Business Archives - Page 3 of 230 - Green Market Report

Video StaffVideo StaffJuly 31, 2020

3min3230

 Scotts Miracle-Gro Company reported fiscal third-quarter sales increased 28% to $1.49 billion, beating analyst estimates for $1.3 billion. Hydroponic subsidiary Hawthorne sales increased 72% to $302 million versus $176 million for the same time period a year ago. Scotts to increase its guidance for full-year sales, adjusted earnings, and free cash flow

Aphria Inc. reported net revenue of $152.2 million in the fourth quarter, an increase of 18% from the prior-year quarter. This number also beat the analyst estimate of $149 million. However, the stock was getting beaten up after the company also reported a $98.8 million net loss for the fourth quarter, which was much worse than last year’s net income of $15.7 million. The losses were attributed to the COVID-19 pandemic.”

PotNetwork Holdings, Inc. (OTC PINK:POTN)  filed its 2019 Annual Report and reported that its revenues fell 41% to $15 million versus $25.5 million in 2018. The company attributed the drop in revenue to “distribution contraction as a result of the FDA Warning Letter, along with the paring and streamlining of the product lines in mid-2019.”

MYM Nutraceuticals Inc. is buying Biome Grow Inc. for roughly C$12 million. Biome is a Canadian-based company with national and international business interests in the cannabis industry. Its wholly-owned subsidiary Highland Grow Inc. is licensed to cultivate, process, and sell cannabis.

As announced in early June, Clever Leaves International is continuing to make its way onto the NASDAQ through the Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA). The deal is expected to close in the fourth quarter and will be known as Clever Leaves Holding Corp. 


Noemi GonzalesNoemi GonzalesJuly 31, 2020
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5min2100

“The Cannabis Business Book: How to Succeed in Weed According to 50 Industry Insiders” by Michael Zaytsev  

Have you ever wondered what kind of advice you could receive if you had the opportunity to interview 50 of the top entrepreneurial spirits in the cannabis industry?

You need not wonder any longer as author Michael Zaytsev has already done you the solid of putting together this compendium of advice gathered directly from some fantastic fonts of information already producing potent results in the cannabis industry.

Piqued your interest yet? Alright, let’s get into it then!

-Topic Focus-

The number of books that discuss the business side of cannabis is finally beginning to increase but not many can boast containing advice pulled directly from people who are already considered to be successful in the world of cannabis and cannabis products.

Author Michael Zaytsev brings to the table information regarding the proper mindsets for entrepreneurs in the cannabis space, exactly why the cannabis industry is unique, ways to build money in the cannabis game, the most common mistakes made in this niche, and so much more.

In this book, you will find powerful advice from prominent cannabis figures such as Danny Danko, Steven DeAngelo, Emily Paxhia, Shanel Linsday, and many more. The concentration of expertise here is impressive.

About the Author

Author Michael Zaytsev has a dedicated and diverse background in the world of cannabis ranging from founding The New York City Cannabis Film Festival, The Cannabis Media Lab, and is also the creator of High NY, one of the most extensive cannabis Meetups on the planet.

His content has been published on sites such as International Business Times, Forbes, Entrepreneur, and more.

If you would like to explore Michael’s projects and see what he’s up to you can learn more about his endeavors here:

https://www.michaelzaytsev.com/

-Reading Experience-

The passion and expertise on this topic possessed by author Daniel McQueen become evident even by the end of the forward and seeing the glowing reviews from other medical professionals further lends to the credibility of the author.

The book does flow a bit chaotically at times as the author strikes me as eager and excited to share information he is so passionate about in order to see as many people as possible benefit from this knowledge.

The combination of anecdotal stories coupled with facts helps to keep this book engaging while also continuing to stay on topic.

-Summary-

The combined skills of an experienced writer, a seasoned entrepreneur, and someone who is experienced and passionate about cannabis make “The Cannabis Business Book” a valuable addition to the library of any aficionado or anyone looking to make their mark in the cannabis business world.

