High Tide Archives - Green Market Report

StaffSeptember 29, 2022
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The Daily Hit is a recap of cannabis business news for Sept. 29, 2022.

ON THE SITE

Vermont Recreational Cannabis Sales Will Launch Oct. 1 in Burlington

At least three Vermont stores will have adult-use cannabis sales beginning on Oct. 1: CeresMED in Burlington, Mountain Girl Cannabis in Rutland and FLORA in Middlebury. Several more retailers are expected to quickly follow. Read more here.

Heritage Cannabis Reports Rising Revenue, Trims Losses

Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) reported its financial results  for the third quarter ended July 31, 2022. Heritage delivered revenue of $10 million, an increase of 111% over last year’s $5.1 million. Heritage said the growth was attributed to a continued increase in its vape and concentrate offerings as well as the launch of the flower vertical. Read more here.

Safe Harbor SPAC Complete

Safe Harbor Financial, technically known as SHF Holdings (Nasdaq: SHFS) has completed its special purpose acquisition corporation (SPAC) deal with Northern Lights Acquisition Corp. (Nasdaq: NLIT). Northern Lights is now officially known as SHF Holdings, and the stock will continue to trade on the Nasdaq marketplace. SHFS Shares began trading at $9, down 12% as the broader market experienced selling and Norther Lights shares closed at $10.81 on Wednesday. Read more here.

IN OTHER NEWS

Canadian cannabis grower Sugarbud seeking creditor protection

Calgary, Alberta-based Sugarbud Craft Growers Corp. “expects that it is likely to default on several material debtor agreements due to ongoing liquidity constraints,” the company said in a Monday news release. The cannabis producer is seeking creditor protection. Read more here.

High Tide to Acquire 2 Jimmy’s Cannabis Shop Locations in British Columbia

High Tide (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA), a retail-focused cannabis company, entered into a definitive agreement to acquire 100% of the equity interest of 1171882 B.C. Ltd., operating as Jimmy’s Cannabis Shop BC. Under the deal, High Tide will acquire two of the five retail cannabis stores currently operated by Jimmy’s in British Columbia for $5.3 million. Read more here.

Irwin Naturals Acquiring Ketamine Media

Irwin Naturals Inc. (CSE: IWIN) (OTC: IWINF) (FRA: 97X) has agreed to acquire all of the issued and outstanding shares of Keta Media LLC dba Ketamine Media, the nation’s leading growth platform for clinics offering ketamine-assisted therapy. With a global network dedicated to improving patient outcomes, KM has established relationships with clinics in more than 45 states and three countries connecting providers and patients using a unique patient-centered approach to communication. Read more here.


StaffSeptember 14, 2022
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The Daily Hit is a recap of cannabis business news for Sept. 14, 2022.

ON THE SITE

Tempered Optimism On Cannabis Industry Future At Benzinga Chicago Conference

A diverse swath of cannabis industry insiders at the Benzinga Capital Conference this week in Chicago expressed high-flying optimism heading into 2023, but they also hedged by acknowledging the immense business hurdles that marijuana entrepreneurs still face. Read more about sentiment on the cannabis industry here.

High Tide Revenue Keeps Rising With Resilience In M&A, Members Program

Pointed consolidation efforts and increased participation in its member loyalty program drove High Tide‘s (Nasdaq: HITI) (TSXV: HITI) third-quarter revenue to nearly double what was reported last year. “These impressive numbers come despite hypercompetitive cannabis retail markets across Canada and a global softening of e-commerce sales as pandemic-related restrictions are continuing to be lifted,” CEO Raj Grover said in a news release. Read more about High Tide’s rising numbers here.

Green Market Report’s Cannabis Tech Awards Profile: Puffco, Coolest Consumption Tech

Puffco’s mission has always been to make “the magic of concentrates accessible to everyone.” The company’s advanced push-button technology hardware and accessories for vaping and dabbing helped make the category significantly more friendly to a wider group of cannabis consumers. This is why Green Market Report honored Cannabis Media at the first ever Green Market Report Tech Awards in San Francisco. Read more about Puffco’s cool consumption tech here.

