This is Marijuana Money for the week ending January 19, 2018, covering the top financial news headlines in the cannabis industry.
Colorado reported that medical marijuana sales fell 2% in 2017 as consumers made the switch to recreational marijuana. Initially, medical sales had only slowed when adult use was made legal, but now the data shows they are actually declining.Medical marijuana sales were down year-over-year to $420 million in the full year 2017 versus $430 million in 2016 ’16. Recreational marijuana sales increased 30% year over year to $1.074 billion.
Even though the trading week was shortened with a holiday on Monday as U.S. markets were closed for Martin Luther King Day, several big deals have been announced.
Canopy Growth (TWMJF) announced a $175 million bought deal led by GMP Securities and BMO Capital Markets. The deal is expected to close on February 7 and the proceeds will be used for expansion and working capital. The offering is expected to close on Feb. 7, 2018. This latest deal comes on the heels of a two year agreement between Canopy and the Canadian provincial government of Prince Edward Island, in which the company will provide the province with a minimum of one million grams of cannabis for at least the first year.
The Green Organic Dutchman raised $112 million including $55 million from Aurora Cannabis (ACBFF). The company also said it expects to go public at some time in March.
Aphria (APHQF) acquired Broken Coast Cannabis in a deal valued at 230 million Canadian dollars. Aphria also signed a supply agreement with Australian based Althea company which will increase their presence in Australia.
Kush Bottles (KHSB) reported that its revenue rose 258% in the fiscal first quarter to $8.85 million. The company also delivered net income of $94,000 versus last year’s loss of $161,000. Gross profits also rose to $2.6 million over last year’s $834,000. Gross margins fell from 34% to 30% as business increased in the lower margin vaporizer category. The company acquired CMP Wellness which generated strong vaporizer sales, but at the cost of lower margins.
And finally, Organigram (OGRMF) and Canopy Growth both signed deals to supply Canada’s Prince Edward Island with cannabis.