Lowell Farms Archives - Green Market Report

Debra BorchardtJune 24, 2022
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Cannabis deal tracker Viridian Capital Advisors is looking at the second half of the year to see what’s in store for the industry. Director of Equity Research Jonathan DeCourcey wrote, “The outlook is bearish for investor returns in the near term as the key catalyst on everyone’s mind, federal legislation, is unlikely to come, and thus valuations will remain depressed for the remainder of the year with further stock declines likely in connection with broader market weakness.” With that said, DeCourcey thinks investors will have to wait until next year for a return to a positive market in the sector. For now, though he has come up with five predictions for cannabis for the back half of 2022. 

Viridian’s Five Predictions are as follows:

  • Federal legislation won’t happen
  • Stock prices will remain depressed
  • Companies may beat earnings estimates
  • California consolidation will continue
  • Smaller companies will outperform larger ones

Despite hopes for a banking bill, it is unlikely that anything will happen in 2022. DeCourcey wrote, “There is insufficient bi-partisan support for Chuck Schumer’s full legislative proposal to pass (requiring 10 Republican votes and full Democrat support) and, as we have said before, the timing is too tight for a stand-alone SAFE Act to be possible this year given the Democrats will first await the Schumer proposal to make the rounds.” Schumer’s proposal is expected to come in August, but that doesn’t give it much time before the midterm elections. 

New legislation could have been the catalyst to jump-start stock valuations. Take that off the table and there isn’t anything really big to move the needle. The overall broader market has been beset with recession fears and interest rate hikes. That also doesn’t help stock prices. However, depressed stock prices could combine next year with strong company earnings and that could lead to a recovery, but those hopes are pushed into 2023. 

Companies struggled with revenues and earnings at the beginning of 2022. Lingering Covid issues, wholesale price declines, and integration issues for newly combined companies caused some strong headwinds. DeCourcey thinks that these challenges are winding down, but cautions that there could be lingering inflation pressures. Still, expectations have been reset and if the New York market actually opens in 2023 then next year could see some strong growth. Plus, companies are going to be able to start reporting New Jersey sales figures, which are looking very good. Those New Jersey numbers could spark some earnings beats and that would be welcome news. 

“The proposed elimination of the California cultivation tax, which we expect to take effect next month, is a game-changer for California cannabis companies reducing the cost of production on outdoor growers by as much as 50%,” said the report. DeCourcey thinks the additional cash will lead to more transactions and motivation for M&A. The improving tax situation could also entice larger MSO’s to come to the market. “For investors, we expect the easier operating conditions and looming consolidation will result in outperforming returns for California-centric stocks in the second half and into next year.”

Finally, the report noted that scale does not necessarily equate to winning. Large companies get the attention, but the smaller and mid-size companies could have better growth potential with the likelihood of getting acquired. Smaller company stocks also outperformed the larger ones by declining by a smaller percentage. Dropping 47% on average versus 55% declines for larger companies. “Our top picks for 2H investment fall within the category of smaller and medium-sized companies. These names include Ascend (OTC: AAWH), AYR Wellness (OTC: AYRWF), Cansortium (CNTMF), Lowell Farms (LOWLF) and Schwazze.”


StaffMay 25, 2022
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The Daily Hit is a recap of the top cannabis business stories for May 25, 2022.

ON THE SITE

Live Blog from WEF 2022 in Davos Switzerland

Green Market Report editor-in-chief Debra Borchardt blogs live from the Medical Psychedelics Series, at the World Economic Forum being held in Davos Switzerland. Read more here.

Ayr Wellness Inc. Approved in New Jersey

Ayr Wellness Inc. (CSE: AYR.A) (OTCQX: AYRWF) announced that the New Jersey Cannabis Regulatory Commission approved the Company for adult-use cannabis sales in the Garden State. “We are thrilled to be approved for adult-use sales in New Jersey and to have all three dispensaries cleared simultaneously to open for adult-use,” said Jonathan Sandelman, Founder, Chairman and CEO of Ayr. “To date, Central Jersey has the lowest number of dispensaries per capita, leaving its population under-served compared with the rest of the state. Read more here.

Verano Holdings Corp.

Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) announced its financial results for the first quarter ending March 31, 2022, with revenue increasing 67% to $202 million versus last year. Revenue for Verano fell  from the fourth quarter’s $211 million. The net loss in the first quarter 2022 was $7 million, compared to a loss of $2 million in the first quarter 2021. Read more here.

Jushi Holdings Inc.

Jushi Holdings Inc.  (CSE: JUSH) (OTCQX: JUSHF) released its financial results for the first quarter of 2022 ending March 31, 2022, with revenue increasing 48% over last year to $61.9 million. Jushi said sales fell 6% from the fourth quarter’s revenue of $65.9 million. The company delivered a net loss of $14.3 million, which was trimmed from last year’s net loss of $26 million. Read more here.