IN OTHER NEWS

Curio Wellness Announces Four New VP Positions

Curio Wellness, a cGMP-certified, vertically integrated medical cannabis company, created four new created vice president positions representing additional expertise in the areas of expansion & integration, supply chain, marketing and brand development. The appointments will help support Curio’s three-year strategic plan. Read more here.


Debra BorchardtJuly 27, 2022
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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.


Adam JacksonJuly 19, 2022
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High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) has entered into an agreement with a syndicate of underwriters led by Echelon Wealth Partners Inc. have agreed to purchase 4,310,400 units at a price of C$2.32 per Unit for total gross proceeds of approximately C$10 million. Despite raising the money in the bought deal, the company cautioned in its remarks that the overall cannabis landscape was becoming more challenging.

“On April 18, 2022, we announced that we had executed a letter of intent with Connect First Credit Union Ltd. for non-dilutive credit facilities. Due diligence on this financing remains ongoing; however, this process is taking much longer than previously anticipated. Accordingly, we are being proactive with a supplemental C$10,000,000 equity capital injection. Despite the recent deteriorating and uncertain macro environment, our operations remain very strong, and today’s news will ensure that we can continue our trajectory and take advantage of the attractive opportunities that present themselves in the market.” said Raj Grover, President and Chief Executive Officer of High Tide.

The company said that the money will be used for constructing and opening new retail cannabis store locations, the repayment of the debt, and for general corporate and working capital purposes. It reported that it had C$15 million in cash at the end of April.

Sailing Through Rough Waters

As Grover stated, the company’s previous earnings were solid. Last month, it released its financial results for the second fiscal quarter of 2022 ending April 30, 2022. Revenue for High Tide increased to $81.0 million versus $40.9 million in the same quarter last year. Sequentially, revenue increased by 12% compared to the first fiscal quarter. That represented the second-highest quarterly revenue figure generated by a Canadian cannabis company reporting in Canadian dollars. The net loss was trimmed by 33% to $8 million in the quarter versus last year’s net loss of $12 million for the same period.

In June, High Tide said it expected to continue to increase its revenue through the third fiscal quarter of 2022, and for the remainder of the year through organic growth and accretive M&A. The goal is to have at least 150 stores open by the end of the year. Currently, it has 126 stores in its Canadian retail store portfolio. The company also said it anticipates entering the British Columbia market within the third fiscal quarter of 2022 and will continue growing strategically in other provinces where it currently operates.


StaffFebruary 10, 2022
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Schwazze,(OTCQX: SHWZ) has closed the transaction to acquire Colorado-based MCG, LLC also known as Emerald Fields.  Emerald Fields is the owner and operator of two retail cannabis dispensaries, located in Manitou Springs and Glendale, Colorado.  This acquisition is part of the company’s ongoing retail expansion plan in Colorado and New Mexico, bringing the total number of dispensaries the Company operates to 32.

Total consideration for the acquisition is $29 million and will be paid as 60% cash and 40% Schwazze common stock upon closing.  This is an estimated 3.8 multiple on 2021 Adjusted EBITDA.

“Our team is delighted to add the Emerald Fields Cannaboutiques to our growing portfolio of dispensaries and are eager to welcome the team to Schwazze. Manitou Springs and Glendale are attractive locations and valuable assets to our overall growth plan as we continue to build out Colorado.  Our team is excited to add another store brand to our house of brands.”  said Justin Dye, Schwazze’s CEO.

High Tide

High Tide Inc. (Nasdaq: HITI) has completed its acquisition of Bud Room Inc. as well as assignments of the vendors’ shareholder loans, for C$3.6 million and acquired all rights to the customized Fastendr retail kiosk and smart locker technology and Bud Room’s retail cannabis store located in Ottawa, Ontario.

