earnings Archives - Green Market Report

Debra BorchardtDebra BorchardtJanuary 17, 2019
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5min530

MedMen Enterprises Inc.  (CSE: MMEN) (OTCQX: MMNFF) released unaudited financial results for its fiscal 2019 second quarter ending December 29, 2018. Across the company’s operations in California, Nevada, New York, and Arizona, systemwide revenue increased 40% sequentially to $29.9 million. The company said that if it included pending acquisitions that revenue number would be $49.5 million. Official results will be posted in February.

The growth is mostly due to the company’s stores in Southern California. MedMen has eight retail locations there that reported a combined $23.7 million in revenue, which represents a 27% quarter-over-quarter increase. Cowen & Co.’s most recent estimate projects California will be a US$11 billion market by the end of 2030.

“California is the prize of the cannabis industry and the performance of our stores, quarter-over-quarter, is a reflection of our continued execution in our home state,” said Adam Bierman, MedMen chief executive officer, and co-founder.

West Hollywood Store

Unfortunately, MedMen did not receive a permanent license for its West Hollywood location. This information was divulged in a recent lawsuit filed against MedMen that alleged the company was being mismanaged. This early release of revenue results may be an attempt to fight back against those allegations. In other words, if revenue has jumped 40% quarter-over-quarter how can the company be mismanaged?

The city council of West Hollywood debated their own wisdom of awarding licenses to businesses that had no open stores and no assurance they could open stores quickly.

Mayor Pro Tem  John D’Amicosaid in a public meeting, “We haven’t asked the eight new licensees whether they can open a business in three months in the city, whether or not they’re in the position to do that – that was supposed to be explained. We also don’t know what the other four medical cannabis licenses mean if the state has conflated cannabis and adult use licenses, and that was supposed to be brought to our attention when I suggested we table this. So we’re having a discussion without any of the actual information we need. Except that four really great businesses in our community potentially will be asked to stop serving their constituents, their customers, if they don’t get some way to continue to provide service.”

That sounds like the city leaders are having second thoughts.

Other MedMen Retail Locations

The retail revenue numbers including those pending acquisitions are based on 31 retail stores that were operational at the end of the quarter. The company said that includes the MedMen Paradise location near McCarran International Airport in Las Vegas, which opened in October, and the MedMen Scottsdale location in Arizona, which opened in December through the closing of the Monarch acquisition. The operational retail locations, including pending acquisitions, represent 40% of the 77 total stores that the company is licensed for across 12 states.

In addition to growing revenue at its existing locations,MedMen has 16 new locations slated to open during the calendar year 2019, including 12 locations in Florida, where the Company is licensed for up to 30 locations. The Company is set to open four retail stores in Florida in the next 90 days, which include locations in Miami Beach, Orlando, West Palm Beach, and Key West.

 


Debra BorchardtDebra BorchardtJanuary 11, 2019
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6min1580

Aphria Inc. (NYSE: APHA) reported net revenue rose 63% to C$21.7 million for the fiscal 2019 second quarter ending November 30, 2018 versus  C$8.5 million for the same time period a year earlier. The company said that the higher revenue in the quarter was driven by a 92% increase in kilogram equivalents of cannabis sold and an additional C$1.6 million of non-cannabis international sales.

The company delivered a net income of $54.8 million or $0.22 per share versus $6.5 million or $0.05 per share for the same period last year. Aphria said that the increase in net income  was due to gains on its long-term investment portfolio, primarily divestitures of positions in Hiku Brands and Liberty Health Sciences.

The quarter though wasn’t without problems. The company reported that medical cannabis sales declined marginally from 1,466.2 kilogram equivalents sold in the first fiscal quarter to 1,443.6 kilogram equivalents sold in the second quarter. Cannabis oil sales, as a percentage of volume, decreased to 19% of overall sales from 39% in the prior quarter, reflecting the higher percentage of dry bud sold in the adult-use market.