IN OTHER NEWS

Rhode Island Legislature Approves Marijuana Legalization Proposal

Following floor debates in both chambers of the General Assembly earlier today, a majority of Rhode Island legislators have approved legislation to legalize, regulate, and tax cannabis for adults. The bill will be transmitted to Gov. Dan McKee who has previously indicated he will likely sign the measure. With the governor’s approval, Rhode Island will become the 19th state to end marijuana prohibition. Read more here.

The Valens Company Inc.

The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS), a manufacturer of branded cannabis products, provided an update on its recent recreational market share in Canada. Tyler Robson, Chief Executive Officer of The Valens Company, said, “We continue to expand our recreational market share as we develop strength within our brand portfolio through products that continue to resonate with consumers.” Read more here.

Item 9 Labs Corp.

Item 9 Labs Corp. (OTCQX: INLB), a vertically integrated cannabis dispensary franchisor and operator announced today that it has signed a definitive agreement to acquire Sessions Cannabis, one of Canada’s largest cannabis retail franchisors. “This is a transformative acquisition that fast-tracks our entry into the Canadian market and brings tremendous value to our shareholders,” said Item 9 Labs Corp. CEO Andrew Bowden. Read more here.

Lowell Farms Inc.

Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF), a California cannabis cultivation company and maker of brand Lowell Smokes, is announcing the acquisition of advanced pre-roll production equipment and capabilities from Canadian cannabis brand All Good Collective. The acquisition will accelerate Lowell Farms’ ability to offer end-to-end automation of large-scale pre-roll production. Read more here.

Ayr Wellness Inc., Herbal Remedies Dispensaries, LLC

Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF), a vertically integrated U.S. multi-state cannabis operator, today announced it has closed the definitive agreement to acquire Herbal Remedies Dispensaries, LLC, an operator of two licensed retail dispensaries in Quincy, Illinois. Read more here.

Decibel Cannabis Company Inc.

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF), a cannabis producer, announced its first quarter financial results for the three month period ending March 31, 2022. “Decibel remains on track to achieve its previously communicated targets, which is a testament to the focus on our strategic plan, and particularly our New, Unique and Innovative products and dedication to our customers”, said Paul Wilson, CEO of Decibel. Read more here.

TILT Holdings Inc., Innovative Industrial Properties, Inc.

 TILT Holdings Inc. (NEO:TILT) (OTCQX: TLLTF), a global provider of cannabis business solutions that include inhalation technologies, cultivation, manufacturing, processing, brand development and retail, has signed an amendment to its previously announced definitive agreement to sell its White Haven, Pennsylvania facility. The Amendment allows TILT and Innovative Industrial Properties, Inc. to extend the end of the investigational period of the transaction contemplated to a date that is on or before June 17, 2022. Read more here.


StaffAugust 31, 2021
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Lowell Farms

Lowell Farms Inc.  (CSE: LOWL)(OTCQX: LOWLF) reported that it has completed an $18 million non-brokered private placement of common equity. Proceeds will be used for working capital purposes, automation investments, and expansion into new markets. Company insiders bought an aggregate of 2,900,000 Units and the units were priced at $1. Shares were lately selling at $1.18.

“We are grateful for the support of our investors who share our conviction and excitement in our mission to capture an enormous market opportunity in front of us,” said George Allen, Chairman of Lowell Farms. “This financing allows the Lowell Smokes brand, one of the strongest cannabis brands in the country, to expand geographically and increase scale in its home state of California.”

BeLeaf Medical

AFC Gamma, Inc. (NASDAQ: AFCG) today announced it has provided a credit facility of $23 million to Missouri operator BeLeaf Medical, LLC. The credit facility is designed to provide BeLeaf with the capital necessary to expand its three Missouri cultivation facilities in Lakefront, Jonesburg and Cherokee, as well as purchase the Jonesburg cultivation facility. The Company has nearly completed construction on ~25,000 square feet of canopy between its locations and plans to add an additional ~16,000 square feet.

“As we continue our expansion in Missouri, we are excited to have the support and expert partnership of AFC Gamma,” said Kevin Riggs, President of BeLeaf Medical, adding, “At BeLeaf, we are steadfast in our production of high-quality flower and the development of innovative, best-in-class products resulting in remarkable growth and impressive customer loyalty. We look forward to bringing our exceptional products and brands to consumers in new markets, as this has been our highest priority every time we looked towards expansion.” Missouri legalized the use of medical marijuana in 2018, with sales beginning in October 2020. Since the program launched in October, according to the Missouri Medical Cannabis Trade Association, sales in Missouri have hit $91 million, with 130,000+ registered patients as of July 31, 2021.

