Riv Reports Etain Revenues Amid NY Headwinds

Riv Capital hinted it might expand beyond the New York border citing uncertainty in the home market.

After the market closed on Monday, RIV Capital Inc.  (CSE: RIV) (OTC: CNPOF) released its financial results for the first quarter ending June 30 with revenue of $1.4 million and net losses of $3.4 million. 

However, the real story for Riv Capital is its purchase of the New York medical marijuana company Etain. Retail revenue of $1.3 million came from Etain’s dispensaries in  Manhattan, Kingston, Syracuse, and Yonkers, and wholesale revenue of $0.2 million was generated from sales of Etain-branded products to other registered organizations in New York. Riv says it has approximately $170 million of cash on-hand to support the Etain Acquisition and long-term expansion plans.

“Following the initial closing on the unregulated assets of Etain in April 2022, we remain confident that we have selected the ideal platform for growth as the New York market approaches the launch of adult-use sales,” said Mark Sims, President and CEO of RIV Capital. “While the final transfer of equity interests of Etain, the license-holding entity, is currently under review by New York state regulators, the structure of the acquisition has given us ownership of Etain’s non-regulated assets, and accordingly, we have been diligently working with the Etain team to appropriately scale their existing infrastructure, processes, and systems. We expect a significant increase in Etain’s revenue and cash flow following the launch of adult-use sales in New York, which Etain plans to support alongside the State’s medical program once legally permissible.”

Negatives in NY

While Sims touted future adult-use sales in New York, it is unknown when the company could receive a license for adult-use sales. The first licenses are being awarded to social equity applicants and the current medical operators will be limited to three stores. In a market that is estimated to hit $9 billion, three stores might not warrant the investment into the market.

Indeed, Ascend Wellness (OTC: AAWH) recently opted out of its deal to acquire the New York Assets of MedMen citing the uncertainty of the adult use market and the proliferation of illicit dealers. To make matters worse, it is rumored that the existing license holders might have to pay $20 million for an adult-use license.

Sims went on to say, “Despite ongoing challenges in the existing medical market, particularly due to the rampant proliferation of unlicensed operators in the state of New York, Etain has carved out a premium niche that will serve as a foundation on which to grow market share in the years ahead. Four months following the initial closing of the Etain Acquisition, Etain is well on its way to completing the Chestertown expansion, introducing new and exciting products into the medical market, optimizing its retail platform, and readying to break ground on our new flagship facility in Buffalo.”

“Despite some of the prolonged headwinds that we have seen weigh on the sector over the past several quarters, we remain extremely bullish on the growth prospects for the cannabis industry, and we believe that New York will be the epicenter for key market developments in the years to come,” said Chris Hagedorn, Executive Vice President, The Scotts Miracle-Gro Company, Division President, The Hawthorne Gardening Company, and Director, RIV Capital.

Beyond NY

It seems the company acknowledged the limitations of its home base and hinted that it plans to move beyond the Empire States’ borders.

Eddie Lucarelli, Chief Financial Officer of RIV Capital, added, “Our cash position remains strong, providing us with more than enough liquidity to complete the Etain Acquisition and finance our expansion plans in New York, while remaining flexible enough to adapt to the shifting cannabis landscape in real time. Our goal to build a market-leading U.S. platform begins in New York, but we continue to explore new opportunities for the selective expansion of our footprint to other geographies in the future, keeping in mind the dynamic nature of the industry.”

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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