In addition to that, the average selling price, inclusive of the excise tax, declined to C$6.54 per gram in the quarter, compared to C$7.12 in the prior quarter. Sales to the adult-use market, which had a lower average selling price of C$6.32, inclusive of excise tax, compared to C$7.51 in the medical-use market.

“This is the first quarter to partially include adult-use sales, helping to drive 63% quarter-over-quarter net revenue growth, as did continued strength in sales to the medical-use market,” said Chief Executive Officer Vic Neufeld. “As expected, gross margins declined, reflecting lower effective selling prices in the adult-use market, as well as temporarily lower yields and higher production costs in the quarter as we moved aggressively to build out production facilities and implement new automation processes.”

The cash cost to produce a gram of dried cannabis rose from C$1.30 last year to C$1.76 in this past quarter. The “all-in” cost of goods sold also rose from last year’s C$1.83 to C$2.60.

Expenses in the quarter rose to $27.5 million, from $24.1 million in the prior quarter and $7.3 million in the prior year, which the company attributed to higher headcount and employee-related costs, following the acquisitions of Nuuvera Inc. and LATAM Holdings, and as a result of investing $2.6 million in brand development prior to the implementation of The Cannabis Act. It said that as a percent of net revenue, SG&A declined to 127% from 181% in the prior quarter, reflecting improved operating leverage on the Company’s growing revenue base.

New Leadership

The company did not address the issues it has had over the past few months with Hindenburg Research, the short seller who criticized company management. It did say that Aphria’s CEO Vic Neufeld, and Co-founder Cole Cacciavillani were both nearing the end of their five-years with the company and would transition out of their executive roles over the coming months but remain on the Board.

“Succession is the plan. Cole and I have informed the Board, and they have agreed, that we will begin the transition process immediately, and at the appropriate time, we will both step down from executive positions at Aphria,” said Neufeld.

Looking Ahead

“A top priority for Aphria is expanding production and automation to secure our long-term cost and scale advantages,” said Neufeld. “The Part IV and V expansions of Aphria One are now complete and awaiting Health Canada approval, while an application for a cultivation license at Aphria Diamond has been submitted and is awaiting pre-cultivation inspection. Based on this, we now expect to generate first sales from these new facilities later in the calendar year, pending Health Canada approvals, with our annualized harvest reaching 255,000 kilograms, compared to 35,000 kilograms currently, by the end of calendar 2019.”

He went on to add, “In the second quarter we also positioned the Company for long-term growth in key global markets with strategic alliances, targeted investments, and disciplined acquisitions. We’re excited to have just closed the previously announced acquisition of CC Pharma, based in Germany, which distributes pharmaceuticals and medical cannabis to over 13,000 pharmacies. This transaction positions Aphria to be a leading player in the European medical cannabis market. We’re equally optimistic about our recently announced alliances and acquisitions of highly strategic licenses and operations in Latin America and the Caribbean’s most attractive emerging cannabis markets, including Colombia, Argentina, Paraguay, and Jamaica.”

 

 


Debra BorchardtDebra BorchardtJanuary 8, 2019
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3min1452

Cannabis packaging company KushCo Holdings, Inc. (OTCQB: KSHB) reported that revenue rose 186% in the fiscal first quarter of 2019 to $25.3 million. Revenue increased by 26.5% sequentially from $20 million in the fourth fiscal quarter of 2018.

The net loss was approximately $8.2 million compared to net income of $0.1 million in the first quarter of fiscal 2018. The company reported that it had a net loss per share of -$0.10 which missed analyst estimates by $0.07. Analysts according to Yahoo Finance estimated a loss of three cents per share for the quarter.

The company said it had to weather several challenges. Cash dropped to $3 million as of November 30, 2018, versus $13.5 million as of August 31, 2018. KushCo said that rapid demand for product and timing of inventory purchases leading up to Chinese New Year resulted in a decreased cash position and overall working capital headwinds. Gross profits were equal to 12.8%, compared with 34.8% in the prior year period.

