Gage Cannabis Archives - Green Market Report

Gage Growth Corp.  (CSE: GAGE) (OTCQX: GAEGF) reported its financial results for the third quarter ending September 30, 2021, with revenue rising to $27.2 million versus $26.4 million in the second quarter of 2021, a 3.2% increase. The net loss for the quarter was $3.7 million,

“In the third quarter of 2021, Gage had a record performance across all financial and operating metrics,” said Fabian Monaco, CEO of Gage. “We will continue to invest while improving our margins. Moreover, as we further introduce our in-house branded concentrate products, we expect our gross margin to further improve over the next two quarters.”

Gage reported that the gross margin, before the impact of biological asset adjustments, was 36.5% in the third quarter versus 34.2% in the second quarter. The company said that the 230 basis point improvement quarter over quarter in gross margin to 36.5% was due to a greater mix of higher-margin sales from retail locations and cultivation capacity expansion via Gage-operated cultivation assets, contract growing partners, and lower input costs from dedicated wholesale partners.

The company said it expects that it will continue to see its quarter-over-quarter margin expansion in the fourth quarter as in-house branded vape cart sales have recently accounted for over 80% of the category month-to-date in November. In the month of November, the company has been averaging approximately 18,000 Gage vape carts sold per week.

TerrAscend Acquisition

A couple of weeks ago, Gage announced that shareholders voted in favor of acquisition by TerrAscend Corp., and on November 15, 2021, the Ontario Superior Court of Justice (Commercial List) has issued a final order approving the Arrangement.

Mr. Monaco continued, “We are very pleased with the announcement of the proposed acquisition of Gage by TerrAscend. Our shared strategic and corporate values make this combination a strong fit, and I am extremely excited and looking forward to executing on our shared strategy of deep vertical integration and scale in our core markets. In addition, I am also very pleased with the closing of our recent debt financing which further strengthens our balance sheet.”

Looking Ahead

In addition to 10 retail dispensaries in operation today, Gage said it is in active discussions with multiple retail operators in Michigan to potentially acquire over 10 retail locations in the coming months. The company’s second Kalamazoo dispensary is now fully built and expected to open in December. Gage also successfully acquired another dispensary located in Detroit. and expects to close another proposed acquisition of a dispensary in Sturgis by the end of November. Both dispensaries are expected to be rebranded as Gage and Cookies stores, respectively. The company now has 17 dispensaries in its portfolio with the inclusion of the Sturgis acquisition.

Mr. Monaco concluded, “Overall, we will continue to execute on our growth strategy in the remaining months of 2021 and into 2022. With a strong balance sheet, we are well-positioned to execute on our near-term acquisition opportunities that will fuel the overall growth of the company.”

Michigan-based Gage Growth Corp.  (CSE: GAGE) reported its financial results for the three and twelve months ended December 31, 2020. Gage said revenue increased 615% to $10.5 million in the fourth quarter over last year. Gage also reported that its revenue increased 1,972% for the full year to $39.9 million versus $1.9 million in fiscal year 2019. The company also trimmed its net losses to $29.8 million from 2019’s net loss of $75 million. the company had a stellar 420 holiday and logged revenue of over $505,000 in a single day with average basket size of $171 and 2,956 total transactions.

“Throughout 2020, we worked to establish Gage as one of the leading vertically integrated cannabis companies in Michigan. We strategically invested in the infrastructure and human capital necessary to build scale, leveraging our first-mover advantage and strong brand to own the Michigan market,” said Fabian Monaco, CEO of Gage. “We are thrilled with the results of our efforts, demonstrated by the strong revenue growth and margin expansion we have achieved. Gage is approaching an exciting inflection point, which we believe will enable us to extend our strong growth as we look ahead to 2021.” The company said it closed its fiscal year with over $45 million of cash after closing the first tranche of oversubscribed Regulation A, Tier 2, equity financing.

Gage also noted that at this time it has eight cultivation facilities in operation today (three Gage operated and five contracted cultivation assets) and is expecting to expand to 13 cultivation facilities by year-end. The cultivation capacity is expected to increase to 3,000lbs/month in June/July 2021 and further expand to 7,000lbs/month by year-end. Gage said it expects to operate in-house processing assets in the third quarter of 2021 leading to further margin expansion.

