CLS Holdings Archives - Green Market Report

Debra BorchardtAugust 31, 2020

CLS Holdings USA, Inc. (OTCQB:CLSH)(CSE:CLSH) reported that its fiscal year-end 2020 total revenues were $11,917,629 an increase over fiscal year 2019’s total revenue of $8,459,048. The company also reported a net loss $30 million versus last year’s net loss of $27 million. The loss was attributed to a large non-cash impairment charge on goodwill as a result of the decline in the company’s stock price.

“Because our stock price provides a basis for our enterprise value, this decline meant that we were required to write-down the value of this intangible asset by $25,185,003, a one-time write-down that has not occurred in prior fiscal years. This devaluation is not reflective of any tangible loss of assets, and our working capital remains sound.”

CEO Jeff Binder said, “In spite of the competitive landscape in Nevada we were able to grow revenue and increase our gross profit margins. Our “People Power Profits” mantra is paying dividends and I am proud that all our employees have been provided a safe working environment during these challenging times. We are a local company who will continue to provide our community with a robust menu of safe cannabis products at fair price points.”

CLS did point out that excluding the charge, its net loss would have been $5,472,970, an improvement of $22,146,087, or 80.18% compared to the fiscal year 2019 net loss.

The company said that it has seen a growth in sales at the Oasis dispensary despite a brief downturn in sales at the beginning of the COVID-19 pandemic. The company shifted to expanded delivery and curbside sales which contributed to the ability to achieve net revenue growth in an otherwise uncertain environment. The statement read, “Our continued improvements in inventory purchasing and implementation of new processes also led to a 16% expansion in gross margin to 50% in the fiscal year 2020 from 43% in the prior fiscal year. Improvements to our manufacturing division have also been successfully implemented, marked by the completion of an expansive innovation and extraction lab at City Trees in April 2020.”

Expenses dropped from $26 million in 2019 to $8.7 million in 2020. The company said it cut professional fees and trimmed parent company costs. Gross margins expanded 16% to 50% as compared to 43% in fiscal year 2019. The total number of customers served increased 70.48% from 134,009 in fiscal year 2019 to 228,458.

StaffFebruary 10, 2020

While Planet 13 Holdings (CSE: PLTH) (OTCQX: PLNHF)reported that its January sales held strong and that January revenue was roughly 10% higher than the seasonally slow months of November and December. CLS Holdings USA, Inc. (OTCQB: CLSH)(CSE: CLSH) said it saw a drop in its January sales.

Still, the 2020 January sales were better than in 2019. Revenue increased 49% from last year’s $0.73 million to this year’s $1.5 million. The company also reported that its consolidated record gross margin was 52% compared to 39% in January 2019 for an increase of 33%. The company also reported a 136% increase in dispensary customers, from 10,908 (351 average per day) in January 2019 to a record 25,776 (831 average per day) in January 2020.

Andrew Glashow, President, and COO of CLS Holdings said, “The month of January represented the best overall month to date for our operating divisions. We continued our positive momentum from CY19 into CY20. While January of 2019 saw a drop-off in revenue after the holiday period, we saw a continued acceleration in revenue and customer growth this January.”

CLS said that the installation of a new POS system allowed for increased transactions, more hands-on interaction with our customers and a substantial decrease in customer wait times. Glashow added, “The company has made great strides supported by a team of 80 hardworking, dedicated employees in Las Vegas. We anticipate that 2020 will be CLS Nevada’s best year and are carefully managing growth while increasing margins and profitability. The month of January 2020 also marked double-digit positive gross margin expansion while running ahead of our CLS Nevada operating plan. CLS Nevada continues to be cash flow positive, which facilitates all our growth and capital improvements.”

CLS said in its statement that it had executed agreements to provide third party wholesale manufacturing at our North Las Vegas, NV facility. Glashow also said, “Moving forward in 2020, we expect to see substantial revenue and margin expansion from our newly built conversion and extraction facility in North Las Vegas, NV. We have begun to manufacture for a number of third parties and are creating an entire new line of effect-based products to be launched soon. These products will be unique and differentiated in the Nevada cannabis market”.

