Sunniva Archives - Green Market Report

William SumnerWilliam SumnerSeptember 10, 2019
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4min1270

It’s time for your Daily Hit of cannabis financial news for September 10, 2019.

On the Site

Canndescent

Private premium cannabis company Canndescent announced that it closes on a $27.5 million in Series C Preferred Funding. Leading the investment round, Green Acre Capital, a cannabis-specific venture fund from Canada, was joined by Carnegie Arch Capital, Senterra, LLC., Altitude Investment Management, JW Asset Management and a multinational beer company from Asia. The money will be used for the company’s expansion into vapes and ingestibles as well as supporting efforts in Massachusetts, Nevada, Canada and beyond.

Dissect the Economics of Cannabis Branding at the Green Market Summit

On September 11th, 2019, investors, entrepreneurs, and branding experts will gather to dissect the economics of cannabis business brands at The Green Market Summit in Los Angeles, California. Following a sold-out event in Chicago, The Green Market Summit will bring its business acumen to the world of cannabis branding and provide exclusive industry information on topics such as the celebrity effect on cannabis, how to manage brand perception for public companies, and the world of luxury cannabis.

In Other News

MedMen

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced that the waiting period stipulated by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended has expired in relation to the company’s proposes acquisition of PharmaCann LLC. The waiting period was one of several conditions needs to close the acquisition, and the deal is expected to close by the end of 2019. “Today marks a monumental day for the cannabis industry,” said Adam Bierman, MedMen co-founder and CEO. “We hope this will pave the way for other companies in what has become a highly acquisitive and dynamic industry.”

Sunniva

Sunniva Inc. (CSE: SNN) announced that it has entered into an agreement to sell its subsidiary Natural Health Services, Ltd.  (NHS) to The Clinic Network Canada, Inc. (TCNC) for C$9 million. Half of the purchase price will be paid in cash, while the other half will be paid through the issuance of 4.5 million shares of TCNC. The closing of the sale could not have come at a better time for Sunniva, as yesterday,  NHS was named in a class action lawsuit in connection with a previously reported privacy breach of the Electronic Medical Record system used by NHS.


William SumnerWilliam SumnerSeptember 9, 2019
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5min2290

It’s time for your Daily Hit of cannabis financial news for September 9, 2019.

On the Site

Medicine Man Technologies

Medicine Man Technologies, Inc. (OTCQX: MDCL) has been on a dispensary buying binge this past couple of weeks. Today the company has added to that list of newly acquired properties. The company said it would be buying four additional dispensaries in Colorado from a leading cannabis retailer. The company’s total dispensary count will grow to 27 upon the successful closing of all the pending acquisitions.

Cannabis Meets Fashion At New York Fashion Week

Fashion met cannabis this past weekend as Project Runway Allstar, Korto Momolu, partnered with Women Grow, the largest network of women in the cannabis and hemp industries for a runway show spectacular. The combination of high fashion and activewear emblazoned with the Women’s Grow logo was well-received by an enthusiastic audience.

Medical CCAs 101 (Cannabis Cooperative Associations)

This article describes the additional financial benefits of moving flower from cultivator to consumer through a CCA as medical cannabis rather than as adult-use cannabis.

In Other News

Aurora Cannabis

Aurora Cannabis Inc. (NYSE: ACB) has closed its previously announced amended and upsized credit facilities with a syndicate of lenders led by the Bank of Montreal. This consist of C$160 million in term loans and a feature enabling to company to upsize the facility by approximately C$40 million, in addition to the original C$200 million in credit facilities. “We are very pleased to now have three of the five largest Schedule 1 Canadian banks in our syndicate, along with increased participation from other key syndicate partners,” said Terry Booth, CEO of Aurora.

