, which includes the company’s common equity positions in Canapar Corp., Herbert, High Beauty, Inc., LeafLink Services International ULC, PharmHouse, and Radicle. The company said that it expects these equity method investees to continue to generate net losses during the remainder of the fiscal year as the companies continue to ramp up operationally.

“In the third quarter, we continued pursuing our goal to become the leading venture capital firm building the cannabis industry of tomorrow,” said Narbé Alexandrian, President & CEO, Canopy Rivers. “We focused primarily on follow-on investments in our existing portfolio of innovative companies, further developing the Canopy Rivers ecosystem through collaborative partnerships, and evaluating where we think the next wave of disruption will come from as the global cannabis market continues to evolve and mature.”

Civilized

Canopy invested $5 million into cannabis media company Civilized and then this past October it gave the company an additional $120,000. This was after Civilized announced that it was being bought by New Frontier Data at the New West Media Summit in San Francisco and at a time when the company was cutting back. Now Canopy Rivers says its current ownership interest is zero. However, there is still a debt. Both the convertible debenture and warrants are currently exercisable and, if exercised, would together represent approximately 26% of the equity of Civilized on a fully diluted basis as of December 31, 2019.

Rivers also stated that it is now expected that the convertible debenture interest receivable will not be recovered until maturity or conversion. “The company no longer recognizes interest receivable on the instrument, which was reported at $629,000 as of March 31, 2019. ”

Even though Rivers says it has no current ownership interest, As of December 31, 2019, the company said it owned 221,239 common share purchase warrants of Civilized (March 31, 2019 – 221,239). The warrants represent a derivative financial instrument that is initially measured at fair value and is subsequently measured at FVTPL. As of December 31, 2019, the warrants were estimated to have a nominal value (March 31, 2019 – $760).

Civilized was recently called out on The Black List for not paying a writer. In the comment section Civilized’s Terri Riedle, the Co-founder & President allegedly wrote in an email,”Thank you for the patience you’ve afforded Civilized over the last few months. As you may be aware, Civilized is in the process of being acquired by New Frontier Data. As a follow-up to their October announcement to that effect, we’re continuing to work in partnership with them and other advisors on a shared strategic and capital plan for 2020. I wanted to give you a heads-up today that the acquisition due diligence process has led us to the joint conclusion that the best path forward is to suspend Civilized’s day-to-day operations until January 2020. This is news you may catch in the media in the coming weeks. By hitting pause, we’re minimizing costs while we work with New Frontier Data to move into the new year with the resources we need in order to achieve our goals, including honouring our commitments to you. We regret that our vendors are in a difficult position and want to assure you that despite the delays, New Frontier Data prioritizes these important relationships and will be in a position to remedy the situation with vendors as soon as possible. We expect to re-launch a stronger and more powerful media company in a few weeks and appreciate this is an uncomfortable, even if necessary, transition for all. If you have any questions or wish to get in touch with me or New Frontier Data to discuss, we’re available to you.”

The Rise

Apparently Canopy Rivers hasn’t gotten its fill of media. The company has announced its launching its own news site called The Rise, whose Editor-in-Chief will Jameson Berkow. Berkow most recently helped The Globe and Mail launch its cannabis industry coverage. He was previously a senior reporter for BNN Bloomberg (formerly the Business News Network), where he led live daily coverage of major business news from the television station’s Toronto headquarters.

The Rise is described as a publication that will dive into these stories and speak directly to the modern entrepreneur. “Here you will find thoughtful content that strips away the fluff and gets to the heart of what it means to be an entrepreneur: the challenges, journeys, successes, and failures. You’ll find these stories alongside resources, thought leadership, economic insights, and emerging trends.”

There is no launch date as of yet.

 


Video StaffVideo StaffFebruary 14, 2020

4min3420

Happy Valentine’s day to everyone. Did you know that a BDS Analytics report found that in 2019, sales in the recreational cannabis markets of California, Florida, and Oregon were 3.3 percent higher on Valentine’s Day than any other day in February, while Eaze reports a 20 percent spike in orders on Valentine’s Day. So, give your special someone a different kind of flower this year!