All the potent advice from successful cannabis entrepreneurs is competently comprised by author Michael Zaytsev and flows along very smoothly from section to section.

This book makes me think of it as the “Tribe of Mentors” by Tim Ferriss but catered toward the world of cannabis business.

Looking to start making plays in the world of marijuana? Step your game and get your copy here:

https://www.amazon.com/gp/product/B082S5FRK2/ref=dbs_a_def_rwt_bibl_vppi_i0


StaffStaffJuly 30, 2020
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5min1370

It’s time for your Daily Hit of cannabis financial news for July 30, 2020.

On the Site

FSD

FSD Pharma Inc. (Nasdaq: HUGE) (CSE: HUGE.CN)announced that it has notified Health Canada of the company’s decision to forfeit the licenses of its wholly-owned subsidiary, FV Pharma, Inc. and suspend all activities by FV Pharma within 30 days of the notification date. FSD Pharma said it has begun the process of liquidating all FV Pharma assets, including the sale of the company’s cannabis production facility in Cobourg, Ontario.

Shareholders are apparently happy with the move as the stock is up over 60% on the news and was lately selling at $6.04.

Bargains

Like everything else touched by COVID-19, unexpected trends and shifts have occurred in the cannabis industry. One such shift is towards consumers seeking value products, which are rising in popularity due to a reduction in work and income across many different industries as the COVID-19 crisis wears on. In particular, low price/high THC combinations seem to be the magic bullet for anyone shopping for cannabis on a budget. 

Canndescent, a brand that initially entered the market with a luxury-focus, recently launched the company’s third brand, Baker’s Cannabis Co. The brand offers lower-cost but still decent quality products, like $6 one-gram pre-rolled joints and $55 half-gram pre-ground pouches, which come equipped with rolling papers and crutches. 

Clearing the Smoke

The complexities of the U.S. cannabis industry have been exacerbated by the consequences of states operating within the confines of closed economies defined by their own interpretations of legitimacy under the shadow of existing federal laws. These variations of standards from one state to another carry inherent uncertainties for businesses and investors with respect to how the industry will operate subsequent to the inevitable delisting or reclassification of cannabis.

The general health concerns, heightened levels of anxiety, and financial assault brought upon by the COVID pandemic have arguably enhanced the cannabis legalization debate regardless of any Trump or Biden preference.  To minimize budget shortfalls, it stands to reason that many states that have not heretofore generated tax revenues from cannabis sales will now seek to initiate a discussion addressing legalization.

In Other News

DELTA 9 CANNABIS INC. (OTCQX: VRNDF) provided guidance on select financial results of the Company for the second quarter of 2020 based on preliminary results:

  • The Company anticipates revenues for the three-month period ending June 30, 2020 to be between $12.7 million and $13.2 million, compared with:
    • $8.9 million for the second quarter of 2019.
    • $11.7 million sequentially for the first quarter of 2020.
       
  • Based on preliminary results, the Company anticipates revenues for the six-month period ending June 30, 2020 to be between $24.3 million and $25.1 million, compared to $14.5 million for the same period last year.
     
  • The Company anticipates direct cannabis production cost per gram of $0.96 and total cost per gram of $1.08 for the second quarter 2020, compared with:
    • $1.05 and $1.04 respectively for the second quarter of 2019.
    • $0.98 and $1.10 respectively for the first quarter of 2020.

StaffStaffJuly 30, 2020
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11min2790

Editors Note: This article has been republished from GreenWave Advisors with permission.

Clearing the Smoke: With the End of Prohibition on the Horizon, Is It Too Late For States To Implement New Cannabis Markets?

The complexities of the U.S. cannabis industry have been exacerbated by the consequences of states operating within the confines of closed economies defined by their own interpretations of legitimacy under the shadow of existing federal laws. These variations of standards from one state to another carry inherent uncertainties for businesses and investors with respect to how the industry will operate subsequent to the inevitable delisting or reclassification of cannabis.

