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StaffAugust 15, 2023
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BusinessDaily Hit

The Daily Hit: August 15, 2023

5min00

The Daily Hit is a recap of the top financial news stories for Aug. 15, 2023.

On the Site

Tilt Cuts Social Equity Brands With No Warning

In a surprise move by the company’s new leadership, Tilt Holdings (OTC: TLLTF) cut its social equity brands. These include: Her Highness, a female-centric brand based in New York and founded by Laura Eisman and Allison Krongard; Highsman, founded by former professional football player Ricky Williams; and Black Buddha Cannabis, founded by Roz McCarthy, who is also the founder and CEO of Minorities for Medical Marijuana Inc. Read more here.

Halo Collective to Delist from CBOE Following Disastrous Q2

International cannabis company Halo Collective Inc. (Cboe: HALO) (OTC Pink: HCANF) (FSE: A9K0) reported a punishing second quarter for 2023, including a 48% drop in revenue to just $3.5 million for the quarter that ended June 30, due to oversupply in its core markets of California and Oregon. The company announced it was delisted from the Cboe Exchange as of Monday. Read more here.

New Missouri Auditor Launches Review of Cannabis Bureaucracy

The newly elected Missouri state auditor, Scott Fitzpatrick, launched a formal investigation into how the state oversees its medical and recreational marijuana industries, fulfilling a campaign pledge he made last year in his run for the office. Read more here.

Greenlane Paints Profitability Roadmap Amid Q2 Revenue Miss

Florida-based Greenlane Holdings, Inc. (NASDAQ:GNLN) reported a slump in revenue for the second quarter ending June 30, but outlined a strategy for real returns in the near future. The company’s second-quarter revenue stood at $19.6 million, marking a decrease from the $24 million in the previous quarter. Read more here.

iAnthus Revenue Continues Downward Slide in Q2

Late Monday evening after the markets closed, iAnthus Capital Holdings Inc. (CSE: IAN) (OTCPK: ITHUF) reported its second quarter financial results ending June 30, showing deepened losses as the Canadian producer tries to crawl out of sweeping legal and financial crises. Read more here.

In Other News

RECALL: Missouri Cannabis Products/Delta Extraction

The Division of Cannabis Regulation in Jefferson City, Missouri, has issued a public product recall for nearly 63,000 manufactured marijuana items distributed by Delta Extraction LLC. This recall happened after a result of the products failing to meet compliance standards and posing a potential threat to the health and safety of consumers. Read more here.

Unrivaled Brands

Unrivaled Brands, Inc. (OTCQB: UNRV) reported that revenue for the quarter ended June 30 was composed of retail revenue of $8.4 million and cultivation revenue of $0.4 million. While sales for the company have been stable, Unrivaled also noted that it had reduced its workforce by 39% over the past year, from 238 a year ago to 145 as of June 30. Read more here.

Organigram Holdings

Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) expanded its global footprint by entering into a supply agreement to provide dried medical cannabis flower to 4C Labs in the United Kingdom. Read more here.

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StaffNovember 15, 2022
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BusinessDaily Hit

The Daily Hit: November 15, 2022

5min00

The Daily Hit is a recap of cannabis business news for Nov. 15, 2022.

ON THE SITE

California Cannabis Debt Bubble on Verge of Bursting

A slow but steady years-long trend of licensed marijuana companies in California not paying all of their bills might be nearing its climax, industry insiders warned, and a wave of business failures is on the way if (when) the debt bubble explodes. Read more here.

Kentucky Governor Provides Pathway for Medical Cannabis Use

The governor of one of last states holding out on medical cannabis signed an executive order today permitting possession and use of the product. Kentucky Gov. Andy Beshear signed the order Tuesday, pardoning “any and all persons” accused of marijuana possession after the order’s effective date of Jan. 1, 2023, provided certain conditions were met. Read more here.

Michigan’s Canapa Valley Farms Closes on $17 Million Deal With Pelorus

Pelorus Equity Group closed a $17.3 million debt financing agreement with Vassar Acquisitions Property Management and its cannabis operating entity, Canapa Valley Farms. The money will be used for building out Canapa’s state-of-the-art 90,000-square-foot greenhouse and 8,500-square-foot processing facilities. Read more here.

Cresco Labs Slashes Losses Despite Significant Headwinds

Sales for Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ), a vertically integrated, multistate operator, ticked down in the third quarter ended Sept. 30 to $210 million, in part due to the company’s exit from third-party distribution in California. Read more here.

Halo Stretches Margins Despite Lower Q3 Revenue

Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) posted results that showed rising margins despite lower revenue, driven by cost-cutting measures amid a congested supply side in California and Oregon. Revenue totaled $5.5 million, down 36% from $8.7 million in the same quarter last year. Read more here.