This week, Aurora Cannabis gave a disappointing earnings report for the second quarter. total net revenue fell 26% to $56 million in the second quarter from $75 million in the first quarter of 2020. The company also reported that the adjusted EBITDA loss was $80.2 million in the second quarter versus $39.7 million in the first quarter of 2020. The interim CEO warned that the third quarter was going to show little to no growth.

Supreme Cannabis joined the layoff club this week when the company announced a 33% reduction in employee headcount at a corporate level.

Kentucky hemp farmer filed for bankruptcy.  GenCanna Global USA, Inc. filed a petition for voluntary Chapter 11 reorganization

CLS Holdings USA, Inc. (OTCQB: CLSH)(CSE: CLSH) said it saw a drop in its January sales. Still, the 2020 January sales were better than in 2019. Revenue increased 49% from last year’s $0.73 million to this year’s $1.5 million. 

Having said all that Neptune Wellness actually reported a solid quarter. The company reported that total revenues for were $9.1 million, a sequential increase of $2.6 million or 41% over the second quarter ended September 30, 2019. The company also delivered net income of $5.6 million for the quarter versus a net loss of $3.6 million for the same time period in 2019

TILT Holdings Inc. (CSE: TILT) (OTCQB: TLLTF) and its vape subsidiary Jupiter Research, LLC  has partnered with vape device company The Blinc Group, LLC. Perhaps trength in numbers for vape companies

Old Pal announced that Kiva Sales and Services (KSS), the states’ leading distribution operator, will be their exclusive distribution partner and the first to service the entire state of California for Old Pal. This brand took Nevada by storm and quickly became a top selling brand. 

If you’d like to sponsor the Marijuana Money video just email us at info@greenmarketreport.com.

 

 


StaffStaffFebruary 14, 2020
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4min2620

Editors Note: The Northeast Cannabis Business Conference is an advertiser on GMR. 

One of the largest problems facing the cannabis industry is the illicit market. Next week at the NCIA Northeast Cannabis Business Conference, the industry association plans to tackle the issue head-on.

The illicit market has steered away important tax revenues and endangered consumers through unregulated products like vape pens. Most of the deaths in the vape crisis were attributed to illicit market vape pens that were adding fillers to the cartridges. Had these pens been sold by reputable dealers this wouldn’t have been allowed. 

Low cannabis prices and high taxes have also been blamed for cannabis producers that take the chance at selling in the illicit market. Many of these companies say they can’t make a profit when the taxation is reaching levels of 50%. Plus, the costs to operate remain the same while the prices for the product have been falling. Some in the industry are sympathetic, while others chafe at being financially penalized for following the rules.

Counterfeit products have also flooded the market making it difficult for consumers to discern what is real and what isn’t. This has created an opportunity for software companies to develop quality codes for products, but once again adds more to the cost of doing business. 

Covering this important topic is NCIA’s Director of Public Policy Andrew Kline. Kline has a background in public policy, law enforcement, and coalition creation/management. Prior to joining the NACB, Kline served as Chief of Staff and Senior Advisor for Intellectual Property Enforcement in the Executive Office of the President [Obama] where he led public-private partnership and public policy efforts to address online trademark theft, copyright infringement, consumer safety, national security, and the protection of domestic business interests globally. 

He is joined by Britte McBride who is a Commissioner of the Massachusetts Cannabis Control Commissioner and former Police Commissioner of the Boston Police Department from 2006 through 2013 Edward Davis. Also on the panel is Ean Seeb is the Special Advisor on Cannabis to Governor Jared Polis. He previously co-owned one of Colorado’s oldest and most successful medical cannabis businesses, Denver Relief, which was sold to Willie Nelson’s team in 2016. 

The illicit cannabis market continues to divert precious law enforcement resources away from other law enforcement priorities. It harms the profitability of state-legal cannabis businesses and it diverts anticipated tax revenue from cash strapped states and municipalities.