“We acknowledge the impact that our dramatic growth has had on our gross margins, in particular, the utilization of air freight and additional cost incurring quality control measures at our receiving warehouse to meet demand,” said CEO Nick Kovacevich. “We have implemented a number of strategic operational initiatives that will drive our gross margins back towards 30% as we scale the business, with improvements in margins expected in the second half of fiscal 2019. These efforts are centered on supply chain fortification including upgrading our China-based producers to support higher volumes.”

The company made quite a few changes as it navigates through its growing pains. It engaged a new Warehouse Management System provider and GoLeanSixSigma.com as consultants to build scalable and sustainable processes that maximize efficiency. KushCo initiated a second international expansion with a new office in the Jiangbei District of Ningbo, China, establishing a physical presence that it said will facilitate stronger manufacturing relationships and maintain consistent high-quality standards. The company also appointed Christopher Tedford as Chief Financial Officer, and in turn allowing Jim McCormick to focus exclusively on the Chief Operating Officer role

Kovacevich went on to say, “We are also improving operational processes through the rollout of a new Warehouse Management System, which will allow us to improve inventory accuracy, expand gross margins through a more efficient supply chain and support the overall scaling of our business.”


Debra BorchardtDebra BorchardtDecember 14, 2018
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4min3980

Organigram Holdings Inc. (OTC: OGRMF) reported a 131% increase in net sales of $12.4 million for the 2018 fiscal year versus $5.4 million in 2017. Sales for the fourth quarter increased 76% to $3.2 million versus last year’s $1.8 million for the same time period. Organigram said that the sales to the adult recreational use market will be reflected in the first quarter of fiscal 2019 which includes the three months ending November 30, 2018.

The company also reported net income of $20.5 million in 2018 up from $(10.9) million in 2017. Most of those gains came from the fourth quarter where Organigram clocked net income of $18 million versus a loss of $2 million for the same quarter last year.

“The importance of 2018 cannot be overstated for Organigram as well as the industry,” said Greg Engel, the Company’s Chief Executive Officer. “We are incredibly proud of our ability to meet the challenges of scaling our business in preparation for the adult recreational use market. We are pleased with our progress to date and believe that we have performed well in a highly competitive space while always maintaining a sustainable cost structure. Ultimately, it is our view that our Moncton Campus will be seen as a crown jewel in the industry as it is able to produce consistent, high-quality indoor grown product at scale to support our brands with the lowest dried flower cultivation costs reported to date in Canada.”

Gross margins increased to $52.5 million in 2018 from $(3.3) million in 2017. The company said that excluding fair value adjustments on biological assets, those figures would be $6.5 million and $(1.9) million, respectively.

Registered medical patients increased to 15,730 in 2018 from 7,404 in 2017 or 112%.

Looking Ahead

The company said that its 2019 sales will be dominated by adult recreational use revenue and that the company estimates first-quarter sales alone will top that of the full year for fiscal 2018. This despite only a portion of that quarter will include adult use sales. Organigram went even further and said that second quarter 2019 sales will beat the first quarter based on purchase orders received to date.

Organigram said that it believes that it currently has the leading market share position in the Maritime provinces of New BrunswickNova Scotia, and Prince Edward Island with a strong presence in AlbertaManitobaNewfoundland, and Ontario. As a reminder, the company has signed adult-use recreational supply deals or listing agreements with customers in nine out of the ten Canadian provinces (Quebec is the exception) and has already shipped to all nine of those provinces. Quebec remains a target for 2019.


Debra BorchardtDebra BorchardtDecember 13, 2018
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5min1530

HEXO Corp. (TSX: HEXO) (OTC: HYYDF) reported its financial results for the first quarter of the 2019 fiscal year with gross revenue of  C$6.7 million versus last year’s C$1.1 million for the same time period. The revenue figure includes C$5.2 million from legal adult-use cannabis sales during the first two weeks of legalization.