The general health concerns, heightened levels of anxiety, and financial assault brought upon by the COVID pandemic have arguably enhanced the cannabis legalization debate regardless of any Trump or Biden preference.  To minimize budget shortfalls, it stands to reason that many states that have not heretofore generated tax revenues from cannabis sales will now seek to initiate a discussion addressing legalization. 

Although this thinking may seem logical, we offer the following considerations as to whether any such efforts are practical at this time.

1. The imminent changes to federal cannabis laws will likely impact current regulatory and taxing structures within each state, thus initial tax revenue projections may be unachievable. We share the consensus view that a change to federal law could occur shortly after this year’s general election regardless of who wins. The inevitable friction between federal and state desires for tax revenues within the tolerance of end-user pricing acceptance (to some degree an illicit market alternative and in other cases, the demographic without access to the illicit market) will need to be reconciled.  While a new taxing structure will take time to phase-in, state tax revenue projections are more likely to fall short of original expectations.

2. It could take longer than 2 years for a state to implement a new cannabis market. As we have observed in legal recreational markets, which have benefited from an existing medical marijuana infrastructure, the timeline from the date of legalization to implementation on average is about 18 months (see below).  This timeline is even longer when considering the commencement date of initial discussions/debates among state politicians. Also, in the current pandemic environment, safety protocols at licensed cannabis facilities will need to be considered which could further extend the timeline for state tax revenues.   On the other hand, we expect an accelerated timeline in those medical states that have begun taking measures to accommodate a recreational use market. New Jersey is one such example that has recently expanded its medical program which, by a “flick of the switch” positions the state to realize added tax revenues sooner from recreational use sales (we expect the ballot measure to pass in November). 

3. A federal excise tax could garner approximately  $7B – $10B, net of lost 280E revenues. As we have noted in the past, the cost of prohibition is expensive and will continue to limit the ability for many businesses to continue as a going concern thus reducing Federal tax revenues generated from 280E.  Consequently, many businesses have failed and more will likely follow suit, particularly as the economy worsens and capital becomes more scarce.  A federal excise tax would more than offset these lost 280E revenues as noted in our analysis below.

Similar to tobacco and alcohol sales, we think it is reasonable to assume a federal excise tax on cannabis will be passed on to the consumer, which conservatively could be assessed in the range of 15% – 20%.  In order to compete with the illicit market, state taxes on cannabis sales would need to be lowered thus making original expectations unachievable.   

In this VERY simplified example, we assume a $75 B maturity value of retail cannabis sales, a 50% gross margin for 280E purposes (normal operating expenses are non-deductible under 280E), 20% operating profit margin on a normalized basis (similar to other CPG companies with no 280E) and illustrate the impact with a 15% and 20% excise tax:

4. In our view, a move to legalize medical marijuana without consideration for recreational use will provide limited tax revenues and ongoing operating losses. In the early stages of the industry’s growth, the appeal of “first mover” in a limited license medical marijuana state, has largely been predicated upon the perceived “first right” for license conversion that would at some future point, permit serving a more lucrative, recreational use marketplace.  

While patient cardholder counts and revenues are accelerating in some markets, Medical Marijuana (as it exists today) has generally fallen short of expectations (relative to the market potential) which can be attributed in part to lackluster physician/practitioner participation in state medical marijuana programs that is on average 5% with some variations depending on the state. 

We do believe that the medicinal use market will recalibrate when the pipeline of new, more targeted medication becomes available, and as the medical profession gains more comfort in “pushing” a marijuana treatment rather than a patient having to “pull” a recommendation from a doctor. These may include products available only by prescription as well as over the counter nutraceuticals. Defining a precise timeframe for these developments is difficult, as legislation will lead to guidance which in turn will foster increased entrepreneurial and scientific efforts. With this maturity, we expect the medicinal use market to surge, particularly as foreign-based companies leading the way in the research, development, and marketing of ailment specific treatments enter the U.S. market.