Tilray

Tilray Inc. (NASDAQ: TLRY) announced that it has signed a definitive merger agreement with Privateer Holdings, which is the company’s largest stockholder. Under the agreement, the parties will effect a downstream merger of Privateer with and into a wholly-owned subsidiary of Tilray, with the Tilray subsidiary surviving the merger, and the issuance by Tilray to Privateer equity holders of newly issued and registered shares of Tilray common stock and options to purchase shares of Tilray common stock in an aggregate amount equal to the number of Tilray common shares currently held by Privateer.

Sunniva

Sunniva Inc. (CSE: SNN) (OTCQB: SNNVF) announced that its that its wholly owned subsidiary, Natural Health Services Ltd. (NHS) has been named in a class action lawsuit filed in connection with a previously reported privacy breach of the Electronic Medical Record system used by NHS. “From the time we initially became aware of this issue, we have taken all the necessary steps to prevent a situation like this from happening again in the future,” said Dr. Mark Kimmins, President of NHS. “We continue to work with law enforcement and the Office of the Information and Privacy Commissioner of Alberta in the ongoing investigation into this matter.”


Debra BorchardtDebra BorchardtApril 30, 2019
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7min7730

After the market closed on Monday, Vancouver-based Sunniva Inc.  (CSE: SNN) (OTCQB: SNNVF) reported its fiscal 2018 results for the year ending December 2018 in Canadian dollars. The company delivered$18.8 million in revenue versus 2017’s $16.1 million. The net losses for 2018 rose to $29.0 million versus last year’s $17.5.

The company attributed the increase in net losses to SG&A expenses increasing by $10.5 million during the year.  The increase was primarily due to the company’s growth in 2018 as US operations, which led to an increase in the number of employees.  The most significant increase in costs was related to personnel costs, rent, and insurance of US operations.

In addition to that, share-based payment expenses were $8.2 million for the year versus $4.0 million in 2017 as the options granted during the year had much higher valuations due to the higher share price in the first half of 2018. Also, the company recognized an impairment loss of $1.3 million due to a valuation assessment of assets held-for-sale in December.

“While we were faced with some challenges in 2018, our existing businesses continued to see revenue growth and we now have strategic verticals assembled in California which have allowed us to leverage our core assets and to launch brands covering numerous cannabis product categories,” said Dr. Anthony Holler, CEO of Sunniva.

“Hard work by our team in California throughout 2018 has begun to bear fruit in early 2019.  The extraction facility became operational in Q3 2018 and, in conjunction with the acquisition of our distribution company, has enabled us to successfully launch two of our first three product brands into the California market in March 2019.  Strong initial sales of our cannabis brands contributed over $10.0 million of revenue to our total preliminary revenue estimate of $14.0 million for Q1 2019 which is almost as much revenue as we generated all of last year.”

Revenue did increase by $2.7 million during the year and FSD revenue increased by $3.3 million during the year due to an increase in sales from current customers as well as an increase in the customer base. NHS revenue decreased by $0.7 million during the year due to a temporary loss of doctors midway through 2018. CPL revenue increased by $0.1 million as initial extraction revenue was realized.

2019 Outlook

In 2019, Sunniva said it plans to focus primarily on the ongoing development of our California assets and brands in California. In a statement, the company noted, “In Canada, we continue to expand our Natural Health Services operations with new leadership from Dr. Mark Kimmins. We have suspended operations on our Okanagan Falls property (the “Sunniva Canada Campus”) as we focus efforts on US operations, and we continue to review strategic initiatives in respect of our Canadian assets.”

California – Delayed & More Expensive

Sunniva said that construction of the phase one 325,000 square foot California Campus in Cathedral City has experienced delays and is now expected to be operational in late Q3 2019. Sunniva attributed the delay on additional leasehold improvements required to increase the efficiency of the greenhouse and slower than expected construction progress.

The company also said that the estimated capital costs of the leased California Campus have increased to $95 million due to additional costs expected for the temperature control and lighting systems and additional infrastructure on phase two. Sunniva has contributed approximately $19.5 million to date and is committed to spending an additional US$10.5 million to complete its obligation. The flagship Sunniva onsite dispensary is expected to be completed and operational in Q1 2020 which will showcase the Sunniva brands.

