Sundial Growers Archives - Green Market Report
Debra BorchardtMarch 9, 2023
Competing lawsuits outline bad behavior at the company.
StaffMarch 8, 2023
This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.
Skymint, one of Michigan‘s largest marijuana cultivators and retailers, is now under the control of a receiver as the industry faces an increasingly difficult market in the state.
Skymint
Oversupply Pressures
Lenders Kept Lending
Adam JacksonAugust 15, 2022
SNDL Inc. (NASDAQ: SNDL) posted positive results as the company reaps record revenue from this year’s M&A bets. The Canadian vice operator — formerly known as Sundial Growers Inc. — delivered its second-quarter results ending June 30, 2022.
SNDL reported approximately $223.7 million in total revenue during the period, a 2,344% gain versus the same period last year; well over the Yahoo Finance Average analyst estimate for revenues of $162.6 million.
This comes after the company in March acquired a 63% majority stake in Nova — making SNDL the largest private sector cannabis and liquor retailer in Canada.
The company also reported a second-quarter net loss of $74 million versus a net loss of $52.3 million in the same period last year. The earnings were for a loss of $0.31 cents per share, according to SEDAR filings, versus an earnings loss of $0.23 cents a share during the same time last year.
“The SNDL team’s dedication and perseverance have enabled us to make significant progress on our journey to becoming Canada’s largest private sector distributor of both liquor and cannabis,” said CEO Zach George. “We believe our unique asset base and balance sheet strength represent competitive advantages that we are determined to leverage for the benefit of our stakeholders.”
The increased loss of $21.7 million sequentially was due to investment losses ($37.4 million), the share of loss of equity-accounted investees ($41.7 million), higher general and administrative expenses ($30.2 million), depreciation and amortization ($7.9 million) as well as finance costs ($26.5 million) — partially offset by an increase in gross margin ($45.8 million), lower asset impairment ($58.2 million), lower transaction costs ($8.7 million) and a positive change in fair value of derivative warrant liabilities ($3.8 million).
Adjusted EBITDA across segments was a loss of $25.9 million for the quarter, versus a loss of $200,000 in the same period last year, driven primarily by the Sunstream equity pickup of a $38M loss.
The company also added that the adjusted EBITDA loss was primarily due to its recent reverse stock split — which it needed to continue listing its shares on the Nasdaq — as well as an increase in general and administrative expenses due to the inclusion of Alcanna and Spiritleaf as well as a decrease in realized gain on marketable securities. The decrease was partially offset by an increase in gross margin including Alcanna and Spiritleaf, it said.
Cannabis Segments
For its cannabis retail sector, the company included Nova’s Value Buds sales totaling $63.5 million versus $7.5 million in the first quarter of 2022, a 746% increase. Value Buds sales were the material driver of the increase with $56.3 million of revenue.
Gross revenue from the cannabis cultivation and production segment for the second quarter of 2022 was $15.4 million versus $11.3 million in the previous quarter, a 36% sequential improvement and a 21% year-over-year improvement.
SNDL reported an $8 million net loss for the segment during the second quarter versus a $75.4 million loss in the second quarter last year.
Adjusted EBITDA in the cannabis cultivation and production segment was $3.4 million versus a loss of $11.0 million in the same period last year.
This represents SNDL’s first positive adjusted EBITDA quarter in the cannabis cultivation and production segment, the company said, adding “The significant improvement in Adjusted EBITDA can be attributed to higher sales volumes, improved margin on an adjusted basis, reductions to SMG&A, and greater discipline over inventory management driving a reduction in price discounts for provincial board sales during the first half of 2022.”
“We are seeing market share gains through our retail network and this quarter our cannabis operations generated positive adjusted EBITDA for the first time in the Company’s history,” George said. “We continue to strengthen and transform our business while benefitting from vertical integration across our business segments under a shared services model with integration work expected to impact results over the next two quarters.”
Newly-Acquired Liquor Vertical
Gross revenue from liquor retail sales for the three banners — “Wine and Beyond”, “Liquor Depot” and “Ace Liquor” — combined was $148.6 million for the second quarter.
SNDL said the gross margin in the liquor retail segment was $33.5 million, or 22.6% of sales.