Debra BorchardtJanuary 30, 2020

CLS Holdings USA, Inc (OTCQB: CLSH)(CSE: CLSH) released its 2019 calendar year-end statement for CLS Nevada, not long after the company reported its quarterly earnings on January 14. The company said in a statement that it was “forecasting CLS Nevada 2020 revenue of $17 million and positive EBITDA of $4 million.”

The company’s total revenue for the last three months ending in November was $3 million and for the past six months was $5.9 million. The net loss for the most recent quarter was $1.2 million, which was down from the net loss of $2.6 million for the same time period in 2018. In the recent statement, the company said that it saw a 26.10% increase in total net revenue of $996.673.18 vs. $790,396.21 in Dec. 2018.

“We saw the number of transactions increase at our Oasis Cannabis dispensary from 115,768 in 2018 to 203,127 in 2019, an increase of 75%. We did this while substantially increasing our gross margin, becoming EBITDA positive and experiencing exceptional revenue growth.”

The company’s recent filing wrote, “Although our revenues are expected to grow as we expand our operations, our revenues only recently exceeded our Oasis and City Trees operating costs and we do not yet exceed our Oasis and City Trees operating costs and corporate overhead.”

How Will It Get There?

The company will need to hustle if it wants to hit that $17 million goal. CLS said that it plans to increase sales by 100% at City Trees by eliminating low return on investment SKUs, re-branding and increasing visibility through better marketing channels. That includes expanding the Oasis Cannabis parking lot and vault to allow it to efficiently serve 1250 customers a day. The company also wants to create new revenue streams by offering advertising opportunities to brands and partners.

Andrew Glashow, President and COO of CLS Holdings, stated: “In general, 2019 has been a watershed year for us, and our Nevada operations have seen massive traffic expansion, which has led to impressive results. Internally generated cash flow provides the basis for continued expansion.

“Since coming on board as President and COO, our team has accomplished a lot in a short amount of time. We are thankful to the regulatory authorities for their commitment to a safe, robust cannabis market and their approval of our state-of-the-art North Las Vegas extraction facility, which allows us to produce some of the most unique, safest, high-quality products in the industry.”

Capital Needs

The company said in its last filing that “During fiscal 2020, we will likely require additional capital to cover our projected corporate-level cash flow deficits, the implementation of our business plan, including the expansion of our Nevada operation, and the development of other revenue sources, including the closing of the IGH Option Agreement.”

The statement went on to say, “Although we believe we will be successful in raising the capital required to close this acquisition, we have not entered into any definitive agreements with respect to such fundraising and there can be no assurances that we will be able to raise the necessary funds. We may also pursue additional acquisitions in the next twelve months but we have not entered into any definitive agreements with respect to either additional acquisitions or the capital necessary to finance them.”

Expansion Plans

Over the next year, CLS said it expects to expand its Nevada processing facility to utilize its patented technology. “Phase 2 of our expansion plan, the substantial expansion of our grow facility in Nevada, is on hold as we monitor and evaluate wholesale marijuana prices, supply, and demand. We hold an option to purchase IGH for a purchase price that includes $35 million in cash, which we plan to fund with the proceeds of future equity sales, warrant exercise proceeds and/or loans.

Debra BorchardtJanuary 7, 2019

It’s time for your daily hit of cannabis financial news for January 7, 2018.

On The Site

Jobs

As of 2018, there are more full-time cannabis workers than there are librarians, and the number is growing. These are not minimum wage positions either – retail managers, agriculture experts, and extraction technicians all earn attractive salaries and desirable compensation packages.

Patents

The number of global cannabis patent applications has doubled since 2008, Cannabis Law Report can reveal, as 2019 promises to be a landmark year for marijuana intellectual property. The World Intellectual Property Organization said approximately 10,246 cannabis-related applications have been filed since 1978 under the Patent Cooperation Treaty (PCT), with 6,137 applications coming after 2008. Experts say the number could potentially be even higher as firms exploit loopholes to snatch patents related to cannabis such as growing or treating addictions, without expressly referring to marijuana in their application.