While we do not intend to understate the importance or necessity of medical marijuana as an alternative treatment for many debilitating health conditions, there presently appears to be little distinction between the various designated medicinal use products and those offered in a recreational market.  Since “chronic pain” (loosely defined), is the most common ailment among medical marijuana users, it is likely that recreational users can already purchase marijuana without great difficulty in states where medicinal use is legal. Accordingly, it can be argued that to some degree, a recreational use market already exists in medical marijuana states.

5. Depending on the state, even with a compressed timeline, it will likely become increasingly more difficult (but not impossible) to attract capital into a newly established market.  While retail sales have remained strong year to date, ongoing economic uncertainty coupled with prolonged operating losses in many legalized states may keep new investment dollars on the sidelines.  Furthermore, because of the federal illegality, Multinational companies have been precluded from investing in American cannabis companies leaving the U.S. at a competitive disadvantage. An end to federal prohibition will enable strategic investments from multinational companies (Big Alcohol, Big Tobacco, Big Pharma) which also brings a heightened level of professionalism and expertise.   Thus far, U.S. companies that seek exposure in Cannabis have done so by investing in Canadian companies (Constellation Brands/Canopy Growth etc.).

 


Debra BorchardtDebra BorchardtJuly 30, 2020
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4min8020

FSD Pharma Inc. (Nasdaq: HUGE) (CSE: HUGE.CN)announced that it has notified Health Canada of the company’s decision to forfeit the licenses of its wholly-owned subsidiary, FV Pharma, Inc. and suspend all activities by FV Pharma within 30 days of the notification date. FSD Pharma said it has begun the process of liquidating all FV Pharma assets, including the sale of the company’s cannabis production facility in Cobourg, Ontario.

Shareholders are apparently happy with the move as the stock is up over 60% on the news and was lately selling at $6.04.

“It is now clear to us that our shareholder value is best served in closing down our medicinal-grade cannabis operation in Cobourg, Ontario and reinforcing steps to advance pharmaceutical R&D efforts on our lead compound FSD201 (ultra-micronized PEA) and continuing to explore the acquisition of other compelling compounds to expand our drug development pipeline,” said Raza Bokhari, MD, Executive Co-Chairman & CEO.

“Our pharmaceutical R&D team led by Dr. Edward Brennan is actively working to submit an Investigational New Drug Application (IND) to the FDA for the use of FSD201 (ultra-micronized PEA) to treat hospitalized COVID-19 patients by down-regulating the over-expressed pro-inflammatory cytokine immune response to SARS-CoV-2 virus infection. We are hopeful to initiate the phase 2 clinical trial before the end of this year and remain cautiously optimistic that our study may improve treatment outcome for COVID-19 patients.”

The company said it is not making any express or implied claims that its product has the ability to eliminate, cure, or contain the COVID-19 (or SARS-2 Coronavirus) at this time.

COVID Pivot

In June, FSD said it was shifting its attention towards COVID. “Our immediate plans for FSD201 include submitting these Phase 1 trial results for publication in a peer-reviewed journal and advancing this compound into a Phase 2a proof-of-concept trial for the treatment of COVID-19,” said Dr. Bokhari. “The U.S. Food and Drug Administration recently gave the company permission to submit an Investigational New Drug Application for the use of FSD201 to treat COVID-19. We contacted the FDA after becoming aware that Italian physicians and scientists were advocating for use of ultramicronized PEA for patients suffering from symptoms of COVID-19, based on the drug’s mechanism of action as a potent and safe anti-inflammatory agent that reduces the production of pro-inflammatory cytokines and may help mitigate a cytokine storm.”

The company announced a $20 million at the market offering just a few weeks ago. The company said at the time that it would use the proceeds to continue the advancement of the near-term objectives with respect to its R&D program for the commercialization of ultramicronized-palmitoylethanolamide of FSD201.