On the liquor side, the company said it stabilized its margin through a pricing and mix strategy in the second quarter — despite fluctuations in sales due to market conditions and retail competition.
While customer count is down by 5% year-to-date, largely due to a return to on-premises consumption in a post COVID-19 environment, the average basket size is up 2%. SNDL said it sees larger basket sizes at their Wine & Beyond locations, where consumers come for the experiential, destination shopping approach to liquor retail.
SNDL’s liquor banners’ market share in Alberta was 17.6% in the second quarter of 2022, with Wine & Beyond representing 2.9% with only 11 stores, “showcasing the continued and increasing popularity of the banner.” SNDL is exploring opportunities to expand the Wine & Beyond store footprint in Alberta, British Columbia, and Saskatchewan.
“Moving forward, the company will seek to optimize profitability and cash flow for the liquor retail segment by focusing on cost discipline, margin accretive products, monetizing intellectual property, and leveraging its retail footprint to develop an e-commerce platform,” it said.
Looking Ahead
Revenue from the investments segment for the second quarter was a loss of $35.1 million, versus $2.4 million in the second quarter last year. The company said the decrease was primarily due to “accounting fair value adjustments reflecting an increase in the assumed risk-free rate and the deterioration in overall cannabis credit market conditions.”
The company also said it possesses an unrestricted cash balance of $363 million and $334.9 million, respectively, and a total of 238 million post-consolidation shares outstanding as of August 11, 2022.
SNDL said it remains focused on “building long-term shareholder value through vertical integration, the accretive deployment of cash resources, the expansion of its retail distribution network, the further streamlining of the company’s operating structure as well as the enhanced offering of high-quality brands.”
“Despite our encouraging results, we know there is still room for improvement, and we remain humbled by the opportunity before us,” George said. “SNDL represents an opportunity for investors to gain exposure to North American regulated products in a manner that does not exist with any other public company today. We will continue to prioritize free cash flow generation with a focus on strengthening our distribution platform and using our credit portfolios to turn industry headwinds into long-term opportunities.”
Debra BorchardtApril 6, 2022
The debt troubles facing Parallel are exposing the risk to other companies. Innovative Industrial Properties (NYSE: IIPR) gets 10% of its revenues from Parallel and Sundial’s (OTC: SNDL) joint venture with SAF Group called Sunstream Bancorp owns some defaulted debt.
In March 2021, Sundial Growers Inc. formed a 50/50 joint venture with SAF Opportunities LP, a member of the SAF Group called SunStream Bancorp Inc. The Joint Venture’s first mandate was the formation of a special opportunities fund with commitments from third-party limited partners alongside an initial commitment from Sundial of $100 million.
Sunstream is the owner of $145 million of Junior notes owned by Parallel Cannabis and those notes are in default – exposing Sundial to the loss. According to the lawsuit filed by disgruntled investors, the notes were purchased shortly after the joint venture was formed and was likely the venture’s first investment or one of the first investments. The notes were purchased on May 7, 2021. The lawsuit actually attributes the purchase to SAF Group, but Sunstream’s spokesperson did confirm that it was Sunstream that owned the debt, not SAF Group.
Parallel used the Junior Note to refinance seller financing provided by the sellers of New England Treatment Access (“NETA”). NETA is a cannabis facility that Parallel acquired in 2019. The Junior Note carries an annual non-default interest rate of 14.25%. Sunstream may have felt some comfort in the language of the Junior Note that stated Parallel couldn’t incur any more debt, but the company is alleged to have done just that.
According to the court filing, “On December 16, 2021, Parallel received an even more alarming default notice—this time for the Junior Note—in the form of a Notice of Default, Election of Default Rate and Reservation of Rights to the Company (the “Junior Lien Notice”) from Talladega LP, the Administrative Agent and Collateral Agent for the Junior Note holders. The Junior Lien Notice informed the Company that it had failed to (i) maintain the required debt-service-coverage ratio; (ii) maintain specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021.”
Sunstream’s Silence On Parallel
Sunstream has made a big deal out of most of its investments. It has lent money to Jushi (OTC: JUSHF) and the SPAC Greenrose Acquisition Corp. Michigan-based Skymint also got financing from the joint venture. However, one would be hard-pressed to find any mention of the $145 million investment in Parallel. Despite the numerous press releases crowing about these deals and more, there is little information about the purchase of the notes from Sunstream or Sundial.