Still, the company delivered a net loss of C$14.7 million versus last year’s net loss of C$381,000. Hexo said that the increased loss was mainly due to higher expenses needed for expanding the scale of the operations as it prepared for the legalization of the adult-use market and the realization of stock-based compensation expenses in line with the increased headcount and market share price value of the company.

“HEXO hit tremendous milestones in the weeks following the legalization of adult-use cannabis,” said HEXO’s CEO and co-founder Sebastien St-Louis. “The company continues to honor its commitment to executing on its plans, which has led to a significant portion of our first quarter’s $6.7 million in revenue generated in just two weeks and represents more than a 500% increase over last quarter.”

Hexo said that it sold approximately 1,110,000 total gram in the quarter versus 539,000 in total fiscal 2018. Despite the new adult-use market, the company still experienced a 2% increase over last quarter in its medical cannabis sales.

“HEXO’s first quarter financials highlight the remarkable pace of its adult-use cannabis sales and put HEXO on-track to generate significant revenue this year”, added Mr. St-Louis.

Adult Use Sales

Hexo said that its adult-use sales totaled C$5.1 million during the quarter, which is a 371% increase over the C$1.1 million of medical sales in the first quarter of 2018, and a 5% increase over the C$4.9 million of total medical sales in all of fiscal 2018.

The sales volume in the first quarter of 2019 was 952,223 gram equivalents sold. With a limited ability to sell other forms of cannabis, dried flower represented 81% of gram equivalents sold during the period.

The company reported that adult-use revenue per gram was approximately C$5.45. Hexo said that this was reflective of the bulk of sales attributed to dried flower which commands a competitive market sales price. The remaining balance was made up of oil sales which get a higher revenue per gram equivalent.

The company statement said that 90% of all adult-use sales were realized in Quebec through the SQDC with the remaining 10% derived in Ontario and British Columbia via the OCS and BCLDB respectively.

Medical Cannabis Sales

Even though the focus has been on the new adult-use cannabis market, medical sales continue to be an important part of the equation. Revenue increased 30% to C$1.4 million compared to C$1.1 million in the same period last year. Hexo said that the higher revenue was driven by increased sales volume as well as higher Elixir oil sales which get a higher revenue per gram when compared to dried gram sales. Sequentially, revenue increased 2% reflecting a lower revenue per gram on the dried flower sales which decreased $0.22/gram due to the current period’s sales mix of products.

The sales volume for medical cannabis increased 30% to 157,504 gram equivalents, compared to 120,844 in the same prior year period, due to an increase in oil-based products as the product mix purchased by customers shifted towards smoke-free alternatives. Total dried grams sold increased 10% when compared to the same prior year period. Revenue per gram equivalent remained at $9.12 as compared the same prior year period. On a sequential basis, sales volume collectively increased 3% across both dried and oil sales.

Geographical sales in Ontario and Quebec increased 8% and 16% respectively.

 

 


William SumnerWilliam SumnerDecember 10, 2018
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2min3060

Cresco Labs, Inc. (CSE: CL), a multi-state cannabis operator, today announced its financial results and operational highlights for the third quarter, which ended on September 30, 2018.

Revenue for the quarter increased to $12.2 million, representing a quarter-over-quarter increase of 51% and a year-over-year increase of 335%. Cresco’s net income nearly doubled from $2.0 million in the previous quarter to $3.9 million.

Gross profits, before gains from biological assets, increased to $5.4 million, compared to $3.5 million in the previous quarter. Adjusted EBITDA for the quarter rose from $2.1 million in the previous quarter to $5.9 million.

At the end of the quarter, the company had approximately $149.5 million in assets, which included $93.9 million in cash and cash equivalents. Cresco has a working capital position of roughly $105.3 million and long-term liabilities of about $2 million.