IN OTHER NEWS

Decibel Cannabis Company

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF), a premium cannabis producer, achieved 5.3% national market share in October 2022, which places Decibel as the sixth-largest LP in Canada by market share. The company reported $18.3 million of total net sales in Q3, with a sequential decline of 1% over Q2 2022 and an increase of 37% over Q3 2021. Read more here.

Trees Corp.

Trees Corp. (NEO: TREE) increased its revenues in the third quarter by 60% from the first quarter of 2022, while total gross profit has increased by 78% over the same period due to a strengthening retail gross profit margin percentage. Read more here.

Stone Road

Stone Road, a California-based line of premium, sustainably grown cannabis products, announced a partnership with Gamut Cannabis to bring Stone Road’s line of products to Michigan in early 2023. This marks the rapidly growing brand’s fourth market launch, as it continues to expand into legal states across the U.S. Read more here.

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Adam JacksonAugust 16, 2022
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Business

Halo Shores Up Losses As Revenues Rise

4min00

Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF) posted mostly positive results with revenues ticking up over the quarter — illustrating the west-coast operator’s pursuit to shave losses and pay down debt. The company announced its financial results for the first quarter ending June 30, 2022.

Halo reported approximately $6.9 million in revenue during the period, a 24.9% gain versus the same period last year; and a gain of 9.7% sequentially.

The company also reported a second-quarter net loss of $11.4 million, down from $13.8 million sequentially; and a net income of $11.3 million in the same period last year. The earnings were a loss of $1.64 per share versus a loss of $0.28 cents per share in the previous quarter, according to SEDAR filings.

“During the quarter, we ramped up efforts in our brand sales business, specifically Hush and Budega which are resonating with West Coast consumers and continued the retail rollout in Los Angeles where we opened the second of three planned dispensaries,” said CEO Katie Field. “Meanwhile, we de-emphasized other areas such as bulk wholesale flower and trim sales which generated good revenue but yielded lower profitability. And, we have made the decision to walk away from other parts of the plan altogether such as the Ukiah Ventures buildout and Canadian retail.”

Total second-quarter sales were 2.0 million grams versus 5.0 million grams in the same period last year — a 59.4% decrease. Year-over-year, flower sales fell by 6.2%, sales of pre-rolls rose by 11.5%, oils and extract sales slumped by 68.3% and edibles sales fell by 88.8%.

Halo reported a gross profit of $2.1 million, or 31.9% gross margin, versus a gross profit of $2.2 million, or 24.1% gross margin, in the same period last year. Adjusted EBITDA loss of $4.1 million versus an adjusted EBITDA loss of $4.4 million in the same period last year.

The company said it repaid $7.7 million in debt financing and raised $8.0 million from convertible debentures. It had unrestricted cash available in the amount of $1.6 million at the end of the period.

“Our efforts to do more with less are already paying off,” Field said. “In the second quarter, we maintained steady gross margins despite the downward pressure on wholesale pricing and volumes across our markets. We have also made progress reducing Halo’s indebtedness through debt paydowns.”

“Importantly, we are transforming the Company into a focused West Coast operator amidst market conditions in California and Oregon that continue to be very challenging,” she added, “but longer-term, are expected to be fertile grounds for significant growth and profitability for well-positioned companies such as Halo. I am highly confident that Halo is on the right path as a leader in these attractive markets. The initiatives we are undertaking, including those in the second quarter, will strengthen the Company and ultimately enhance shareholder value.”

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Debra BorchardtJuly 27, 2022
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BusinessPublic

Halo Kills PhytoCann Deal, Gives Back High Tide Stores

4min00

Halo Collective Inc. (NEO: HALO) (OTCQX: HCANF) has decided to not buy PhytoCann Holdings SA and cited market conditions as the driving factor for not pursuing the proposed acquisition. In addition to killing the PhytoCann deal, Halo also said it essentially gave back the stores it had planned to buy from High Tide.

With regards to the termination of the PhytoCann deal, CEO Katie said, “I have worked in the legal U.S. cannabis industry for nearly a decade and frankly have never seen market conditions as challenging as what we are experiencing today. In conjunction with the Board of Directors, I have therefore decided to focus on Halo’s core assets, including California and Oregon. We are simplifying and strengthening in order to enhance shareholder value. Even under the best conditions, managing an international business out of our core product line presents complexities. We wish Phytocann’s management all the best and look forward to their continued success.”

Halo has been struggling and when it reported its first-quarter earnings the company said revenue declined 23% to $7.6 million and that sales were impacted by a significant downturn in both the California and Oregon markets.

