marijuana Archives - Page 2 of 2 - Green Market Report

Debra BorchardtSeptember 12, 2017
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Canadian-based private company The Green Organic Dutchman announced on Tuesday that it had entered into an agreement with a group led by PI Financial Corp. for a private placement valued at C$20 million. The deal consists of 4,242,500 units of the company at C$1.65 for gross proceeds of C$7 million.

In addition to that deal, the company will engage in a non-brokered offering of 7,879,000 units at C$1.65 for gross proceeds of C$13 million. In a statement, the company outlined the warrants associated with the units as such, “Each Unit will consist of one common share and one-half common share purchase warrant. Each whole Warrant is exercisable into one Common Share  at the exercise price of $3.00 per share and has an expiry date that is the earlier of (a) 36 months from the date the Common Shares commence trading on a recognized stock exchange, and (b) February 28, 2021.”

So far, The Green Organic Dutchman has raised C$41.5 million from 2,400+ retail shareholders. The company has positioned itself to be one of the lowest cost producers in Canada specifically due to its low-cost power solutions. It noted that Quebec has some of the least expensive power in Canada that includes government incentives.

It recently secured a 75-acre property near Montreal with the ability to expand to 820,000 square feet. The company is currently financing phase 1 of its expansion of 220,000 sq. ft. which will include an indoor and hybrid greenhouse facility and add an annual capacity of 22,000kg or product. The company also has a newly designed extraction laboratory that is expected to be online in the fourth quarter. This lab has the capacity to process up to 12,000kg of raw material per year and produce C$170 million worth of organic cannabis oils.

The Green Organic Dutchman is known for its organic products that are free from pesticides, herbicides, and synthetic nutrients. Organic cannabis commands a 28% premium pricing over regular cannabis and the  Canadian organic industry has grown by 38% from 2013-2015.

 

 

 

 


Ken NischSeptember 12, 2017
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Traditional brick-and-mortar retailers are facing major challenges due to ease of credit cards, federal postal services, and potentially even other types of shippers. This has made the cannabis industry essentially immune to the challenges that other physical retailers have. This doesn’t mean that marijuana retailers don’t need to be experiential or try harder, but rather it suggests that the physical store experience can be a primarily offensive direction in order to create brand awareness and dominance, versus substantially being defensive as it is for most retail today in trying to counter-impact the online business.

Also new to the cannabis category in the aspect of retail is individual vs “branded house” product. Think of the spice section in your local grocery store with red caps of the iconic McCormick brand dominating, rather than the individual flavor profiles themselves dominating. Cannabis started out with the contrary, with the flavor and experience profile of the individual product defining it rather than a dominant brand umbrella defining it. However, this contrast with cannabis where the flavor profile is the brand, and the sense of origin, etc. comes secondary, has been changing rapidly now with the growth of celebrity and lifestyle branding. Think Whoopi Goldberg, Cheech and Chong, Willie Nelson, etc. where the flavor profile is through the eyes of Willie, Whoopi, and Cheech. This represents a big change in the industry where ultimately certain brands will be common across distributors and retailers versus each individual retailer essentially creating their own “special sauce” unique to their environment. With the advent of cross retailer branding, the individual brand of the retailer will become more critical (versus relied on price or uniqueness to drive the consumer from a destination standpoint).

Important in terms of future growth will be a key and differentiated brand identity. As legalization continues to become more flexible and market driven, formats such as shop-in-shop concepts as well as event and lifestyle pop-up concepts (cannabis meets food truck, etc.) will arise. Cannabis will grow into other delivery spaces for pet, spa and treatment applications; home furnishings; and luxury accessories and consumables. Today’s fairly cut and dry approach to reception, consulting, selection and transaction will become more complicated (in a positive way), impacting everything from staffing to seasonality, to requirements for flexibility beyond today‘s primarily transactional environment.

Due to many cases of landlord reluctance, particularly national landlords, to accommodate companies within the cannabis space, they’ve often been relegated to second or third tier locations, industrial parks, or the capital intensive activity of purchasing or building a freestanding facility. The next generation of locations will most likely become part of lifestyle assortments, like adjacencies such as Lululemon, Whole Foods, the local gym, etc. with the cannabis retailer to be a welcome and lifestyle appropriate co-tenant to many of the national tenants, particularly in the wellness, leisure and food segments.

Society has already made a significant change in the perception of cannabis as a medication, and as perceptions continue to evolve in the world of cannabis through the rest of 2017, the brick-and-mortar concept has been integral to the movement. Thus, allowing the public access to these products in an entirely new type of space. The design concept of the physical environment provides the retail dispensary model an opportunity to create interactive experiences, as well as personal connections. The mental perception shift in medical and recreational clients alike will continue to open a door to societal growth and appreciation of cannabis.


StaffSeptember 4, 2017
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mCig Inc. (MCIG) delivered its fiscal 2018 first quarter results on Tuesday with revenue increasing 1,249%. Total sales for the quarter ending July 31 were $3.1 million and net sales were $400,000, six times greater than the same quarter a year ago.

While the company posted a press release of its results, there was no formal filing of documents on either the OTC Market Homepage or the company’s website.