On December 17, 2018, at 5 PM Eastern Time, Cresco will hold a conference call to discuss its financial results for the quarter. A replay of the call will be made available on the company’s website following the call.

“As one of the early cannabis companies to establish a national geographic footprint with substantial population reach and production capacity, Cresco is leading the way in normalizing and professionalizing our industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “As a multi-state operator, we have repeatedly proven our ability to get access to markets, get operational, get product to markets, and get disproportionate market share.”

Following the closing of the quarter, Cresco entered the Massachusetts cannabis market with the acquisition of Hope Heal Health, Inc. Most recently the company went public on the Canadian Securities Exchange and began trading under the stock ticker “CSL” on December 3, 2018. Cresco is also in the process of receiving FINRA approval to trade on the OTC Market. The company also increased its liquidity by closing a $100 million Series F funding raise and another $85 million funded through institutional investors.


Debra BorchardtDebra BorchardtDecember 10, 2018
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3min1970

Dixie Brands Inc. (CSE: DIXI.U) announced its financial results for the three-month and year-to-date periods ending September 30, 2018. Revenue was $2,435,000 in the third quarter of 2018, an increase of 110% over last year’s $1,162,000 for the same time period. However, Dixie delivered a net loss of $2,404,000 for the quarter versus $630,000 for the third quarter of 2017.

Dixie completed a reverse takeover in order to go public during the third quarter and this set back the company’s ability to record net income. Year-to-date, the company suffered a net loss of $4,696,000 in 2018. Dixie said that the 2018 results were affected by a non-cash charge of $2,187,000, which was recorded in Q3 2018, for the conversion of debt into equity, and by expenses of $803,000  associated with the reverse takeover, Series C financing and public stock listing completed subsequent to September 30. Without these charges, Dixie said it would have made a small profit in the quarter.

“Our revenue growth is accelerating as we realize an increasing return on years of investment in our product portfolio, manufacturing capabilities and distribution network,” said Chuck Smith, President, and CEO, Dixie Brands. “Our fully-funded business plan targets expansion into four-to-six new U.S. states and Canada in 2019, applying the successful template we have used in the four states where we already operate.”

The company reported that year-to-date, revenue was $4,205,000, up 60% from $2,630,000 in the first nine months of 2017. That growth was achieved by increased sales of Dixie’s THC-infused products in Colorado, Maryland, and Nevada, as well as the company’s CBD products. Dixie had $18,584,000 of cash on September 30, 2018. The company also noted that it had gross profits of $1,038,000 in the third quarter which was up 102% from $514,000 a year earlier.

During The Quarter

Dixie re-launched operations in California following a clarification of regulatory requirements in the state. Dixie said it expects to begin generating revenue in California in the fourth quarter of 2018. The company also entered into an agreement with Central Garden & Pet to distribute its Therabis line of pet wellness products. New products launched during the third quarter included Sour Smash Gummies and Cucumber-Melon Mints, and Mindset, a new brand focused on high quality vape and concentrate products.

Fourth Quarter

Dixie closed on a Series C financing round on October 1, 2018, raising gross proceeds of $25 million in an oversubscribed, non-brokered private placement. The company completed a reverse takeover of Academy Explorations Limited on November 27 and began trading on the Canadian Securities Exchange on November 2.


William SumnerWilliam SumnerDecember 3, 2018
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3min3840

Harvest Health & Recreation, Inc. (OTCMKTS: HTHHF) today announced its financial results for the third quarter ending on September 30, 2018. The financial results pertain the operations of the Harvest Enterprises Group of Companies, which acquired Harvest Health & Recreation (then known as RockBridge Resources Inc.) in a reverse takeover last month.