Although the actual summit will be closed to the public, leaders from the Illicit Market Summit will present a report recapping and highlighting a path forward that encompasses best practices for sharing information through a public-private partnership and alternatives to arrest and incarceration.


Noemi GonzalesNoemi GonzalesFebruary 14, 2020
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5min2400

“Cannabis Cocktails, Mocktails & Tonics:

The Art of Spirited Drinks and Buzz-Worthy Libations” by Warren Bobrow 

What a time to be alive!

More and more states are moving toward legalization, strains have evolved, and now you can learn about the best drinks to accommodate your preferred cannabis strains.

Today we are reviewing “Cannabis Cocktails, Mocktails & Tonics: The Art of Spirited Drinks and Buzz-Worthy Libations” by Warren Bobrow and doing a deep dive on the best matches between beverages and marijuana.

-Topic Focus-

As the name suggests, this book focuses on the best combinations of cannabis and alcoholic beverages and boasts over 75 unique recipes to enjoy throughout this interesting book.

Familiarize yourself with a solid decarboxylation process in order to maximize the psychoactive effect that cannabis can produce.

You will find more than just alcoholic beverage recipes here. The range of recipes found here is quite interesting. You can find detailed steps to create your own infused milk-based drinks, various teas,  concentrated oils, compound butters, and more. Pretty cool, huh?

There is also a degree of information focusing on the social perception of cannabis and how it has evolved in recent years. This recent evolution in understanding cannabis is what allows breathing room to our innovators and creators to experiment with topics such as infusions, concentrates, beverages and more.

 -About the Author-

Warren Bobrow’s expertise on these topics becomes clear very quickly in this book. Warren has experience writing content focused on cocktails and drinks for publications such as Eater, Foodista, Total Food Service, Saveur and Whole Foods, Distiller and Beverage Media, Serious Eats, and many more. Warren also has experience teaching his craft at Stonewall Kitchen in Maine.

In 2010 Warren was asked to participate as a Ministry of Rum judge in the Fête de la Gastronomie in Burgundy. You can explore more of his content at “The Cocktail Whisperer”, his popular blog and through his variety of books. Some of the books written by Bobrow include “Shrub Syrup Cocktails”, “Apothecary Cocktails”, and “Whiskey Cocktail and Bitters”.

-Reading Experience-

Infusions, extractions, and mixing your own beverages can be challenging but “Cannabis Cocktails, Mocktails & Tonics: The Art of Spirited Drinks and Buzz-Worthy Libations” by Warren Bobrow shed some excellent light on the topic. Online guides can be confusing or outright incorrect so having guidance from a seasoned veteran like this author makes a powerful difference in the quality of your own extractions/infusions.

You can tell that the author has experience teaching as each recipe and process is broken down in a way that even a rookie to cannabis and mixing can keep up with.

-Summary-

So much reliable information condensed into 160 pages here in this book, it’s great!

The detailed processes do not skip steps and make sure to be very clear all the way to completion.  Some of these recipes seem downright exciting to try out and would make for fun social gatherings to experiment with friends.

This book is fun, insightful, and has a ton of value to offer without an overt amount of fluff or ranting.

If you would like to start getting your mix on and see what “Cannabis Cocktails, Mocktails & Tonics: The Art of Spirited Drinks and Buzz-Worthy Libations” then get your copy here and get started:

https://www.amazon.com/Cannabis-Cocktails-Mocktails-Tonics-Buzz-Worthy/dp/1592337341/ref=sr_1_1?crid=324H3DEL9CJ1X&keywords=warren+bobrow&qid=1580745556&sprefix=warren+bobr%2Caps%2C322&sr=8-1


Kaitlin DomangueKaitlin DomangueFebruary 13, 2020
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4min2380

Its time for your Daily Hit of cannabis financial news for February 13th, 2020. 