Sunstream has also let it be known it was planning to go public. Sunstream IVXX Investment Corp. announced that it has submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission for a proposed initial public offering of its common stock. Could a dud investment affect that IPO?
Sundial’s investors
In July 2021, Sundial increased its commitment to SunStream Bancorp Inc. to $538 million from its previously announced commitment of $188 million. In October 2021, Sundial reported it was buying the common shares of Alcanna Inc., and after extending the closing date, completed the transaction at the end of March. The valuation fell from an all-stock deal valued at $346 million to and combination of cash and stock valued at $320 million. So, it seems as if it’s business as usual at Sundial. However, analysts covering Sundial will no doubt want to know if the effects of this default will bleed into Sundial’s books.
Debra BorchardtOctober 5, 2021Last week, Sundial Growers (OTC: SNDL) enjoyed some success in the courtroom when a case brought against the company by investors was dismissed. In May 2020, several investors had charged that Sundial made claims in investor presentations that weren’t true. However, U.S. District Judge Andrew L. Carter Jr. said that the various statements made in the presentations were either protected, forward-looking statements or weren’t all that misleading at the time the statements were made.
The issue stems back to 2018 when Sundial tried to raise $50 million in order to buy an agricultural company based in the UK called Bridge Farm. According to the court filing, the January Investor Presentation said that Bridge Farm had a hemp license that would allow for cultivation, processing, and export of finished products from the UK. It went on to say that Bridge Farm would “provide a platform for scalable growth with only ~C$20 mm in incremental Capex needed to facilitate CBD production and extraction” and that the “[o]peration enables us to produce and distribute at scale almost immediately and more quickly than competitors.” At the time, Sundial said it expected Bridge Farm to generate C$256 million in revenue and C$115 million of EBITDA in 2020.
Bridge Farm Plans
Then Sundial upped the fundraise and said it wanted $70 million versus the original $50 million. The investors say they ponied up $7 million in the pre-IPO round based on the projections of the Bridge Farm acquisition. In 2019, Sundial filed to go public and stated in Form F-1 that Bridge Farm’s hemp license would expire in December 2021. In August 2019, the company went public pricing its shares at $13 and netting $134 million. The investors were unable to sell their shares for the next six months.
Also in August, the case says that during an investor call Tamy Chen from BMO (one of Sundial’s IPO bankers) said “I know that there’s a couple of licenses, you’re waiting for before you can start really converting and growing hemp at Bridge Farm’s facilities.” BMO then issued a note stating that “Bridge Farm requires key licenses and we expect there will be a natural ramp and learning curve associated with the conversion of Bridge Farm’s greenhouses from growing herbs and ornamental flowers to growing hemp.” The lawsuit also stated that BMO wrote, “That there was no indication as to if, or when, Bridge Farm would receive the necessary licenses to extract CBD and/or to make over-the-counter CBD products.”
Then during its fourth-quarter earnings call for 2019, Sundial reported that its net loss for that quarter was C$145.1 million which was “primarily due to the impact of a non-cash impairment charge of $100.3 million related to the goodwill recorded upon the acquisition of Bridge Farm.” The Plaintiffs alleged that Sundial’s accountants determined that “(i) the goodwill the Company had attributed to the purchase price for Bridge Farm . . . was grossly inflated . . . and/or (ii) Bridge Farm’s ability to generate cash flows deteriorated such that the fair value of Bridge Farm’s goodwill dipped below its book value.” Not long after Sundial said its core management team was leaving the company and the stock continued to slide on negative news.
By March 2020, Sundial said it was selling the Bridge Farm property and in April 2020, the stock had slid from its offering price of $13 to just fifty cents. The investors believed that Sundial wasn’t being truthful when telling them about the Bridge Farm’s hemp licenses. They allege that Sundial used the Bridge Farm acquisition as a reason for people to invest in the company, but knew all along that it didn’t have the hemp licenses it said it had.
Judge Disagrees
However, Judge Carter said the investors didn’t demonstrate that Sundial didn’t believe the claims it had made in the presentations. The court order stated, “Corporate officials need
not be clairvoyant; they are only responsible for revealing those material facts reasonably available to them.” It went on to say, “The Second Circuit has repeatedly stated that plaintiffs must do more than simply assert that a statement is false—“they must demonstrate with specificity why and how that is so.” The judge also pointed out that the company was covered by saying the claims about Bridge Farm were forward-looking statements, which were accompanied by cautionary language about risk.