In Other News

Green Thumb Industries Inc. (GTI) (CSE: GTII) (OTCQX: GTBIF) signed a definitive agreement to acquire Advanced Grow Labs LLC (AGL) and enter the Connecticut market. AGL is one of only four companies in Connecticut licensed to grow and process cannabis. The Connecticut-based cannabis company operates a 41,000 square foot manufacturing facility in West Haven with the potential to expand. In addition, AGL has a 46 percent ownership of a recently-awarded dispensary that will be located in Westport which makes it the only vertically licensed company in the state. Upon the close of AGL and the other recently announced acquisition, GTI will have 12 manufacturing facilities and licenses for 85 retail locations across 11 states.

Acreage Holdings, Inc. (CSE: ACRG.U) closed the acquisition of Florida-based Nature’s Way Nursery of Miami, Inc. (“Nature’s Way”). Nature’s Way was awarded a vertically integrated operating license last summer and will operate the business as Green Owl Pharms, the name under which it was awarded the operating license. The previously disclosed transaction paves the way for Acreage to bring cannabis products to Florida residents throughout the state. As of December 28, 2018, there were more than 209,000 total cannabis patients in Florida according to the Florida Department of Health Office of Medical Marijuana Use.

CannAmerica Brands Corp. (CSE: CANA) (OTCQB: CNNXF) entered into a binding letter of intent to create a joint venture with Invictus MD Strategies Corp. (TSXV: GENE) (OTCQX: IVITF) and CBDistribution Company Ltd. with the intention of acquiring hemp biomass for extraction into CBD isolate using purpose-built facilities for large-scale CBD extraction.

iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCQX: ITHUF) opened its first and flagship dispensary in New York on December 30, 2018. The dispensary, located at 202 Flatbush Avenue directly across from Barclays Center and Atlantic Terminal, is the first in Brooklyn, New York’s largest borough, with a population of roughly 2.6 million people.

CLS Holdings USA, Inc. will commence trading on the Canadian Securities Exchange, or CSE, at the opening of the market on January 7, 2019, under the ticker symbol “CLSH”. Cannabis Life Sciences is the developer of a patented extraction and conversion methodology that has the potential to increase both yield and quality of cannabinoid oils extracted from cannabis plants.

Harvest One Cannabis Inc. (TSX-V: HVT) (OTCQX: HRVOF) said that its shares of common stock were approved for trading on the OTCQX® Best Market operated by OTC Market Group.

Rubicon Organics Inc. (CSE:ROMJ) (OTCQX:ROMJF) said that its common shares are now trading on the OTCQX Best Market under the ticker symbol “ROMJF”. Rubicon Organics’ common shares will continue to trade on the Canadian Securities Exchange under the ticker “ROMJ”.

Canopy Rivers Inc. (TSXV: RIV) announced that its 49%-owned joint venture PharmHouse Inc. has entered into a syndicated credit facility with the Bank of Montreal, as agent and lead lender, and with Canadian Imperial Bank of Commerce and Concentra Bank as lenders. Under the terms of the Credit Facility, the Lenders will provide PharmHouse up to C$80 million of secured debt financing at a rate of interest that is expected to average in the mid-to-high 5% per annum range over its three-year term.

Dixie Brands Inc. (CSE: DIXI.U), one of the cannabis industry’s leading consumer packaged goods companies, has announced the hiring of two new marketing executives. Andrew Floor joins as Vice President of Marketing, Dixie Brands, and Hilal Tabsh joins as Vice President of Marketing and Distribution, Aceso Wellness.

Debra BorchardtAugust 7, 2018

New York-based cannabis-focused institutional fund Navy Capital Green International Ltd. invested $3 million of equity into Nevada-based Oasis Cannabis. Oasis is an integrated cannabis producer and retailer in Nevada. It is also a subsidiary of CLS Holdings USA Inc., which operates as Cannabis Life Sciences.