 


StaffStaffJuly 30, 2020
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6min4150

Editors Note: This story was written by Jackie Bryant.

Like everything else touched by COVID-19, unexpected trends and shifts have occurred in the cannabis industry. One such shift is towards consumers seeking value products, which are rising in popularity due to a reduction in work and income across many different industries as the COVID-19 crisis wears on. In particular, low price/high THC combinations seem to be the magic bullet for anyone shopping for cannabis on a budget. 

Canndescent, a brand that initially entered the market with a luxury-focus, recently launched the company’s third brand, Baker’s Cannabis Co. The brand offers lower-cost but still decent quality products, like $6 one-gram pre-rolled joints and $55 half-gram pre-ground pouches, which come equipped with rolling papers and crutches. 

Old Pal

The style echoes one of the original legal value cannabis brands, Old Pal, which began selling its pre-ground cannabis flower in similar packaging and has gained popularity for its surprisingly high-quality product despite being priced comparatively lower than others in the space.

“Quality weed at fair prices has always been in high demand,” says Rusty Wilenkin, CEO of Old Pal, noting that this isn’t exactly a specific-to-COVID trend. “Value at Old Pal means more than just perceived value of low cost, to us value is the best quality at fair prices. During COVID, we’ve seen steady demand from consumers for our products. The industry overall has felt disruption with changing and varying regulations for retail shopping state to state. And while this is not unique to the cannabis industry, with the industry being as young as it is, these changes have been even more demanding.”

Canndescent

“Consumers aren’t visiting dispensaries as often as before,” explains Canndescent’s CMO Sam Arellano regarding a specific buying trend that can be directly attributed to COVID. “When they do, they’re opting for cannabis in larger weight/sizes with strong value equations to carry them between visits. We’re experiencing this increase in demand with Baker’s Cannabis Co. Despite COVID-19, demand has been consistently strong and steadily growing as consumers come to trust Baker’s quality, price, and availability.”

Arellano continues, speaking to a very specific type of customer–people who genuinely use cannabis as part of their daily routine. So much of the cannabis industry revolves around the highest potency possible, which is expensive to cultivate and produce. Add in state and local taxes on top of dispensary mark-up, and suddenly, someone who was used to paying legacy market prices faces an incredible new sticker shock for something that is part of their everyday life.

“Beyond price, they care about efficacy, availability, and trust,” Arellano says of frequent users. “Trust that the cannabis they choose is free from pesticides and other harmful containments, grown responsibly by a cultivator they respect. Availability as in, always there when they want it. And efficacy as in quality product and consistent experience.”

Harborside

CEO Peter Bilodeau from Harborside (OTC: HSDEF) in Oakland also sees the low price/high THC correlation, but suggests there are other value trends afoot, too, and that rather than hunting for potency regardless of any other factors, buyers are instead settling on personal ratios of price to THC relative other factors. 

“For some, low price and high THC correlates to value,” he says, “but we still have a varied customer base that is looking for high quality, small-batch items, flavor, consistency, and a wide selection of strains/options. We think this is why people tend to shop for the sales items for the best deal versus only shopping for items that are consistently priced lower.” 

Overall, Bilodeau says, Harborside has seen an increase in customers shopping for their sales products as well as increased basket sizes.

In any industry, the value market has always been, well, invaluable to the success of most brands that don’t market themselves to be exclusively luxurious. In an age where inequality is rising and in an industry where inequality is always at the forefront of political issues, like cannabis is, it makes even more sense that value-marketing would become an increased priority for cannabis brands looking to corner the market. 

Now that cannabis has been deemed essential in many states, sweeping federal legalization is again being discussed and it appears that economic upheaval is here to stay, at least for a while, the market for value cannabis brands has never been brighter.

 


StaffStaffJuly 29, 2020
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5min1930

It’s time for your Daily Hit of cannabis financial news for July 29, 2020.