The Judge said that the plaintiffs hadn’t proved that Sundial knew the statements were false.
The investment companies behind the complaint are SUN, A Series of E Squared Investment Fund LLC; E-Squared Capital Fund LP; S.H.N Financial Investments Ltd.; Flamingo Drive M&M LLC; and Stable Road Capital LLC.
Current Day Sundial
Sundial shares were lately trading at roughly 64 cents per share. In January, the company priced an offering in which it would receive approximately $100 million. The company said it planned to use the money for possible acquisitions of, or investments in, equipment, facilities, assets, equity or debt of other businesses, products or technologies and for working capital and general corporate purposes. The additional issuance of shares wasn’t viewed favorably by the market and the price of shares dropped. The company now has a whopping two billion outstanding shares
In August the company reported that its total net revenue for the quarter ending in June was just $18.6 million, while the net loss was $52.3 million. “Following Sundial’s restructuring in 2020, we have been able to rapidly reshape the business model to focus on a two-pillar strategy that we believe will position our shareholders for future success,” said Zach George, Chief Executive Officer of Sundial.
He went on to say, “Our second-quarter performance continued to be impacted by the liquidation of discounted inventory and our refusal to push sub-optimal product into the market. We have undertaken a significant retrenchment in our cultivation activities, which has included changes to our cultivation processes as well as workforce and other cost reductions. We have seen continuous improvement in our cultivation outcomes as we remain focused on best practices to deliver strong results in potency, yield and terpenes. In the last two months of the quarter, we experienced the highest successive average potency at harvest since operations began at Olds.”
Sundial did acquire the Inner Spirit and the Spiritleaf retail network on July 20, 2021. The company said in a statement, “Adding Canada’s largest cannabis retail store network will enable Sundial to reach consumers through an entirely new channel, generate a deeper understanding of consumer buying trends, and provide depth of data to enhance decision making around product and distribution strategies. System-wide retail sales through Spiritleaf stores reached $124 million on a trailing 12-month basis to March 31, 2021, the last reported period prior to acquisition. In July 2021, the retail network achieved its highest ever one-day and monthly sales since inception. Through the acquisition of a retail segment, Sundial now has direct access to more comprehensive customer data and expects revenue increases to be generated by the integration of our distribution channels commencing in the third quarter of 2021.”
StaffFebruary 2, 2021
Sundial Growers
Sundial Growers Inc. (NASDAQ: SNDL) has closed a best efforts underwritten registered offering of 100,000,000 Series A Units with gross proceeds from the offering coming at approximately $100 million, before deducting underwriting discounts and estimated offering expenses. In addition to that announcement, Sundial also said that it has priced a best efforts underwritten registered offering of 60,500,000 Series A Units raising $74.5 million. The exercise price of the Series A Warrants will be $1.10 per common share.
“Sundial’s current balance sheet and liquidity enable management to focus on delighting consumers while providing significant optionality to participate in North American consolidation,” said Sundial’s CEO, Zach George. “We are grateful for continued investor support as we pursue attractive capital allocation opportunities within the emerging cannabis industry.”
Following the closing of the offering and the expected closing of the additional units offering of US$74.5 million announced today, Sundial will have unrestricted cash of approximately $615 million, in addition to marketable securities and loans receivable of approximately $57 million, and approximately 1.52 billion common shares outstanding.
Aleafia Health
Aleafia Health Inc. (OTC: ALEAF) announced the full repayment in cash of its 8% unsecured convertible debt, which matured on February 2, 2021. Emblem Corp., which issued the Convertible Debt on February 2, 2018, was acquired by the Company on March 14, 2019.
“Our team is excited to see continued cannabis sales growth in 2021, driven by new products launched late last year,” said Aleafia Health CEO Geoffrey Benic. “The adult-use, medical and international cannabis markets are the pillars of our 2021 growth strategy, and we look forward to capitalizing on this global opportunity through the continued expansion of our cannabis product portfolio.”
