iAnthus Delivers A Messy Report As Revenues Fall Amid Numerous Lawsuits

Executives are handsomely paid despite company problems.

Long after the markets closed on Wednesday, iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCPK: ITHUF) delivered its financial results for the fourth quarter and year-ended December 31, 2022. Revenue fell 19.6% to $163.2 million for the year versus 2021’s revenue of $203 million. The company also reported an eye-popping net loss of $449.4 million or a loss of ($0.13) per share. This compares to 2021’s net loss of $77.5 million or ($0.45) per share. 

iAnthus did not break out the fourth quarter figures in its annual report, but a review of past earnings puts the revenue at roughly $37.5 million which would be a sequential drop from the third quarter revenue of $39.4 million.

Revenue Breakdowns

The company said that the main drivers for the decrease in revenues are lower retail revenues in Florida and both lower retail and wholesale revenues in Maryland, Massachusetts, and Vermont as a result of increased competition and price compression in these markets. “This was offset by an increase in retail revenues in New York attributable to the sale of whole flower which was approved for sale in the state of New York in October 2021, from retail revenues earned from our new dispensary in New Jersey, which opened in May 2022, and from wholesale revenues earned from our New Jersey facility.” The company sold its Vermont property for $200,000 in February.

The sales revenues in the western region were $65.6 million as compared to $72.4 million for the year ended December 31, 2021, which represented a decrease of 9.4%. The decrease in revenue in the western region is attributable to lower wholesale revenues in Nevada and a decrease in retail revenues in Arizona during the year ended December 31, 2022.


The increase in total operating expenses resulted from an increase of $31.1 million in the company’s expenses which is attributable to $13.4 million in severance expenses, including a $12.0 million payment to the former Interim Chief Executive Officer Randy Maslow; a $23.9 million increase in share-based compensation from grants of RSUs to employees, directors, and officers, and the concurrent cancellation of existing stock options; and an increase in deferred professional fees of $7.1 million from the closing of the Recapitalization Transaction on June 24, 2022.

The company said it is a going concern and it does not believe that its current cash on hand will be sufficient to fund our projected operating requirements. The company also amended its Senior Secured Bridge Note to extend the maturity to February 2024 versus the original February 2023 date. iAnthus has an accumulated deficit of $1.2 billion. Despite being in financial trouble, the company is quite generous with its executive pay.

In November 2022 the company’s CFO Julius Kalcevich resigned. The current CFO is Philippe Faraut, who was previously the CFO at Irwin Naturals and is being paid $300,000 a year plus bonuses. The current interim CEO and COO is Robert Galvin, who is receiving a salary of $675,000 a year and other compensation bringing his full total to $4.3 million. The previous interim CEO Randy Maslow received $12 million for his work in 2022. Faraut and Galvin could also receive additional bonuses for 2022.

It’s worth noting that Kalcevich, Galvin, and Faraut all failed to report some stock transactions as required by insider rules with the SEC.

Unpaid Taxes

iAnthus also disclosed that it has subsidiaries that currently owe $12,501,124 for 2020, $23,050,196 for 2021, and $15,890,466 for 2022 in United States federal income taxes, and $495,303 for 2020, $972,110 for 2021, and $2,630,765 for 2022 in state income taxes. The company’s annual report stated,  “In addition, the IRS has assessed against those subsidiaries $3,694,282 in interest and penalties, and state taxing authorities have assessed $2,273,773 in interest and penalties against those subsidiaries. Interest and penalties will continue to accrue for as long as such taxes, interest, and penalties remain unpaid.” The company said the subsidiaries are in the process of negotiating payment agreements or “currently not collectible” status with the United States federal and state tax authorities for these amounts owed to delay collection; however, no assurance can be given that our subsidiaries will be successful in negotiating such payment agreements or “currently not collectible” status.

Numerous lawsuits

The company is facing numerous lawsuits. The U.S. shareholder class action lawsuit noted that on March 21, 2023, the parties executed a settlement agreement and filed the motion for preliminary approval of the settlement with the SDNY, which remains pending.

There is a case called the Roberts lawsuit against former CEO Maslow with a trial date set and is currently in discovery. The Hi-Med Case is in settlement discussions and the SDNY agreed to extend the date to April 11, 2023. The Canadian shareholder case is ongoing. iAnthus made a settlement offer on March 3, 2023, but hasn’t gotten an answer yet.

A former consultant Arvin Saloum is claiming he wasn’t paid and that case is in discovery. There’s also a claim by a Maryland license holder.

Many of the company’s problems stem from a lender takeover that shareholders insisted wasn’t necessary resulting in many of these lawsuits.

Expansion Plans

The company currently owns and/or operates 35 dispensaries for the sale of medical and/or adult-use cannabis, CBD, and ancillary products. It owns and/or operates licensed dispensaries in prime markets, including Atlantic City, Baltimore, Bethesda, Boston, Brooklyn, Las Vegas, Miami, Orlando, Phoenix, Staten Island, and West Palm Beach, and plans to open additional locations in the future.


Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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