On the Site

Meet the Weedy Award Finalists 

The founder and Editor of WeedWeek, Alex Halperin, has created the Weedy Awards, with winners being announced on February 28th in Hollywood. Awards will be presented in categories like best grow, the most socially responsible company, the best delivery company, the best edibles, and the people’s choice cannabis celebrity. 

Aurora Cannabis Stock Slides as Revenue Falls

Canadian-based Aurora Cannabis Inc. (NYSE: ACB) saw its shares falling in early trading after the company said that revenues fell in the second quarter of fiscal 2020 ending December 31, 2019. Aurora reported that its total net revenue reported in Canadian dollars fell 26% sequentially to $56 million in the second quarter from $75 million in the first quarter of 2020. It was higher than the 2018’s second quarter, which delivered net revenue of $54 million.

Neptune Wellness Delivers Solid Quarter as Sales Increase

Neptune Wellness Solutions Inc.  (NASDAQ: NEPT) (TSX: NEPT) announced its financial results for its fiscal third-quarter ending December 31, 2019. Total revenues for Neptune were $9.1 million, a sequential increase of $2.6 million or 41% over the second quarter ended September 30, 2019. This was also an increase of $2.6 million or 40% compared to $6,538 for the three-month period ended December 31, 2018. 

In Other News

SLANG Worldwide Partners with Cali Cannabis Cookie Company 

SLANG Worldwide Inc. (CNSX: SLNG), leading cannabis consumer packaged goods company, has partnered with Cookies, a leading California-based cannabis brand. 

Pursuant to the deal, SLANG will bring Cookies’ products to the Oregon market. 

Cresco Labs Expands C-suite

Cresco Labs will name marketer Greg Butler as its first-ever Chief Commercial Officer. Butler has past supported the brand in a CMO capacity, developing the commercial growth strategy for the brand. He has strong plans to develop Cresco’s market in 2020, as well as promoting diversity and social equity in the cannabis space. 


AvatarMark TaylorFebruary 13, 2020
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7min1470

UK food regulators have stood by their threat to remove products containing CBD from sale if businesses do not gain special authorisation, and have set March 31, 2021 as the deadline for applications.

The British cannabis industry has been waiting more than a year for clarity.

In a Thursday release, the Food Standards Agency (FSA) said after that date, only products which have submitted a valid application will be allowed to remain on shelves. The authorisation process ensures novel foods meet legal standards, including on safety and content.

Local authorities enforce the novel food legislation, the FSA said, and councils have been advised that businesses should be able to sell their existing CBD  products during this time provided they are not incorrectly labelled, are not unsafe to eat and do not contain substances that fall under drugs legislation.

In addition, the FSA advised those who are pregnant, breastfeeding or taking any medication not to consume CBD products. Healthy adults are also advised to “think carefully” before taking CBD, the FSA said, recommending no more than 70mg a day (about 28 drops of 5 percent CBD) unless under medical direction.

This new precautionary advice is based on recent findings by the government’s Committee on Toxicity (COT).

“CBD products are widely available on the high street but are not properly authorised,” said Emily Miles, chief executive of the Food Standards Agency. “The actions that we’re taking today are a pragmatic and proportionate step in balancing the protection of public health with consumer choice. It’s now up to industry to supply this information so that the public can be reassured that CBD is safe and what it says it is.”

Professor Alan Boobis, chair of the Committee on Toxicity said his committee had reviewed the evidence on CBD food products and found evidence there were potential adverse health effects from the consumption of these products.

“We don’t know enough to be sure about such a risk but I am pleased with the sensible and pragmatic approach the FSA is taking,” Professor Boobis said. “The committee will continue to keep these products under review in the months ahead.”

UK law firm Mackrell.Solicitors have been heavily involved in discussions with both the FSA and European regulators over the novel food issue.

“We anticipated and welcome this morning’s announcement by the FSA that they will be more proactive in regulating the growing CBD market going forward,” said Nigel Rowley, managing partner at Mackrell.Solicitors. “The lack of clarity and certainty has always been a cause for concern for our clients and the industry as a whole.”