Acquisitions

Sunniva also announced on Monday that its wholly-owned subsidiary, CP Logistics had acquired an 80% membership interest in 420 Distribution and Coachella Distillation from Group Two Investments and will assume the existing leases of the commercial property located in Coachella, CA. The company said that the total purchase price was not material.

“We continue to focus our efforts on enhancing and expanding our business in California and this new facility will expand our packaging and distribution operations,” said Kevin Wilkerson, CEO of Sun CA Holdings, Inc. “Following the successful launch of our first cannabis branded products earlier this year, we are looking ahead to growing  in the volume of products sold and we see this facility playing an instrumental role within the fully vertically integrated operations we are building in Southern California as it will enable us to increase our overall packaging capacity, expand our distribution capabilities and most importantly reduce our overall distribution costs.”


StaffStaffApril 5, 2019
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3min7740

Sunniva Inc.  (CSE: SNN) (OTCQB: SNNVF) reported preliminary revenue of C$14.0 million for the quarter ending March 31, 2019.  This represents a 169% increase over the C$5.2 million in revenue generated for the same time period in 2018. The company did not release any pross or net profit figures, but it did state that full figures for the fourth quarter and full-year 2018 would be released on April 29. The official first quarter results will be reported by May 30.

The company said that gross profit margins for the first quarter were expected to be between 30-35% due to operational ramp-up costs in California.  Sunniva reiterated that its 2019 revenue estimate in California through CP Logistics of $72$78 million (USD $55$60 million), with an estimated gross margin of 40-50%. However, the estimate did not include revenue from FSD, the Sunniva California Campus or NHS.

“In California, we now have the strategic pillars in place to ensure scalability and growth for our newly announced brands and we are very proud of our entire team for the execution and delivery of a very strong first quarter,” said Dr. Anthony Holler, CEO of Sunniva. “Our $14.0 million in revenue during the first quarter is close to the total revenue generated by Sunniva in all of 2018. With strong leadership and operating assets producing premium cannabis products, supported by our recent distribution company acquisition, we continue to demonstrate our ability to achieve significant revenue growth and secure shelf space for our Sunniva brands throughout the state.”

In California, Sunniva began selling cannabis products in the first three months of 2019 through its wholly-owned subsidiary, CP Logistics, LLC with preliminary revenue of C$10.0 million (USD $7.5 million). The company reported that revenue came from the sales of premium flower, vape cartridges and concentrates. In March, Sunniva unveiled its first three in-house brands, Sun Fire, KYNDNESS and Herbella, and announced that additional super premium brands would be launched in conjunction with production from the 325,000 sq. ft. purpose-built greenhouse under construction in Cathedral City, California.

Sunniva said that its other wholly-owned subsidiaries, Full-Scale Distributors, LLC, and Natural Health Services Ltd., contributed first quarter 2019 revenue of $2.3 million and $1.7 million, respectively.

 


Debra BorchardtDebra BorchardtJanuary 2, 2019
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5min4000

It’s time for your daily hit for cannabis financial news for January 2, 2019

On The Site

Cannex Capital Holdings Inc. (CSE: CNNX) today announced its financial results for the second quarter of the 2019 fiscal year, which ended on October 31, 2018.

Revenue for the quarter rose to $3.05 million, up roughly 223% from $1.8 million during the same period in the previous year. The bulk of the revenue increase was attributed packaging sales and rental income.

Likewise, the company’s net income rose to $696,746; a significant increase when compared to the loss of $815,188 during the second fiscal quarter of 2018. Adjusted EBITDA decreased slightly, falling from $1.1 million to $1.03 million. At the end of the period, Cannex had approximately $10.04 million in cash and cash equivalents.