The company said in a statement that the acquisition will provide the following elements:

  • High Tide through this acquisition gains ownership of the Fastendr technology which will improve the Company’s competitive advantage in bricks-and mortar cannabis retail.
  • A pilot conducted at Bud Room’s Ottawa location found that over 60% of customers preferred to use the Fastendr™ kiosks and spent over 20% more when doing so.
  • All existing and future Canna Cabana locations will be equipped with this customized and innovative kiosk and smart locker technology as it delivers a faster customer experience in busier retail locations while also enabling the efficient operation of smaller footprint stores.
  • High Tide intends to license this technology to third party retailers starting with the cannabis industry, and expanding to other retail sectors across North America and beyond.
  • This technology provides High Tide with potential new revenue generation, data collection and monetization opportunities from third party retail locations, and will further enhance the value of its Cabannalytics data insights offering.

Bud Room’s founder and Chief Executive Officer, Michael DiDuca will remain engaged with the High Tide team assisting in launching Fastendr. High Tide granted 13,538 stock options to DiDuca exercisable at C$6.25 per High Tide Share for a period of 3 years.


Debra BorchardtDecember 6, 2021
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High Tide Inc.  (TSXV: HITI) (NASDAQ: HITI) announced that it was going to issue up to C$40 million (or the equivalent in U.S. dollars) of common shares at the company’s discretion and subject to regulatory requirements. High Tide said it plans to use the net proceeds of the offering to fund two specific strategic initiatives it is currently developing, to support the growth and development of the company’s existing operations, funding future acquisitions as well as working capital and general corporate purposes.

“I am pleased to announce the establishment of an ATM Program. Keeping our balance sheet healthy is paramount for us. As previously mentioned, we have cut our debt by more than half over the past 12 months. Particularly considering our size and how active High Tide is, it is critical that we always have sufficient cash on hand to take advantage of any opportunities to create shareholder value,” said Raj Grover, President and Chief Executive Officer of High Tide. “This ATM Program is a very low-cost tool for us and provides an opportunity to be flexible in our approach and potentially raise some capital if and as needed to fund two strategic initiatives we are working on in particular. I look forward to sharing more regarding these initiatives in due course,” added Mr. Grover.

In September, High Tide said it expected to be at approximately 110 stores by the end of calendar 2021, despite some delays experienced in securing building permits. The company said it had made good progress on its application to enter the British Columbia market, and now expects that to occur by end of its 2021 fiscal year. Also in September High Tide said, “We are currently in discussions with multiple parties across a variety of end markets, with a particular focus on e-commerce within the growing ancillary and hemp-derived CBD markets. With a current annual run rate of revenues in the U.S. exceeding $50 million, we believe we are excellently positioned to lever our U.S. customer base to also sell cannabis once permissible by federal regulations and/or exchange policies – and the company intends to continue growing its U.S. presence in the meantime.”

High Tide said it will pay the Agents a cash fee of up to 2% of the gross proceeds and will reimburse certain expenses incurred by the Agents. Any shares sold through the ATM Program will be sold at prevailing market prices when issued (i) in ordinary brokers’ transactions on the Nasdaq Capital Market or another U.S. marketplace on which the common shares are listed, quoted, or otherwise traded or (ii) in ordinary brokers’ transactions on the TSX Venture Exchange or another Canadian marketplace on which the common shares are listed, quoted or otherwise traded.


StaffNovember 22, 2021
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High Tide Inc. (TSXV: HITI) (Nasdaq: HITI) announced it was buying 80% of NuLeaf Naturals, LLC for $31.24 million and will have a three-year option to acquire the remaining 20% of NuLeaf at any time. The total company is valued at $39 million. High Tide said that NuLeaf would be highly accretive noting that NuLeaf generated gross margins of 71% and Adjusted EBITDA1 margins of 25% during the 12 months ended September 30, 2021.