Rowley said strong regulation and a clear regulatory regime “can only be positive” for responsible businesses in the sector.

“Questions still remain, particularly in relation to EU Novel Foods authorisation, and whether every business needs to apply or whether a blanket authorisation would cover each end-form of CBD,” said Rowley.  “We will be seeking clarification from the FSA on this and report back to the industry once a greater degree of clarification has been obtained.”

Robert Sidebottom, director of the Hemp and CBD Expo and a leader in the industry added while the statement had been a long time coming, consumer safety statement from the FSA was a long-time coming, regardless of the views on CBD and novel foods, consumer safety is paramount.

“It should act as a clarion call to the sector to work together, education and advice is now more than ever critical for those working in the cannabis space, I encourage everyone to attend our event at the end of this month and talk to and listen to the leading of legal, trade and medical practitioners who are presenting,” Sidebottom said.

The Food Standards Agency (FSA) has announced that food and supplements containing CBD will have to be registered by March 2021 or they could be removed from sale next year.

This is a significant development for the industry and the dedicated Cannabis Law team at Mackrell.Solicitors will be working with the industry to ensure they get the answers they require.

Nigel Rowley, Managing Partner at Mackrell.Solicitors, said: “We anticipated and welcome this morning’s announcement by the FSA that they will be more proactive in regulating the growing CBD market going forward. The lack of clarity and certainty has always been a cause for concern for our clients and the industry as a whole.

“Our initial view is that strong regulation and a clear regulatory regime can only be positive for those responsible businesses that make up the majority of the industry.

“Questions still remain, particularly in relation to EU Novel Foods authorisation, and whether every business needs to apply or whether a blanket authorisation would cover each end-form of CBD. We will be seeking clarification from the FSA on this and report back to the industry once a greater degree of clarification has been obtained.”

Robert Sidebottom, Director of the Hemp and CBD Expo and a leader in the industry also spoke with the Cannabis Law team. He said: “This statement from the FSA has been a long-time coming, regardless of the views on CBD and Novel Foods it is consumer safety that is paramount.

“It should act as a clarion call to the sector to work together, education and advice is now more than ever critical for those working in the cannabis space, I encourage everyone to attend our event at the end of this month and talk to and listen to the leading of legal, trade and medical practitioners who are presenting.”


Debra BorchardtDebra BorchardtFebruary 13, 2020
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5min2900

Neptune Wellness Solutions Inc.  (NASDAQ: NEPT) (TSX: NEPT) announced its financial results for its fiscal third-quarter ending December 31, 2019. Total revenues for Neptune were $9.1 million, a sequential increase of $2.6 million or 41% over the second quarter ended September 30, 2019. This was also an increase of $2.6 million or 40% compared to $6,538 for the three-month period ended December 31, 2018.

Revenues from the cannabis segment reached $2.8 million, an increase of $1.5 million sequentially from the three-month period ended September 30, 2019. Neptune started the commercial operations of its Cannabis segment in March 2019 and had no revenues in the prior-year period ended December 31, 2018.

Making Money

Net income was $5.6 million for the quarter versus a net loss of $3.6 million for the same time period in 2019. The transition from net loss to net income is due to a gain of $64.5 million related to a reduction in the fair value of the contingent consideration in connection to the acquisition of SugarLeaf Labs. The company stated that this gain was partly offset by an impairment of goodwill of $44 million related to SugarLeaf.

CEO Michael Cammarata said: “Since I joined the company six months ago, we’ve had to reassess all facets of our business plans. It quickly became apparent that there were several operational challenges that needed to be addressed immediately. Our revenue growth of 41% sequentially is a solid testament to this, considering the current cannabis and hemp environment. While our profitability this quarter was short of our expectations due to the slower than expected ramp-up of our Phase II cold ethanol production process and industry factors beyond our control, we are setting up our long-term success by expanding our channel strategy with an increased focus on end clients, in Canada and the US.”