On The Site

Scotts Miracle-Gro

The Scotts Miracle-Gro Company (NYSE: SMG) reported fiscal third-quarter sales increased 28% to $1.49 billion, beating analyst estimate for $1.3 billion (Yahoo Finance). The stock was popping over 12% on the revenue and earnings beat.

Hawthorne sales increased 72% to $302 million versus $176 million for the same time period a year ago. The U.S. consumer increased by 21% to $1.08 billion from $889.1 million.

The continued strength of the business in fiscal 2020 caused Scotts to increase its guidance for full-year sales, adjusted earnings, and free cash flow. The new sales forecast for fiscal 2020 is for 26-28% growth and is estimating the U.S. consumer segment grows 20-22%. Hawthorne sales are forecast to grow 55-60%. Scotts had said back in June, that it expected U.S. Consumer sales to increase 9-11% in fiscal 2020 and Hawthorne to increase 45 to 50%.

Aphria

Aphria Inc. (NASDAQ: APHA) stock was falling almost 10% in early trading after the company reported its financial results for the fourth quarter and fiscal year ended May 31, 2020, in Canadian dollars. Aphria delivered net revenue of $152.2 million in the fourth quarter, an increase of 18% from the prior-year quarter, and an increase of 5% from the prior quarter. This number also beat the analyst estimate of $149 million.

However, the stock was getting beaten up after the company also reported a $98.8 million net loss for the fourth quarter, which was much worse than last year’s net income of $15.7 million. The losses were attributed to a non-cash impairment of $64.0 million in the quarter, which was due to “measures taken with respect to certain of the Company’s international businesses in response to the COVID-19 pandemic.”

For the full year, Aphria reported net revenue of $543 million, with a net loss of $84 million. The 2020 revenue increased by 129% from $237.1 million in 2019.

Pennsylvania

A new study is being conducted to measure the quality of life that medical cannabis patients in Pennsylvania report when using cannabis to address pain relief.  The University of the Sciences and Releaf App have partnered with the Pennsylvania dispensary Keystone Canna Remedies to conduct a second collaborative research study on the effectiveness of Pennsylvania’s medical cannabis program.

An original study by that group found that cannabis products with THC gave the greatest symptom relief in patients. The report said that on a 10-point scale, the pain relief seen in patients taking primarily THC products was nearly two points, a statistically significant difference from one point reduction seen in patients taking primarily CBD based products.

 In Other News

CV Sciences, Inc. (OTCQB:CVSI) maker of hemp derived cannabidiol (CBD) products, today announced a strategic category expansion into condition specific dietary supplements with the launch of CV™ Acute, the first of several products to be launched under its new Immunity product line. This new non-CBD product line will open markets and sales channels for the Company, including major e-commerce retailers not currently accessible by CBD-based products.


Debra BorchardtDebra BorchardtJuly 29, 2020
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5min2360

The Scotts Miracle-Gro Company (NYSE: SMG) reported fiscal third-quarter sales increased 28% to $1.49 billion, beating analyst estimate for $1.3 billion (Yahoo Finance). The stock was popping over 12% on the revenue and earnings beat.

Hawthorne sales increased 72% to $302 million versus $176 million for the same time period a year ago. The U.S. consumer increased by 21% to $1.08 billion from $889.1 million.

Increased Guidance

The continued strength of the business in fiscal 2020 caused Scotts to increase its guidance for full-year sales, adjusted earnings, and free cash flow. The new sales forecast for fiscal 2020 is for 26-28% growth and is estimating the U.S. consumer segment grows 20-22%. Hawthorne sales are forecast to grow 55-60%. Scotts had said back in June, that it expected U.S. Consumer sales to increase 9-11% in fiscal 2020 and Hawthorne to increase 45 to 50%.

The revised guidance for non-GAAP adjusted earnings per share of $6.65 to $6.85 compares with the June forecast of $5.65 to $5.85 per share. The company said it expected non-GAAP free cash flow of approximately $400 million, up from approximately $350 million earlier.