Ms. Field added, “As the new CEO, I have aggressively reduced overhead costs and plan to continue streamlining expenses to make Halo’s core business profitable. Furthermore, I have opted for a local, tactical approach to sales and marketing that we expect to improve speed to market and connections with our consumers in California and Oregon. We are focused on the Hollywood store opening and improving inventory levels company-wide. We expect to deliver a comprehensive business update in the coming weeks.”

High Tide Stores

In July of 2021, Halo Kushbar Retail Inc., a wholly-owned subsidiary of Halo, purchased three cannabis stores in Alberta from High Tide Inc. (NASDAQ: HITI). The purchase price for the stores was paid by Halo, on behalf of Kushbar, by way of issuance to High Tide of shares in the capital Halo and a convertible promissory note. The debt owing under the Note was secured by, among other things, a share pledge of Halo in respect of the shares it held in Kushbar.

Now Halo is saying that due to a dispute between the two parties regarding certain payments in respect of the stores, Halo did not perform certain of its obligations under the purchase agreement. It seems Halo decided not to make its payments and claimed the stores weren’t generating the revenue or profits it expected. According to the company statement, High Tide has taken back the stores and Halo has no further obligations or liabilities under the Note or the purchase agreement.

Halo has noted this year that it is a going concern. At the end of March, Halo had $1.8 million in cash.

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StaffMay 17, 2022
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BusinessPublic

Halo Revenue Declines On Oregon, California Market Issues

6min00

Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF) announced its financial results for the first quarter ending March 31, 2022, as revenue declined 23% to $7.6 million versus revenue of $9.9 million for the same time period in 2021. Halo said that sales were impacted by a significant downturn in both the California and Oregon markets. The company also said that the flower category, which is a leading indicator, sharply declined, with sales falling by 23% in California and 26% in Oregon year over year. Halo also reported a net loss of $13 million in the quarter, which increased over last year’s net loss of $9 million.

“Marked to market the company’s estimated unrealized gain before taxes at March 31, 2021, on Halo’s investment in Akanda was approximately $74.6 million,” said Kiran Sidhu, CEO, and Director. “We expect that if the intended acquisition and subsequent spin out of PhytoCann SA is completed, it will also create substantial value by delivering meaningful revenue and operating profit contribution.”

Oregon Issues

The company noted the numerous issues within the Oregon market and is attempting to address them while the state tries to rectify the situation. Halo said it decreased distribution of its products to Oregon dispensaries from 478 on December 31, 2021, to 464 on March 31st, 2022. the company also noted that bad debts have been reduced, and accounts receivable days have decreased. It plans on further reductions planned of production overheads and “right-sizing” of the business for current revenue and future projections. It has also reduced outdoor cultivation operations both in scope and cost for the 2022 growing season to decrease working capital expenditure and improve cash flow.

Halo said in a statement that in March 2022, the Oregon legislature signed HB4016, a moratorium that inactivates all marijuana license applications received after January 1, 2022, until March 31, 2024. Additionally, it allows the Oregon Liquor and Cannabis Commission to refuse to issue any new marijuana licenses until further notice. Halo anticipates this favorable policy change will decrease saturation and lead to rising wholesale cannabis prices over time. The net effect of this bill is expected to result in an increase in product profitability in the State of Oregon.

California

As of April 2022, Halo discontinued operations at Coastal Harvest and consolidated with Outer Galactic Chocolates/Mendocino Distribution and Transportation LLC, which will reduce overheads and increase profitability in the second quarter 2022. The company anticipates Governor Newsom’s tax proposal- which would eliminate cultivation tax starting July 2022– if passed, would further increase profitability and growth of the California business segment.

“Halo’s California wholesale business segment is EBITDA positive and scaling. We expect to re-achieve positive EBITDA contribution from the Oregon wholesale business segment in the latter half of 2022,” added Joshua Haddox, Chief Operating Officer.

“The Company’s California dispensary business segment officially opened in Q1 and is growing quickly. After a six-month ramp-up period per dispensary, we expect the Los Angeles dispensaries in North Hollywood, Westwood, and Hollywood to contribute positive EBITDA,” commented Beau McKeon, Senior Vice President of Retail Operations.

Looking Ahead

“In 2022, we intend to develop, grow, and ultimately monetize assets by incubating promising cannabis related businesses while remaining laser-focused on optimizing West coast cannabis operations. The planned spinout of Halo Tek Inc. is expected to result in a distribution to all Halo shareholders. The intended acquisition of Phytocann is expected to add significant revenue and EBITDA to the Company in late 2022,” said Katie Field, President, and Director. The company remains a going concern according to its filing.

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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis

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