Revenues from the Nutraceutical segment for the three-month period amounted to $6.3 million, representing an increase of 23% sequentially, over the second quarter ended September 30, 2019, and a slight decrease of $202 or 3% compared to $6.5 million for the three-month period ended December 31, 2018.

Cammarata went on to add, “The US launch today of our Forest Remedies and Ocean Remedies products is a significant step forward in expanding our footprint and brand equity and will be followed by a similar launch in Canada, once approved by health authorities. The Forest Remedies hemp-derived wellness products include ingestibles in soft gel and extract forms, topical balms, massage oils, and a pet soother. We are also launching an essential oil and aromatherapy line that we developed in collaboration with our partner, International Flavors & Fragrances. Despite a slightly slower than anticipated ramp-up on the production side and changes to planned capacity expansion, we are building the foundation for this company for many years to come. I am excited about the future prospects, in particular the launch and significant potential of our consumer brands.”

Canada 2.0

Neptune said it had identified underserved segments of the Cannabis 2.0 products in Canada. “There is currently limited availability of cannabis concentrates on the market and Neptune intends to fill that void by expanding its production capabilities to produce these cannabis derivatives and other niche product forms. Neptune is exploring the potential to diversify its extraction capabilities to include solvent-less and hydrocarbon extraction methods, which are well suited to produce high-quality cannabis concentrates.”

 


Debra BorchardtDebra BorchardtFebruary 13, 2020
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7min2730

Canadian-based Aurora Cannabis Inc. (NYSE: ACB) saw its shares falling in early trading after the company said that revenues fell in the second quarter of fiscal 2020 ending December 31, 2019. Aurora reported that its total net revenue reported in Canadian dollars fell 26% sequentially to $56 million in the second quarter from $75 million in the first quarter of 2020. It was higher than the 2018’s second quarter, which delivered net revenue of $54 million.

Medical cannabis net revenues decreased 10% sequentially to $27.4 million due to a short-term permit issue in Germany that has since been resolved. The company did state that its medical patient base remained relatively consistent at 90,307.

Wholesale bulk cannabis net revenues fell from $10.3 million in the first quarter to $2.4 million due to overall volume declines and the wholesale of lower potency (priced) product.

Losses Grow

The company also reported that the adjusted EBITDA loss was $80.2 million in the second quarter versus $39.7 million in the first quarter of 2020. The decline was attributed to “an increase in production costs relating to the ramp-up for the legalization of Cannabis 2.0, and the increase in SG&A expenses.” Aurora said it was taking actions to materially reduce SG&A expenses and was focused on achieving positive adjusted EBITDA.

“Despite delivering modest growth in our core medical and consumer business in Q2, we took immediate and deliberate actions to align our Company to current market conditions,” said Michael Singer, Executive Chairman and Interim CEO, Aurora Cannabis. “As announced last week, being a profitable cannabis company for our investors is the singular near-term focus for Aurora and we have begun to implement a business transformation plan where we intend to manage the business with a high degree of fiscal discipline.”

Those expenses increased by 23% to $99.9 million from the prior quarter. So even as revenues were dropping the company increased salaries, benefits, and annual merit increases. Plus there were investments in educational marketing campaigns related to the launch of Cannabis 2.0 products, and marketing initiatives related to the launch of the Aurora Drift brand.  On February 6, 2020, Aurora announced decisive action effective immediately to reduce SG&A expenses from the Q2 2020 levels, and expects to manage the business with an SG&A expense run-rate of between $40 million to $45 million per quarter exiting Q4 2020 (June 30, 2020).

Debt Levels

Aurora’s current credit facility and other debt outstanding include $50 million in a revolving facility, of which $2 million was drawn as of December 31, 2019. $162 million of fully drawn senior secured term loans and US$345 million of senior unsecured convertible debentures due February 2024.  The company also managed to secure credit facility amendments that removed EBITDA ratio covenants. 