Third Quarter Results

The company also delivered net income of $203 million. The third-quarter GAAP EPS increased 13% to $3.57; Non-GAAP adjusted EPS up 22% to $3.80. The average analyst estimate was for $3.37 according to Yahoo Finance.

“In our U.S. Consumer segment, we saw significant acceleration of consumer engagement beginning in May that continues as we speak,” said Jim Hagedorn, Chairman, and Chief Executive Officer. “Consumer purchases entering August are up 23 percent at our largest four retail partners and we’ve seen increases in every product category. We especially have benefitted from a more than 40 percent increase in branded soils and even higher gains in consumer purchases for most of our Ortho insect control business.”

“We also continued to see strong third-quarter growth at Hawthorne in every product category and geography. The team at Hawthorne has done an outstanding job this year achieving significantly higher-than-expected growth while also exceeding our operating margin targets.”

“Our results this year continue to exceed our most optimistic expectations and are a testament to the critical nature of the categories in which we compete, the commitment of our retail partners, and the loyalty of the consumers and cultivators who rely on our products for their success,” said Hagedorn. “As we enter the final weeks of fiscal 2020 and prepare for the start of our next fiscal year, we remain optimistic about the strength of our business as well as our ability to continue to enhance shareholder value.

Giving Back

ScottsMiracle-Gro said its Board of Directors approved payment of a special dividend of $5 per share and increased its regular quarterly dividend by 7 percent to $0.62 per share. Both dividends are payable September 10 to shareholders of record on August 27.

The company also decided to make special one-time payments later this year to nearly 3,000 hourly and salaried associates who did not participate in the bonus plans. “We also will enhance bonus payments to another nearly 1,500 eligible associates who do participate in incentive plans. In addition, we plan to double our charitable contributions to benefit the communities we serve.”


Debra BorchardtDebra BorchardtJuly 29, 2020
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5min1980

Aphria Inc. (NASDAQ: APHA) stock was falling almost 10% in early trading after the company reported its financial results for the fourth quarter and fiscal year ended May 31, 2020, in Canadian dollars. Aphria delivered net revenue of $152.2 million in the fourth quarter, an increase of 18% from the prior-year quarter, and an increase of 5% from the prior quarter. This number also beat the analyst estimate of $149 million.

However, the stock was getting beaten up after the company also reported a $98.8 million net loss for the fourth quarter, which was much worse than last year’s net income of $15.7 million. The losses were attributed to a non-cash impairment of $64.0 million in the quarter, which was due to “measures taken with respect to certain of the Company’s international businesses in response to the COVID-19 pandemic.”

For the full year, Aphria reported net revenue of $543 million, with a net loss of $84 million. The 2020 revenue increased by 129% from $237.1 million in 2019.

“Our strong finish to fiscal year 2020 demonstrates that this was a transformative year for Aphria, as our net revenue increased 129% from fiscal year 2019,” said Irwin D. Simon, Chairman, and Chief Executive Officer.  “We continue to focus on capturing strong market share in Canada by executing upon our strategic plan and positioning Aphria as a leader in category innovation. With exciting new product categories and line extensions launching in the very near future, we believe our award-winning adult-use portfolio remains unmatched in the industry.”

COVID Costs

Aphria said that it paused its previously announced extraction and processing expansions, including the on-going work completing the extraction center, up to and including its licensing as a result of the pandemic. The company said that it maintains sufficient extraction capacity to meet its current and near-term demand in Canada and abroad.

The company also noted that it sourced biological controls, product packaging, and vape componentry from outside of North America, but then stated that the equipment was readily available. It also stated that’s didn’t anticipate any difficulty in getting product packaging or equipment. The company also found alternative supply sources for essential supplies.