Revenue increased from $10.5 million last quarter to $11.2 million; representing a year-over-year increase of 62% when compared to the same period in the previous year. Net loss for the quarter was $0.5 million; which includes $3.7 in costs and other related expenses of the company’s reverse takeover of RockBridge. Excluding the impact of biological assets, gross profit was $5.6 million, representing a year-over-year increase of 61%, and the gross profit margin was 50%. Over the last year, adjusted EBITDA rose from a loss of $0.04 million to $3.2 million.

As of September 30, 2018, the company had $28 million in cash and cash equivalents, and over the last year the company has raised approximately $290 million; $50 million in convertible debentures (which was converted into common stock at the completion of the RockBridge reverse takeover), $20 million in senior debt, and $218 million in a brokered private placement.

In addition to last month’s reverse takeover, Harvest Health also acquired San Felasco Nurseries, Inc., a medical cannabis license holder in the state of Florida, for $65.6 million. Harvest Health’s operational footprint now includes 40 cannabis licenses in 10 U.S. states. This recent acquisition will allow Harvest Health to produce, process and dispense medical cannabis and will enable the company to open as many as 25 medical cannabis dispensaries in the state.

The company also acquired CBx Enterprises LLC, a cannabis-focused intellectual property company. CBx is currently engaged in a licensing agreement with two Colorado-based cannabis companies, THChocolate, LLC and Evolutionary Holdings, LLC.

“This acquisition ensures Florida patients can finally receive the highest quality products and experience in the cannabis industry,” said Harvest CEO and founder Steve White. “Harvest is thrilled to bring its consistent, safe, fully vertically integrated approach to dozens of forthcoming stores in the Sunshine State.”


William SumnerWilliam SumnerNovember 30, 2018
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4min3660

MPX Bioceutical Corporation

MPX Bioceutical Corporation (CSE: MPX) reported its financial results for the second quarter ended on September 30, 2018. MPX recorded revenue of CAD$14.7 million, up from CAD$4.4 million in the same quarter during the previous year. The increase in revenue was attributed to wholesale operations and the company’s management of four cannabis dispensaries in Arizona. Gross profits for the quarter rose by 30.1% to $4.4 million.

The company’s net loss for the quarter rose precipitously to CAD$19.2 million, up CAD$3.9 million in the same period during the previous year. The company attributes its losses to general operations, accretion expense of CAD$1.4 million and costs related to the change in fair value for the Hi-Med Facility and convertible loan for CAD$9.2 million.

“For the second quarter, we again experienced strong growth, with revenue increasing $10.3 million year over year, topping $14.7 million, driven by the strong performance of our Arizona operations and much-improved production from our facility in Nevada,” said W. Scott Boyes, Chairman, President, and CEO of MPX. “We continue to execute upon our aggressive expansion strategy, as demonstrated by the successful openings of the Health for Life dispensaries in Maryland managed by one of MPX’s subsidiaries.”

Plus Products Inc.

The California-based edibles manufacturer, Plus Products Inc. (CSE: PLUS) announced its financial results for the quarter ended on September 30, 2018. Revenue rose to $2.56 million, up 60% over the previous quarter. The company’s loss and comprehensive loss rose to $1.79 million, up from $1.21 million during the same period during the last year.

PLUS ended the quarter with a gross margin of $0.38 million (15%) and $11.1 million in cash on hand. Shortly after the end of the quarter, the company  went public and closed a CAD$20 million IPO

“We are pleased that as measured by retail sales in Q3, the PLUS brand is now the leading edibles brand in the largest and most competitive cannabis market in the world, and we look forward to extending the brand beyond California in 2019,” said Jake Heimark, CEO of PLUS.

Emerald Health Therapeutics Inc.

Emerald Health Therapeutics Inc. (TSXV: EMH) reported its financial results for the third quarter ending on September 30, 2018. Revenue for the company rose to $321,070, representing an increase of 51% when compared to the same period in the previous year. Likewise, Emerald Health’s net loss also increased; increasing from $1.9 million in Q3 of 2017 to $6.26 million.