The company’s average basket size in 2020 was $164 compared to the estimated state average basket size of $85. The company reported that it continues to see a range of $150 – $170 per average basket size in 2021. Additionally, Gage is targeting $1 million average in revenue per month for each dispensary it operates in 2021. Gage’s average monthly revenue over the past 60 days per dispensary is in excess of $1 million. Moreover, excluding one particular location situated in a tourist-heavy location that has been significantly impacted by the COVID-19 pandemic, the average monthly revenue for each dispensary was approximately $1.3 million in March 2021. Currently, four Gage-operated dispensaries have been performing in the past 60 days at an annual run rate in excess of $15 million.

Looking Ahead

“Overall, we are well-positioned to further scale our business and execute on our expansion strategy in 2021,” said Monaco. “We are excited to build on our momentum and are already seeing great performance evidenced by our record monthly revenue in March and seeing the trend continue into April driven by the success of our new store launches and strength of our brand in the market. We are projecting to set another consecutive monthly revenue record in May with two more store openings.” April revenue is looking like it is growing 5-6% sequentially over March.

Gage gave investors guidance for the next two quarters based on consumer demand.  The company said that it expects revenue in the range of $17-18 million in the first quarter of the fiscal year 2021 and $26-$31 million for the second quarter.

Mr. Monaco added, “Michigan continues to report robust cannabis sales, and in March of this year, the state posted $146 million of cannabis sales, which represents an annualized run rate of approximately $1.8 billion. We believe Michigan will be a top-five largest cannabis market in the United States this year.”

Expansion Plans

Gage said it continues to execute on its retail expansion strategy with the goal of opening 20 or more locations by year end. It expects to open two locations in May 2021, bringing its total retail footprint to ten. Two additional Cookies branded dispensaries expected to open in Q2/Q3 2021.

Michigan-based privately-owned cannabis company Gage Cannabis Co. has launched a Regulation A, Tier 2, equity financing.  The company’s Executive Chairman is industry leader Bruce Linton. Gage said it is offering up to 28,571,400 shares of Subordinate Voting Shares for $1.75 per Share. The shares are being offered pursuant to Regulation A of Section 3(b) of the Securities, as amended, for Tier 2 offerings, by management on a “best-efforts” basis directly to purchasers who satisfy the requirements set forth in Regulation A.

“We wanted to provide investors with the opportunity to invest in a growing and dominant cannabis operation before an official IPO process,” said Bruce Linton, Executive Chairman of Gage Cannabis. “Michigan is one of the top cannabis markets in the U.S., and I am confident Gage is poised to continue building on its historical execution and fortifying its position as one of the top operators and brands in Michigan, as well as a name consumers look for across the United States”. Linton is the former CEO, Chairman, and Founder of Canopy Growth Corporation (NYSE: CGC) and was the first and lead investor in the offering, emphasizing his support of the company.

Gage has opened five dispensaries and is in the process of opening three more locations by the end of the year with a goal of having over 20 stores by the end of 2021. The company says it has garnered $30+ million (unaudited) in sales so far this year and is anticipating further sales growth in the coming months. Gage’s portfolio includes city and state approvals for 19 “Class C” cultivation licenses, three processing licenses and 13 provisioning centers (dispensaries).

The company has stated that it is an exclusive cultivator and retailer of cannabis brands including Cookies, Lemonnade, Runtz, Grandiflora, SLANG Worldwide (CNSX:SLNG), OG Raskal, and its own proprietary Gage brand portfolio in Michigan.

“We’re excited to invite public investors to join alongside industry juggernauts, like Bruce Linton, and provide them with the opportunity to participate in our future success,” said Fabian Monaco, President of Gage Cannabis. “We have strategically acquired a portfolio of high-quality operating assets and brands in the rapidly growing Michigan market and developed a reputation for providing consumers with access to craft cannabis in elevated retail environments. This is a great first step in our journey to becoming a publicly-traded company and we’re excited to continue to build on our strong foundation while delivering long-term shareholder value.”