Still, the impairment losses that didn’t really seem related to COVID were as follows (in thousands):

• $4,800 on CannInvest Africa Ltd. and Verve Dynamics Incorporated (Pty) Ltd., the Company used a discount rate of 38.5%;
• $5,000 on ABP, S.A., the Company used a discount rate of 23.3%;
• $19,171 on Marigold Projects Jamaica Limited (“Marigold”), the Company used a discount rate of 38.5%; and
• $35,000 on ColCanna S.A.S., the Company used a discount rate of 40.0%

Medical Prices Rise, Adult Prices Fall

Aphria reported that the average retail selling price of medical cannabis (exclusive of wholesale), before excise tax, increased to $6.63 per gram in the quarter, compared to $6.41 in the prior quarter. The average selling price of adult-use cannabis, before excise tax, decreased to $5.23 per gram in the quarter, compared to $5.47 per gram in the prior quarter, primarily as a result of a change in sales mix and price reductions in key markets to solidify market share. Gross revenue for adult-use cannabis of $150.4 million in all of 2020.

The adjusted cannabis gross profit for the fourth quarter was $28.1 million, with an adjusted cannabis gross margin of 52.9%, compared to $23.7 million and 42.7% in the prior quarter. The increase in adjusted cannabis gross margin was primarily due to the increase in the higher-margin adult-use sales to wholesale transaction ratio in the current quarter, and higher usage of the lower-cost cannabis produced by Aphria versus purchased cannabis.

Adjusted distribution gross profit for the fourth quarter was $11.9 million, with an adjusted distribution gross margin of 12.1%, compared to $11.4 million and 12.9% in the prior quarter. The decrease in adjusted distribution gross margin was primarily related to the impacts of COVID-19 on sales mix.


StaffStaffJuly 29, 2020
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4min10840

A new study is being conducted to measure the quality of life that medical cannabis patients in Pennsylvania report when using cannabis to address pain relief.  The University of the Sciences and Releaf App have partnered with the Pennsylvania dispensary Keystone Canna Remedies to conduct a second collaborative research study on the effectiveness of Pennsylvania’s medical cannabis program.

An original study by that group found that cannabis products with THC gave the greatest symptom relief in patients. The report said that on a 10-point scale, the pain relief seen in patients taking primarily THC products was nearly two points, a statistically significant difference from one point reduction seen in patients taking primarily CBD based products.

Dr. Andrew Peterson, Executive Director of the Substance Use Disorders Institute, and principal investigator notes that “the results of the first study showed that THC products used by PA patients had a beneficial effect on pain, but now we need to find out if a patient’s health-related quality of life is also improved as a result of the pain relief from cannabis use.”

“KCR has always prioritized the furthering of cannabis research in Pennsylvania, and dispensaries with established patient bases should be looked at as data-rich resources,” said Victor Guadagnino, Founder of Keystone Canna Remedies. “As part of our ongoing care, we equip our robust patient base with tools to self analyze which should prove very effective for this study.  Participation in this study also empowers patients to have an active role in their healthcare while engaging in a way that can shape the overall understanding of cannabis beyond state lines.”

“While Pennsylvania has a robust clinical research program designed specifically for pre-approved licensed operators and universities, one of our goals is to open up research opportunities beyond the pre-approved stakeholders to a wider group of universities, dispensaries, and cannabis brands who are commonly motivated to contribute to our growing body of cannabis research,” says Keenan Keeling, CEO of MoreBetter Ltd, the company behind Releaf App. “Focusing on the efficacy of Pennsylvania products, as reported by Pennsylvania patients, allows us to provide actionable insights to cannabis patients and regional stakeholders. Ultimately, we aim to improve the experience for both patients and healthcare professionals within the state.”

Certified medical cannabis patients in Pennsylvania medicating for pain relief who are interested in signing up to participate in this research study can reach out to medicalcannabis@usciences.edu. Healthcare professionals, dispensaries, and growers/processors in Pennsylvania who are interested in supporting or participating in this research study, or future study efforts, can reach out to tyler@releafapp.com.



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