“With this announcement, we have doubled down on our efforts to become a global market leader with respect to hemp-derived CBD production and e-commerce sales. Our strategy is backed by numerous studies which predict that the global CBD market is set to grow exponentially over the coming years, with Fortune Business Insights projecting that it will reach US$56 billion by 2028, equating to a compound annual growth rate of 47%. High Tide is growing across all three categories within the cannabis ecosystem, including THC, CBD, and accessories. With the purchase of NuLeaf, we are now further vertically-integrated in our CBD business, just like we have been with regard to consumption accessories. As international markets open up and as export regulations evolve, NuLeaf’s cGMP-certified facility positions us to take advantage of the global CBD business opportunity,” said Raj Grover, President and Chief Executive Officer of High Tide. “Additionally, NuLeaf has developed customized manufacturing technology for vegan softgels, establishing them as one of very few manufacturers in the U.S. with this capability. Their portfolio also includes other innovative products including their Multicannabinoid oils and softgels. This transaction will provide us with meaningful cross-selling synergies and margin enhancement opportunities for FAB and Blessed CBD.”

Founded in 2014 with its headquarters in Denver, Colorado, NuLeaf is a market leader in the production and distribution of premium cannabidiol (CBD) wellness products. NuLeaf can produce 60,000 plant-based softgels per hour and is one of only a few manufacturers in the United States that can produce a vegan softgel. NuLeaf has a strong distribution reach in the natural products channel and recently secured an expansion with Sprouts Farmers Market from 33 retail locations to an additional 235 stores. Over the 12 months ended September 30, 2021, NuLeaf had over 5.1 million site visits and an average order value of US$120.

“We are excited to partner with Raj and the High Tide team to deliver the highest quality cannabinoid products in the world,” said Bo Shirley, Co-founder of NuLeaf Naturals. “Utilizing the latest in cannabinoid research, we continue to drive innovation and growth by launching unprecedented products that revolutionize the market. High Tide is a global leader in cannabis and together we look forward to expanding our market share and building the future of this industry.”

“This strategic alignment with High Tide will enable us to continue to deliver exceptional value to our customers and retail partners,” said Jaden Barnes, Co-founder of NuLeaf Naturals. “As part of the High Tide organization, we are well positioned to take the next steps in our growth strategy while maintaining our laser focus on delivering a world-class cannabis experience.”


Debra BorchardtSeptember 14, 2021
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High Tide Inc. (NASDAQ: HITI) reported its financial results for the third fiscal quarter of 2021 ending July 31, 2021, as revenue increased by 99% to $48.1 million versus $24.1 million in the same quarter last year. High Tide noted that the financial results included the acquisition of META Growth Corp., Smoke Cartel, Fab Nutrition, and DHC Supply LLC. The net loss for the quarter was $1.7 million versus last year’s net income of $3.8 million for the same time period.

Geographically, $38.4 million of revenue was earned in Canada and $9.6 million in the United States. Revenue from the U. S. increased to $9.6 million, versus $5.7 million for the second quarter of 2021, representing a 69% increase sequentially.

” Over the past year, we have been making strategic moves to successfully advance our rising portfolio of companies. We believe we can continue to build upon this momentum and capture a sizeable share of the cannabis market globally. I’m proud of our team’s efforts this quarter which resulted in revenue increasing once again by 99 percent over last year and 18 percent sequentially, despite market disruptions due to pandemic-related lockdowns and a very aggressive pricing strategy adopted by some value players. In Ontario, the largest cannabis market in Canada, due to pandemic-related restrictions, our stores were closed for in-person shopping for about half of the second quarter with only click-and-collect and delivery permitted. Despite these challenges we have been able to remain EBITDA positive by increasing our revenue at a pace consistent with previous quarters,” said Raj Grover, President and Chief Executive Officer of High Tide.

High Tide’s adjusted EBITDA in the quarter fell to $1.5 million versus $3.4 million for the same quarter last year. The company attributed the decrease in adjusted EBITDA to expenses related to the uplisting of the company’s stock to Nasdaq including directors’ and officers’ liability insurance premiums, Nasdaq listing fees, one-time professional fees, and additional human resources to support the integration of newly acquired companies. As a result of the uplisting to Nasdaq, the company became a non-venture issuer resulting in higher compliance requirements.