In a statement, Aleafia gave the following update on the company’s businesses:
- Medical Cannabis: Q4 2020 represents Aleafia Health’s best medical cannabis sales quarter to date. The company expects to continue this growth trajectory in 2021 with a more diverse product mix, expanded same-day delivery service which is critical during Covid-19, and through its strategic partnership with Unifor, Canada’s largest private sector union. In January, traditionally a month with slower demand, the company observed its fourth consecutive monthly record for medical cannabis revenue.
- Adult-use Cannabis: The company’s adult-use market strategy, coupling an expanded product portfolio and dedicated sales team with deep cannabis experience, is now delivering promising results. In the first month of 2021, adult-use purchase orders have nearly surpassed the total order value in Q4 2020, driven in part by sales of an innovative product, Kin Slips® sublingual strips. Shipments to additional provincial markets are also expected to commence in the near term.
- International Cannabis: Following the completion of its largest international cannabis shipment in Q4 2020, the Company has entered into supply agreements with new strategic partners in the European Union and Israel, significantly expanding international cannabis sales. Purchase orders for both markets, and a new order from Australia, are being processed, with the timing of delivery depends on the receipt of necessary import and export permits.
- Product & Brand Development: The launch of new product formats and strengthening of core lines has substantially driven sales growth in early 2021. Further product development is also underway, with the near term launch of soft chews and new dried flower cultivars. Later this month, the company plan to provide further details on a much broader expansion of its adult-use brand and product portfolio. This will be led by new brands tailored to specific consumer segments, each featuring novel and high-demand formats, aligned with the needs of Canadian consumers.
Debra BorchardtJanuary 6, 2021
The battle is heating up between Sundial Growers Inc. (Nasdaq: SNDL) and Zenabis Investments Ltd. (OTC: ZBSIF) as it appears that Sundial is looking to capture Zenabis by becoming its creditor. Sundial’s subsidiary special purpose vehicle owns $51.9 million of the aggregate principal amount of senior secured debt of Zenabis Investments, which is a subsidiary of Zenabis Global Inc. Zenabis made a principal payment of $7.0 million on December 31, 2020 in accordance with the terms of the Senior Loan. Despite that payment, a notice of default was delivered to Zenabis, and is arguing that it isn’t in default.
Sundial Attempts Forced Acquisition
The maneuvering began on December 30, 2020, when Sundial said it had made a strategic investment in Zenabis’ senior lender, which Zenabis said was an attempt to coerce Zenabis into being acquired by Sundial. In a statement, Zenabis said, “Prior to Sundial’s acquisition of the Senior Lender, the company had been in late-stage discussions with the Senior Lender relating to the extension of its obligation to repay $7 million of the principal amount of debt on December 31, 2020. Contrary to the discussions with the Senior Lender prior to the point at which it was acquired by Sundial, the Senior Lender substituted the soon to be consummated extension with a demand that the $7 million principal repayment be made on December 31, 2020 accompanied by a forbearance agreement.” Zenabis also said that the forbearance agreement required it to enter into exclusivity arrangements with the Senior Lender in relation to any sale of the company and also required Zenabis to accept significant potential financial penalties in excess of the outstanding balance of the debt owed to the Senior Lender.
On December 31, 2020, Zenabis entered into a letter agreement to sell $7 million of dried cannabis to another major Canadian licensed producer of cannabis and used that money to make the $7 million loan payment. Zenabis said that after making the payment it was alleged that there were a variety of defaults under the terms of the amended and restated debenture dated June 28, 2020.
The company said that none of the alleged defaults are for failure to make payments of principal or interest. In Zenabis’ statement, “The company believes the Senior Lender’s allegations to be spurious and without merit and intends to vigorously defend against what it considers to be an ill-disguised attempt to circumvent a fair and competitive process to acquire the company by improperly foreclosing the equity of the company or compelling Zenabis to enter into a transaction with Sundial.”
Zenabis Has Another Buyer
While Zenabis is fighting desperately to keep Sundial from taking over the company, it says it has started talks with another significant licensed cannabis producer. “There can be no assurance that these discussions will result in a binding agreement or the completion of a transaction. No further details regarding such discussions, including the identity of the counterparty, will be disclosed at this time,” said the company in a statement.