Mainstem

Purchasing platform Mainstem completed its latest round of funding, securing $5 million in its recent Series C raise. Mainstem’s funding to date tops $11 million, much of it from the cannatech investors Merida Capital Holdings. Enjoying 213% in sales growth between 2017-2021, Mainstem was recently honored by INC. Magazine in its prestigious annual ‘5000 Fastest-Growing Private Companies in America‘ list. “This is an extremely meaningful milestone for us,” says Mainstem co-founder and CEO ALEN NGUYEN. “This recent capital raise is a reflection of where our industry is heading as well as a testament to the team we have worked so hard to build. Today’s cannabis companies need to utilize robust tracking solutions to maintain inventory levels and serve customers in real time. Our first-to-market SaaS technology provides that support and helps to bring our industry forward as it rapidly expands, offering merchandising convenience for our customers, wherever they are.”


Debra BorchardtAugust 17, 2021
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After the market closed on Monday, Lowell Farms Inc.  (CSE: LOWL; OTCQX: LOWLF) announced revenue and operating results for the second quarter ending June 30, 2021. Lowell Farms generated revenue for the quarter of $15.2 million; an increase of 53% over last year and an increase of 37% over the first quarter. Lowell also reported a net income of $731,000 versus a net loss of $8.8 million and $6.7 million in Q2 2020 and Q1 2021, respectively. The company noted that the current quarter included proceeds from insurance claims of $2.6 million which was associated with plant stress that happened in 2020.

“We have a lot to be proud of, but I am particularly excited about the continued progress we are making at the cultivation level,” says Lowell Farms Inc. Chief Executive Officer Mark Ainsworth. “We have spent a good portion of Q2 dialing in our automated environmental systems to continue to reach increased yields and potencies and right now we are collecting important data to provide the optimal conditions for each particular genetics. This is an exciting phase and we look forward to reporting back to you on our learnings and improvements as well as the positive impacts on our annual harvest run rate.”

The company also trimmed its operating loss to $473,000 versus an operating loss of $4.8 million and $5.7 million in Q2 2020 and Q1 2021, respectively. The adjusted EBITDA for the quarter was $740,000 which excluded the insurance claim proceeds, compared to negative adjusted EBITDA of $7.2 million in Q2 2020.

“Our Flower production at the greenhouse ramped steadily during the quarter and we exceeded our guidance of 8,500 to 9,000 lbs during the quarter by a healthy margin at 9,553 lbs, a 102% increase over the preceding quarter. Additionally, our plan to restore the Lowell brand to health was met with success during the quarter.”

Looking Ahead

“We have a lot to look forward to, and despite the headwinds, we anticipate encountering from a decline in bulk sales and the compression in the market,” said George Allen, Chairman of the Board for Lowell Farms. “Our strategy is to offset revenues with our increased cultivation output and the launch of our new LFS business unit which is ramping quickly to incredibly high demand.

“We are also seeing extremely positive results from our expansion to Illinois and we are on track to launch Massachusetts later this quarter. We fully expect to add more markets in the near future. In California, we are positioning Lowell to be successful in an incredibly competitive operating environment and I am incredibly encouraged by the numbers coming out of our cultivation.”


StaffFebruary 25, 2021
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California-based Indus Holdings, Inc. (OTCQX: INDXF) is buying Lowell Herb Co. and Lowell Smokes in a deal valued at $39 million. The acquisition includes trademark brands, product portfolio, and production assets of Lowell from The Hacienda Group effective immediately. The company will change its name to Lowell Farms Inc.

“The combination of Indus and Lowell will create a leading producer of California cannabis and the next step for the first great American cannabis brand,” said Gregory Heyman, founder of Beehouse, Lowell’s largest investor. “The Indus team’s commitment to growing excellent cannabis and the communities they serve also realizes Lowell’s mission to normalize cannabis in America.”

The deal consists of a cash payment of $4.1 million and the issuance of 22,643,678 Subordinate Voting Shares of the Company (of which 5,000,000 will be held in escrow to secure certain indemnification obligations undertaken by the sellers in the transaction). The share consideration was issued in a private placement transaction and the company has agreed to register such shares for resale in the United States. Hacienda said it has agreed to continue to produce Lowell products for an interim period pending the completion of the transfer of certain regulatory assets.

It is expected that Lowell Farms Subordinate Voting Shares and Warrants will begin trading on the Canadian Securities Exchange (CSE) on March 5, 2021, under the ticker symbols LOWL and LOWL.WT, and that the Subordinate Voting Shares will begin trading on the OTCQX effective on March 5, 2021, under the ticker symbol LOWLF.

“The cannabis industry is awash in brands competing for our attention, but Lowell has risen to the top of the fray as a brand that simultaneously empowers a movement, welcomes the curious, and greets the reacquainted all with a grace and elegance that other brands can only aspire to,” said George Allen, Chairman of the Board for Indus Holdings, Inc. “Every resource under our control will be employed in unlocking Lowell’s full potential.”


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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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