“The transformational actions we announced last week have already positively impacted SG&A expense and we are confident that our run-rate will be approximately $40 million – $45 million as we exit the fiscal fourth quarter of 2020.  This is a very important step toward EBITDA profitability,” said Glen Ibbott, CFO. “In addition, our credit facility was amended to provide greater flexibility to Aurora. More specifically, Aurora chose to downsize the facility by $96.5 million with the elimination of undrawn term loan capacity, and further used $45 million of restricted cash to repay a portion of the drawn term loan balance for the purpose of reducing leverage and cash required for debt service.”

Prices Fall

The average net selling price of cannabis decreased to $5.54 per gram over the prior quarter of $5.68. This decrease was attributed to the provision for returns and price adjustments impacting Q2 2020 which did not affect Q1 2020, lower kilograms sold in Q2 versus Q1, and lower wholesale bulk volume and pricing. Gross margin before fair value adjustments on cannabis net revenue, excluding provisions was 48% in Q2 2020, compared to 58% in the prior quarter.

During Q2 2020, Aurora produced 30,691 kilograms of cannabis as compared to 41,436 kilograms in the prior quarter. The 26% decrease in production output was primarily due to previously announced changes to cultivation strategies, including a pivot to high-value, high-potency strains which are lower yielding. “With the continued refinement of our cultivation techniques, we expect to achieve quarterly harvest volumes leading to an average of 150,000 kgs annually or better.”

Looking Ahead

Despite the troubling earnings report, Aurora said it was bullish on the long-term potential for the global cannabis opportunity. “However, due to several short-term factors, there is likely to be a slower than previously expected rate of industry growth in the near-term. The Company has outlined a number of fiscally responsible steps it has already taken to realign its business operations to this expected industry growth rate. Aurora reiterates its outlook for fiscal third quarter that cannabis revenue will be impacted by previously mentioned industry headwinds, and as such will likely show modest to no growth relative to fiscal Q2’s cannabis revenue, excluding provisions, of approximately $65 million.”


StaffStaffFebruary 13, 2020
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4min3860

WeedWeek founder and Editor Alex Halperin has created the Weedy Awards and the winners will be announced on February 28 in Hollywood. Halperin said he wanted the awards to reflect his company’s desire to recognize excellence within the industry and to advance the idea that the industry should be diverse in its ownership and respectful of the environment.

The nomination process was akin to a reverse American Idol. The initial list was created through a nominating process with an all-star cannabis industry panel of judges to pick the winners. More than 500 people submitted the nominations. The judges were given the top five vote-getters from the public nominations process and they narrowed it to three finalists.

The judges include: Dale Sky Jones, Executive Chancellor, Oaksterdam University; Jason Beck, Founder, Alternative Herbal Health; Steve DeAngelo, Founder, Harborside; Brad Bogus, VP, Confident Cannabis; Amber E. Senter, Founder, SuperNova Women; Bryant Mitchell, Founder, Blaqstar; Ophelia Chong, Co-Founder, Green Sky Strategy; Josh “Rocco” Loebl, Executive VP, Henry’s Original and Alicia Rose, Founder, Herba Buena.  

Here are the WeedWeek Weedy Awards 2020 finalists in each category

Grow

Lowell

THC Designs

Bloom Farms

Women Run Company

Yummi Karma

Kikiko

Sava

Person of Color Run Company

Kind Colorado

Viola

SF Roots

Consumption Device

Pax

Hanu Labs

Puffco

Socially Responsible Company

Eaze

Bloom Farms

Wana Brands

Delivery Company

Weden

Sava

Eaze

Environmentally Responsible Company

Wana Brands

Flow Kana

Sana Packaging

Dispensary

MedMen

The High Note

Harborside

Edibles

Kiva

Wana Brands

Wyld

Yummi Karma

People’s Choice Cannabis Celebrity

Snoop Dogg

Seth Rogen

Willie Nelson

The Weedy’s winners will receive their awards at The London, in West Hollywood, on February 28th. Attendees will be limited to Business to Business Execs in the business.

 

For more information contact John Bollinger at 732 872 2270 or john@weedweek.net.



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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