In June, Zenabis Global reported that it had entered into an agency agreement with a syndicate of agents co-led by AltaCorp Capital Inc. and Eight Capital and including Canaccord Genuity Corp., Haywood Securities Inc. and PI Financial Corp. for the sale of up to 157,643,875 Units at a price of $0.13 per Unit for gross proceeds of up to $20,493,704. Zenabis said it planned to use the net proceeds of the offering for general working capital and corporate purposes, the partial repayment of subordinated secured notes, the partial repayment of the Company’s unsecured convertible debentures, the partial or full repayment of it’s $7,000,000 third tranche of senior secured debt and the payment of an extension fee on the remaining balance of Tranche 3, if applicable.
Debra BorchardtAugust 14, 2020Sundial Growers Inc. (NASDAQ: SNDL) reported that its revenues were rising and then quickly followed up with an offering. the stock fell from $0.70 to $0.51 on the news for a drop of over 25%.
First, the Canadian-based Sundial said its net cannabis revenue increased 44% sequentially in the second quarter of 2020 to $20.2 million. The company also delivered a net loss of $31.6 million, which was trimmed slightly from the first quarter’s net loss of $38.4 million. The company said the decreased loss of $6.8 million was primarily due to improvement on loss from operations, partially offset by provisions against the company’s inventory and biological assets to reflect current and rapidly evolving market conditions.
Zach George, Chief Executive Officer of Sundial said, “While we are pleased to be one of a small group of Canadian LP’s able to post quarterly revenues greater than $20 million, we remain focused on the intense competitive landscape and the need to gain greater scale to reach sustainable profitability. We have made good progress in streamlining our business over the past six months, having eliminated non-core initiatives, reduced costs, and improved operating efficiencies. We still have significant work to do as we look to deliver on innovation, improve capacity utilization, and reduce our cost of goods sold. These initiatives, along with continued strong consumer demand and increased sales levels to date in 2020, should position us well for the balance of the year.”
Strategic Initiatives
In its press release, the company said that its board of directors had authorized management and its external advisors to consider a broader range of strategic alternatives, including a potential sale of the company, merger or other business combination, investments in other Canadian cannabis companies, including dispensaries and other retail outlets, dispositions of discrete brands and related assets, optimizing its assets, including the potential sale of its Rocky View and Merritt facilities. It is also looking at selling limited quantities of inventory at or below cost and entering into long-term supply agreements with other licensed producers, licensing or other strategic transactions involving the company, or any combination of the foregoing. Sundial has engaged a financial advisor to assist with these efforts.
Sundial also said that it secured an amendment to its $79.3 million syndicated credit agreement deferring all material financial covenants other than maintaining a minimum cash balance of $2.5 million and securing additional equity financing of US$10 million on or prior to December 1, 2020. The company also said that with regards to the Bridge Farm Group, $45 million of its term debt facility was extinguished with the remaining $73.2 million converted into non-interest-bearing convertible notes.
Offering Priced
Sundial followed the earnings announcement with a registered offering of 25,820,000 Series A Units sold at a price of US$0.50 per Series A Unit and each Series B Unit will be sold at a price of US$0.50 per Series B Unit, minus US$0.0001, and the remaining exercise price of each Series B Warrant will equal US$0.0001 per common share. Sundial’s gross proceeds from this offering are expected to be approximately US$20 million. The offering is expected to close on August 18, 2020.
Subsequent to the quarter-end, Sundial filed a registration statement for a mixed shelf prospectus allowing it to issue common shares in an amount up to US$100 million at its discretion and intends to establish an At-the-Market (“ATM”) equity program covering issuances of up to US$50 million.
Revenue Details
Sundial reported that the average gross selling price per gram equivalent of branded products was $5.67 per gram in the second quarter of 2020, including net provisions, compared to $5.11 per gram in the prior quarter. The change in average gross selling price was primarily due to an increase in vape sales. Average gross selling prices for unbranded flower in the second quarter were $2.82 per gram up from $2.74 per gram in the previous quarter despite competitive pressures in the wholesale market as a result of industry-wide increased inventory levels.
The gross revenue from vape cartridge sales was $6.3 million in the second quarter of 2020 representing a 44% increase from the previous quarter. The company sold 5,997 kilogram equivalents of cannabis in the second quarter of 2020, a 35% increase over the previous quarter sales of 4,437 kilogram equivalents.