Paul Rosenberg, MCIG’s Chief Executive Officer said, “We will continue to evolve and grow. We are exploring licensing opportunities in Nevada, California, Oregon, Florida, and Massachusetts. MCIG’s past performance has become a disruptive force in the cannabis markets in which we serve. It is our goal to be the trendsetters for the future.”

In the press release, MCIG said it posted its fifth consecutive quarter of bottom line profitability and noted that last year the company recorded a net loss of $170,736, while this year it posted net income of $77,953. The company went on to say it is experiencing profitability in each operating segment and continues to develop its 420Cloud social network platform.

mCig recently released its annual audited report for the fiscal year 2017 at the end of August. The company reported that its gross profit for the year was $1.8 million, a nice jump over the previous year’s $290,773. Revenue for the year was $4.7 million, also topping last year’s $1.7 million. During the year, mCig acquired seven companies and sold one asset.

At the time, Rosenberg said, “This has been a record year for mCig and its shareholders. MCIG has seen tremendous improvements in revenue, gross profits, net profits, cash position, CAGR, and shareholder value. MCIG has done this with no toxic debt. With our new and innovative solutions that are projected to have a significant impact on our future financial statements rolling out shortly, the MCIG story will continue to be exciting.”

The stock was lately trading at 19 cents and got a lift from the earnings announcement, however, it is still lower than its 52-week high of 50 cents.


Debra BorchardtAugust 31, 2017
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Toronto-based Golden Leaf Holdings (GLDFF) reported its second quarter earnings on Tuesday with net revenue falling to $2.1 million from $2.5 million for the same time period in 2016. The 9% decline was blamed on supply constraints across the company’s portfolio.

The net loss for the second quarter was $1.7 million, which was higher than last year’s loss of $1.1 million for the same time period. Gross profits improved to $402,124 from last year’s $217,300.

“It is a key corporate objective for Golden Leaf to establish a greater retail presence, driven by the acquisition of Chalice Farms. We expect this will deliver higher operating margins for the Company, as well as from a proven, retail-focused operating blueprint to successfully broaden Golden Leaf’s market share and to capitalize on the substantial growth opportunity that lies before us,” said Mr. William Simpson, the new Chief Executive Officer of Golden Leaf. “To kick start our strategic plan, we undertook a comprehensive review of the business to identify opportunities to streamline costs. Already, we have made reductions to the work force and have made progress toward consolidating all corporate and commercial operations to Portland, Oregon. These steps are expected to improve our cost structure while maintaining the capacity to support our core expansion strategy.”

Golden Leaf is consolidating its headquarters to Chalice Farms in Portland OR and constructing a processing facility. Three dispensaries are under construction in Oregon and should be opened in the first quarter of 2018. In Nevada, Golden Leaf expects to begin sales of its cannabis brands to dispensaries in Nevada before the end of 2017. In Canada, the company expects to close on the acquisition of MMGC by the end of the third quarter and begin to grow operations shortly thereafter. It expects to launch retail operations in Canada in the second quarter of 2018.

As a result of all these acquisitions, operating expenses jumped to $3 million from last year’s $2.5 million. This month Golden Leaf entered into a private placement transaction with Canaccord Genuity for C$10 million and C$2 million in bridge loan financing.


Debra BorchardtAugust 29, 2017
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Toronto-based Emblem Corp. (EMMBF) reported mixed earnings in the second quarter on Monday as the company continues to mature. Revenue for the three months ending in June were C$538,475, but this was lower than the revenue for the first quarter, which was C$903,274. The gross margin was C$146, a big improvement over the first quarter’s loss of C$89,243. The quarter’s net loss of C$2.9 million was higher than the previous quarter’s loss of $2.4 million.

Emblem completed three out of four Phase 2 grow rooms in the quarter which will provide an additional 5,200 square foot of grow space. Those rooms should begin to produce harvests in November of this year. The company also closed on more land to create another facility that will target the recreational market. The stock got a penny lift on the news to trade lately at $1.42.

“With the more than doubling of our production capacity complete and the imminent receipt of our cannabis oil license, combined with the strength of our marketing platform and patient registration pace, we are well positioned to demonstrate progress towards profitability in 2018,” noted Gordon H. Fox, CEO of Emblem.

Cronos Group Inc. (PRMCF), another Toronto-based cannabis company also delivered its second quarter results. Sales increased 25% sequentially with Cronos reporting $643,000 in revenue over last quarter’s $514,000. The company recorded positive net income of $174,879. The cost of goods sold dropped to $2.18 per gram and management said it expected the costs to continue to decline as two additional facilities ramp up production.

“It’s been less than a year since Cronos acquired Peace and we’re just beginning to see the results of the work we’ve put in.  I expect Q3 to be the most successful quarter in our company’s history, and I have no doubt that that momentum will continue into 2018 and beyond,” says Mike Gorenstein, Cronos Group CEO.

Cronos also noted that during the quarter it repaid a $4m mortgage to Romspen Investment Corp., which in turn provided $40 million to fund ongoing expansion efforts. The stock moved higher by two cents to trade lately at $1.86.


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