Navy Capital said that it has an extreme interest in the CLS patented extraction and processing technology. According to the company statement, Navy Capital or select others may invest an additional two million with a 15% overallotment for a total of up to $5,750,000 by August 15, 2018.

“We believe CLS Holdings possesses the premier vertically-integrated cannabis business in Nevada and when combined with the company’s opportunities in other major U.S. states and its cutting-edge scientific developments, we expect that CLS quickly will establish itself as one of the top companies in the emerging U.S. cannabis market,” said John Kaden, Managing Partner and Chief Investment Officer of Navy Capital.

With this investment, CLS now has all the funds in place to complete its build-out of its Las Vegas cultivation and production facility. In addition, CLS will utilize a portion of the proceeds to update its existing Oasis Cannabis dispensary location and improve its signage.

Jeff Binder, Chief Executive Officer of CLS, commented, “We look forward to the added value that Navy Capital brings to CLS. It is a terrific corporate development to have an additional partner, of Navy Capital’s stature, and we are excited by the expertise they bring to CLS.”

Oasis Cannabis

Oasis Cannabis has operated a cannabis dispensary in the Las Vegas market since dispensaries first opened in Nevada in 2015 and has been recognized as one of the top marijuana retailers in the state. Its location within walking distance to the Las Vegas Strip and Downtown Las Vegas in combination with its delivery service to residents allows it to efficiently serve both locals and tourists in the Las Vegas area. The company recently commenced wholesale offerings of cannabis in Nevada with the launch of its City Trees brand of cannabis concentrates and cannabis-infused products in August 2017.

Debra BorchardtJune 28, 2018

The deals continue to happen in the cannabis space with lab company EVIO’s expansion in Oregon and CLS Holdings closing on its Oasis acquisition.

EVIO

EVIO Inc. (EVIO) entered into an asset purchase agreement with Oregon-based MRX Labs. The company said that it has also formed a strategic alliance with MRX Xtractors which will develop and expand growth in existing and new markets.

According to the company statement, EVIO Inc. will acquire 100% of the assets of MRX Labs, LLC including equipment, real estate, customer lists, customer contracts, rental agreements, and equipment leases. EVIO Labs Portland will relocate its personnel and license to the Tigard facility. The transaction is expected to close on or before July 11, 2018.

“We are excited about the opportunity to further expand our reach and solidify our position as the dominant testing lab in Oregon,” said William Waldrop, CEO of EVIO. “As the Oregon market matures, there is a consolidation of the marketplace occurring, and this alliance is a win-win for both of our companies and our customers.”

MRX Labs, LLC, and MRX Xtractors, founded by Paul Tomaso, CEO and CTO, and Jonah Barber, President, have been research and development, design and engineering pioneers in both analytical testing and extraction technologies. “This relationship with EVIO affords MRX Xtractors an opportunity for us to focus on the global expansion of our extraction technologies, and to unite our testing lab with a company of scientists and professionals whom we trust will take great care of our loyal lab customers and employees,” said Barber. “We are thrilled with our newly formed alliance that gives us great confidence to refer our extraction customers, across the US and Canada, to EVIO’s network of labs and vice-versa.”

EVIO’s Lori Glauser spoke to Green Market Report not long ago about the company’s expansion plans in this video.

CLS Holdings USA, Inc

CLS Holdings (CLSH) closed its acquisition of Oasis Cannabis. With this purchase, CLS is now active in the legalized cannabis market in Las Vegas, NV, generating $850,000 in gross monthly revenue.

According to the company statement, Oasis Cannabis had its best month ever last month in generating $200,000 in gross revenues. Due to increased demand and the additional capital that was just raised, CLS plans to triple the grow production capacity over the remainder of 2018. On the retail dispensary side, Oasis has steadily witnessed increased traffic over the past few months, is now up to 400 daily visitors, and is currently generating $650,000 of gross monthly revenue.