OTC, CSE Investors Looking For Green Swan

The OTC Markets Group and the Canadian Securities Exchange held an Investor Day in New York City on October 30. The event featured presentations from Trulieve Cannabis Corporation (OTCQX: TCNNF; CSE: TRUL), Flower One Holdings Inc. (OTCQX: FLOOF; CSE: FONE), Ayr Strategies Inc. (OTCQX: AYRSF; CSE: AYR.A), TerrAscend Corp. (OTCQX: TRSSF; CSE: TER), Planet 13 Holdings Inc. (OTCQX: PLNHF; CSE: PLTH), Cresco Labs Inc. (OTCQX: CRLBF; CSE: CL) and iAnthus Capital Holdings, Inc. (OTCQX: ITHUF; CSE: IAN).

Richard Carleton, CEO of the Canadian Securities Exchange and Jason Paltrowitz, Executive Vice President of Corporate Services at the OTC Markets Group fielded questions from investors about the sector’s bear market and what they thought could turn things around. Of course, these executives can’t convince investors to start writing buy tickets and it doesn’t seem as if a “Green Swan” moment will occur in the near term to swing stocks back to the past meteoric rises.

“We would like to see a decoupling between US multi-state operators and Canadian licensed producers (LP),” said Patrowitz. “It’s challenging in Canada, and some LP’s have gotten in trouble, which took the group down.” He did add that U.S. companies are working in a completely different environment from the Canadians, but get lumped together. He also pointed out that the market is seeing the emergence of winners and these performers he believes will bring confidence back to the investors.

The two also highlighted the growth they are seeing in other stock markets around the world. Specifically, Jamaica and Africa were mentioned for future promise. They both agreed that there would be more market consolidation

One of the best performers in the sector has been Trulieve, who kicked off the event. The company announced updated guidance of revenue in the range of $220-$240 million for 2019 and for 2020 the revenue is expected to be between $380-400 million. A considerable amount of the company’s growth was due to a rise in the number of medical cannabis patients in Florida, which increased by 19%. Driving patient growth was the introduction of cannabis flower to market, which accounted for 50% of total product sales in the state for the second quarter. As of June 30, 2019, there were 181,000 medical cannabis patients in Florida.

Trulieve CEO Kim Rivers said that 3,000 people new people enter the Florida market every week. The company’s decision to go “all in” on the state is part of its brand penetration thesis. It has  1.7 million sq ft of cultivation, combining low cost and premium facilities. Trulieve expects 44 stores by year-end in the state and assured the attendees that they had no banking issues.

Flower One spoke about its recently acquired product Old Pal becoming the top-performing cannabis flower brand in the state of Nevada according to Headset.

Newcomer Ayr Strategies stressed to the audience that its strategy was to acquire cash flow positive only companies. Chief Operating Officer Jen Drake noted that the company was not reliant on capital markets to fund growth. “We have a lower risk strategy and we’re focused on profitability,” she said. The company created vertical integration in Nevada by buying four companies and is also in Massachusetts. The company has a 2019 forecast for revenue of C$160-170 million and in 2020 the revenue is estimated at $305-C$325 million. The company currently has a market cap of only $46 million and is free cash flow positive every month.

iAnthus reviewed its relationship with Gotham Green and the financing deals that the company has engaged in to keep the company in solid standing. While the New York recreational status was disappointing, the company is nonetheless preparing for that day whenever it does happen.

 

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief 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 Masters degree in Business Journalism from New York University.


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