Shortly before the end of the quarter, Emerald Health was chosen as an authorized cannabis supplier by the Newfoundland Labrador Liquor Corporation (NLC), and by the last week of November had completed its first adult-use cannabis shipments to Newfoundland; as well as British Columbia and Labrador.

“As we move forward at this pivotal point of commercial production, we expect our Pure Sunfarms joint venture, Quebec facility, and hemp sourcing agreements to result in significant scaling of production and sales from the fourth quarter onward,” commented Avtar Dhillon, MD, President of Emerald Health.

 


Debra BorchardtDebra BorchardtNovember 29, 2018
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5min5040

MedMen Enterprises (MMEN) (MMNFF) reported that its fiscal year 2019 first-quarter revenue grew 1,094% to $21.5 million over last year’s $1.8 million for the same time period. Still, the company reported a net loss of $66.5 million, or a loss of $1.42 per share, a dramatic increase over last year’s loss of $5.7 million for the same time period. This was a slight improvement over the net loss of $78.7 million for the fourth quarter last year.

“Our first quarter performance underlines the successful execution of our growth strategy and ongoing commitment to provide mainstream cannabis consumers a wide breadth of products for their lifestyle and wellness needs,” said Adam Bierman, MedMen chief executive, and co-founder. “Our four-pillars strategy – built around a quality team, superior assets, strong balance sheet and the ability to efficiently and effectively raise and deploy capital – has set us up to successfully achieve our vision. We are now entering a new phase focused on fully operationalizing our vast footprint.”

Revenue Breakdown

The company said that the systemwide revenue was drawn from operations in California, Nevada and New York. The statement read that the year-over-year increase was driven primarily by the opening of seven additional retail stores and strong results from the California market. The Company operated 14 locations at the end of the first quarter. Southern California accounted for 86% of first quarter systemwide revenue and 8 out of the 14 open retail stores at quarter end.

The company noted that the quarter was impacted by a state-wide supply chain challenge in California during the month of July. That was when new regulations went into effect and many of the original products on the shelf no longer met those requirements. They were sold at deep discounts and then destroyed if it didn’t meet new regulations.

MedMen said its gross profit for the first quarter were $11.7 million versus $5.9 million in the previous quarter. This represents a 98% growth rate. Gross profit margin in the first quarter was 54% compared to 29% in the previous quarter.

Expenses

Expenses in the first fiscal quarter were $72 million and SG&A  included $4.8 million in marketing and branding, $16.3 million for salaries and benefits. Furthermore, SG&A expenses for the first quarter also included $1.4 million acquisition-related costs and $24.9 million of cash and non-cash stock-based compensation and employee incentive plans expense and $4.7 million for the state, local and federal tax-related expenses.

MedMen had $63.4 million in cash and cash equivalents at the end of the quarter. While MedMen has been able to sell more shares to raise additional capital, the expenses continue to outpace the revenue. The last capital raise was cut almost in half as the price of the shares dropped before the deal could be completed. The CFO James Parker also recently resigned and the company appointed Jim Miller as interim chief financial officer.

Since Quarter End

Since the first quarter ended, MedMen got its foot into the Illinois market through the pending acquisition of a licensed medical dispensary in Oak Park. It acquired a northern California licensed dispensary in the City of Emeryville outside San Francisco on October 10.

The company intends to acquire PharmaCann in an all-stock transaction valued at $682 million. The transaction will double the number of states where MedMen has licenses to 12, which accounts for over 50%of the total estimated 2030 U.S. addressable market of $75 billion as stated by the Cowen Group. Combined, MedMen and PharmaCann would be licensed for 67 retail stores and 14 factories, including pending acquisitions by MedMen.

MedMen agreed to acquire control of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up,” in a cash and stock transaction valued at $33 million. Level Up holds licenses for two vertically-integrated operations in Arizona, including retail locations in Scottsdale and Tempe and 25,000 square feet of cultivation and production capacity in Tempe and Phoenix.

 



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