Branded net cannabis sales in the second quarter of 2020 were $14.0 million compared to $7.6 million in the first quarter of 2020, an increase of 84%, supporting Sundial’s strategy to focus on increased sales to Provincial Boards.
The cost of goods sold per gram of bulk dried cannabis was $1.34 in the second quarter, an increase of 11% over $1.21 per gram in the prior quarter. The company said that the increase was due to a decrease in production capacity utilization and consequent allocation of manufacturing overhead over fewer grams.
William SumnerAugust 14, 2019
It’s time for your Daily Hit of cannabis financial news for August 14, 2019.
On the Site
Zenabis Global
Zenabis Global Inc. (TSX: ZENA) (OTC: ZBISF) reported that its second-quarter net revenue rose 78% to $25 million from last year’s $4.1 million for the period ending June 30, 2019. The company said that the results were achieved “despite being negatively impacted by temporary price reductions on inventory sold to provincial counterparties designed to help Zenabis to capture a larger share of the recreational cannabis market.”
Charlotte’s Web
Charlotte’s Web Holdings, Inc. (TSX: CWEB)(OTCQX: CWBHF), a producer of whole-plant CBD hemp extract products, reported its financial results for the second quarter ending June 30, 2019. The company’s revenue grew 45% to $25 million over last year’s $17.2 million for the same time period. The net income fell to $2.2 million from last year’s $3.7 million.
Who’s Really Buying CBD? And Why?
If you’re asking yourself who’s buying CBD products, just take a stroll to your local grocery store and mosey over to the vitamins and supplements section. Prepare to be overwhelmed by the thousands of nutraceutical “wellness” products filling the shelves – everything from melatonin chocolates for sleep-aid to echinacea for immune support – and yes, very recently products containing the compound that’s outshined Beyonce in popularity, CBD.
In Other News
Jushi Holdings
Today, Jushi Holdings Inc. released its financial results for the second quarter. Year-over-year, revenue for the quarter increased to approximately $200,000, and the gross profit was roughly $200,000. The net loss increased to $11.8 million, up considerably from $100,000 in the same period of the previous year. Despite low earnings and high losses, the company has a net working capital of $95.4 million, of which $86.7 million is in cash.
Sundial Growers
Sundial Growers Inc. (NADAQ: SNDL) has released their financial results for the second quarter. Gross revenue was $20.3 million. The net loss declined from $16.6 million in the first quarter to $12.4 million. Adjusted EBITDA was a loss of $500,000, up from a loss of $5.5 million. “Sundial accomplished great things this past quarter and our team’s solid execution across key areas of our business resulted in significant revenue growth,” said Torsten Kuenzlen, CEO of Sundial. “We are very confident in our go-to-market strategy, our strengthened balance sheet and our ability to execute upon organic growth opportunities.”
The Green Organic Dutchman
After the close of the market yesterday, The Green Organic Dutchman Holdings Ltd. (TSE: TGOD) reported their financial results for the second quarter. Revenue rose 20% over the previous quarter to $2.9 million. The net loss rose from $8.5 million in the previous year to $16.6 million. “Q2 was pivotal for the Company as we began commercial production in the second phase of our Hamilton site and expanded our product line for the Grower’s Circle,” commented Brian Athaide, CEO of The Green Organic Dutchman.
Helix TCS
Today, Helix TCS, Inc. (OTCQB: HLIX), announced the release of its financial results for the second quarter. Quarterly revenue was $3.9 million. The gross profit was $1.9 million, with a gross margin of 49%. “We feel that we are still deeply undervalued due to our focus on execution as opposed to publicity, and are working to tell the simple truth of our constantly improving business and strong results,” said Helix TCS CEO and Executive Chairman, Zachary L. Venegas.
HempFusion
HempFusion, Inc. closed a brokered and non-brokered private placements of a total of 28,800,000 units of the Company at a price of US$1.25 per Unit for gross proceeds of US$36 million. The brokered portion of the Offering consisted of the sale of 26,227,650 Units for aggregate gross proceeds of US$32,784,563 and was completed by a syndicate of agents led by Canaccord Genuity Corp. and including Haywood Securities Inc. and PI Financial Corp. Due to demand, the Offering was upsized from US$20 million to US$36 million.
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