Grover went on to say, “This last quarter saw us continue our organic growth momentum by opening seven new retail locations across Canada with a total of 93 locations today. While the Canadian retail market remains competitive, our one-stop cannabis shop concept is very well received. This is evidenced by the fact that our Cabana Club membership grew by over 69,000 during the last quarter. Beyond our bricks and mortar organic growth, we doubled down on more accretive e-commerce acquisitions last quarter, in the consumption accessories and hemp-derived CBD space, with a particular focus on the U.S. market. With these acquisitions, our portfolio now includes three of the top five most popular online platforms for consumption accessories in the world. I remain excited about our e-commerce pipeline and look forward to sharing more good news on the M&A front in the very near future.”

Looking Ahead

High Tide said it expects to be at approximately 110 stores by the end of calendar 2021, despite some delays experienced in securing building permits. The company said it has made good progress on its application to enter the British Columbia market, and now expects that to occur by end of its 2021 fiscal year.

The increase in dispensaries in Canada was also mentioned. High Tide wrote, “While competition has increased given material growth in store counts in Ontario and Alberta and the concurrent rise of value players, the Company is focused on maintaining and growing its market share. We have begun leveraging our unique positioning within accessories to attract and retain more customers, and this approach has already yielded meaningful increases to our top line over the past few months. Just this week we announced two initiatives to expand our revenue streams.” The company also noted its plans to increase its business in the U.S.

Finally, High Tide said, “We are currently in discussions with multiple parties across a variety of end markets, with a particular focus on e-commerce within the growing ancillary and hemp-derived CBD markets. With a current annual run rate of revenues in the U.S. exceeding $50 million, we believe we are excellently positioned to lever our U.S. customer base to also sell cannabis once permissible by federal regulations and/or exchange policies – and the Company intends to continue growing its U.S. presence in the meantime.”

 


StaffJuly 13, 2021
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High Tide Inc. (TSXV: HITI) (Nasdaq: HITI) is buying a dispensary chain with six stores owned by 102105699 Saskatchewan Ltd. for C$2,900,000. High Tide will acquire a portfolio of six retail cannabis locations in Regina, Saskatchewan, out of which one is operational and five are in various stages of construction and development and are all expected to be operational by the end of 2021.

“I am excited that we are adding these six new locations which will bring High Tide’s total retail footprint in Saskatchewan to ten stores upon completion and solidify our position as a leading cannabis retailer in the province,” said Raj Grover, High Tide’s President & Chief Executive Officer. “Furthermore, within the City of Regina, there are currently only 13 operating retail cannabis stores of which one will be ours, with five more to come shortly. This transaction is especially beneficial to High Tide because retail cannabis margins in Saskatchewan are higher than the Canadian average, and new licenses are difficult to come by given various municipal zoning restrictions in Regina,” added Mr. Grover.

The payment will consist of C$2,150,000 in common shares of High Tide and C$750,000 in cash. The cash portion of the transaction will be funded entirely with cash on hand.

Acquisitions

High Tide has been busy acquiring companies. In June, the company said it was buying DHC Supply LLC operating as Daily High Club in a deal valued at $10 million. It was expected to close around the end of June 2021. The transaction consisted of  $6.75 million in common shares of High Tide and $3.25 million in cash. Daily High Club is an online retailer of glass water pipes, vaporizers, and other in-demand consumption accessories.

In March, High Tide completed the acquisition of Smoke Cartel Inc.  (OTCQB: SMKC) in a deal valued at $8 million. At the time, the company said it operated both the largest and second-largest e-commerce platforms for consumption accessories in the world with a combined total of 33 million site visits in 2020. As a result of the acquisition, High Tide said it has considerably expanded its footprint in the United States market and is very enthusiastic about its position to begin online cannabis sales should the United States move forward with federal legalization.

 


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