RIV Ramps Up for Adult Use as New York Regulators Give Go-Ahead

The MSO submitted an application in November to transition to adult-use sales.

RIV Capital’s (OTCPK: CNPOF) growth story has been anything but steady.

As one of the few medical outfits to set up shop in New York, it expected to be among the first in line to reap profits once the promising market went adult-use.

But things didn’t exactly go as planned, and everyone in that cohort lost money.

The situation soured as people began playing the blame game and wondering when regulators were going to open the door to the registered organizations that had invested in the state early.

Now, the dream is alive again for Riv and the other MSOs who have been waiting, after the state agreed to a settlement that gives the operators the green light to transition from medical-only operators to full-fledged recreational licensees.

In its latest earnings call, the Toronto-based cannabis investment firm, which is navigating a shortened fiscal year due to a shift in its accounting calendar, elaborated on its plan for a focused entry into New York’s adult-use cannabis market.

“This has been an exciting quarter for us as we eagerly anticipate the launch of our adult-use operations in New York,” interim CEO and COO Mike Totzke told investors.

Totzke emphasized the near-term goals: “Having submitted our application to transition to adult use in early November, we expect to wholesale into adult-use dispensaries by the end of the year and transition into adult-use sales at our first co-located dispensary at the beginning of 2024.”

Riv Capital made notable strides in preparing for this expansion, Totzke said, including expanding operations at its Chestertown facility. The facility has completed five harvests yielding results “above expectations.”

The company also integrated automation technologies to enhance the production of flower and extract products.

Completion of the firm’s new flagship facility in Buffalo, New York, is strategically timed with the rollout of the adult-use market in New York, in order to bolster the company’s retail and wholesale operations, Totzke noted.

“We were thrilled to put together a package that showcases our commitment to both medical patients and adult-use consumers in New York state, as well as the principles and ideas that the New York market is being built on.” Matt Mundy, chief strategy officer and general counsel, added.

Financials

According to regulatory filings, the company’s retail revenue from Etain medical dispensaries located in Manhattan, Kingston, Syracuse, and Yonkers was $1.5 million for the quarter, compared to $1.9 million in the previous year. However, wholesale revenue from Etain-branded medical cannabis products more than doubled to $258,000, from $125,000 in the same period last year.

Over the six-month period, RIV Capital reported net revenue of $3.5 million, showing an increase from $3.2 million in the same period in 2022. Retail revenue contributed $3.2 million, while wholesale revenue amounted to $472,000.

“As previously stated, we believe (our current capital) provides us with sufficient capital to continue the expansion and optimization of Etain’s business in New York and its impending entry into the adult use market over coming years, as well as capture new growth opportunities in other jurisdictions,” CFO Eddie Lucarelli said.

Riv reported that it currently has about $85 million in cash on hand. That type of reserve could fund potential ventures alongside other established giants, such as Scotts Miracle-Gro Co. (NYSE: SMG), which is already an active investor in Riv and recently signaled a willingness to dive deeper into the cannabis pool.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.


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