In Other News

Xanthic Biopharma, Inc. (CSE : GGB) (OTCQB : GGBXF) officially changed its corporate name to Green Growth Brands Inc. The company had been operating under the trade name “Green Growth Brands” since the November 9, 2018 closing of its reverse take-over of the existing Xanthic entity. The new name is effective immediately and will be implemented across the company. The common shares will continue to trade on the Canadian Securities Exchange under the stock symbol “GGB” and on the OTCQB under the stock symbol “GGBXF”. The new CUSIP number of the Company’s common shares will be 39305B105 and the new ISIN number will be CA39305B1058.

The Supreme Cannabis Company, Inc.  (TSXV: FIRE) (OTCQX: SPRWF) (FRA: 53S1), announced 7ACRES has 19 completed flowering rooms and is on track for all 25 flowering rooms to be completed in March 2019. Once completed, 7ACRES will have a greenhouse footprint of approximately 300,000 square feet, with the total facility reaching over 440,000 square feet.  Supreme Cannabis expects 7ACRES to reach its estimated annual output of 50,000 kg by the middle of calendar 2019.

Sunniva Inc. (CSE:SNN) (OTCQB:SNNVF), a North American provider of cannabis products and services, announced today the closing of the previously reported 100% acquisition of LTYR Logistics, LLC a California-based cannabis distribution company.

Honeydrop Beverages announced a new partnership with Boulder, Colorado-based Evo Hemp to launch a line of Honeydrop Cold-Pressed CBD Lemonades. Made with 20 mg of premium U.S grown CBD sourced by Evo Hemp and a teaspoon of raw U.S. honey, the new CBD lemonades contain only 4 g of sugar per bottle and will be offered in three flavors: REVIVE (Matcha), RELAX (Lemon) and REHAB (Turmeric). The new line was conceived and crafted by Honeydrop’s SVP Mareill Kiernan, who is also a certified holistic natural foods chef and health coach.The products will initially be available in Southern California and the New York Tristate area via distributors Los Angeles Distributing and Doras Natural at an MSRP of $5.99. Nationwide shipping will also be available.

 


StaffStaffJuly 19, 2018
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5min18140

Part 2 of 8 of the Cannabis Trends for 2018: U.S. companies run north of the border and IPOs are on the rise.

Over the next year expect an increase of cannabis companies to start going public in Canada instead of the United States. Although the U.S. market has great potential in the long run, there are a lot of short term advantages to going public in Canada.

The first, and most obvious reason, is that Canada has legalized recreational cannabis sales.

Sure, nine states have legalized recreational cannabis, but it’s still federally illegal. US cannabis companies continuously have to look over their shoulders, hoping that the federal government isn’t about to kick down their door and make their business close its doors for good. Not to mention the fact that the entire U.S. market still  operates as cash-only, with extremely limited access to banking services.

Put yourself in the position of a cannabis business owner: Would you rather operate in a market that has the *potential* of being more profitable but has no access to banking services and puts you at risk of being arrested? Or would you want to operate in a market that carries little legal risk and you can actually open a bank account? For many entrepreneurs, it’s a pretty simply choice.

One company that is not afraid to do business in both the United States and Canada is Sunniva. Headquartered in Calgary, Canada, Sunniva is on the fast track to becoming one of the first cannabis companies to be licensed in both Canada and California, which is one of the world’s largest cannabis markets.

Legality aside, there’s also the issue listing requirements in the U.S. Companies have to be meet very strict requirements in order to become listed on the New York Stock Exchange (NYSE) or NASDAQ. For example, in order to become listed on the NYSE you need to have publicly held securities that are valued at a minimum of $100 million. Likewise, companies hoping to go on NASDAQ need a pre-tax income of $11 million for an aggregate of three years.

Contrast that with the Canadian exchanges, where companies on the TSX only need a pre-tax income from the previous year totaling $300,000. Those are not the only requirements, of course, but from there you can get a pretty clear idea of how difficult it is to make it on the NYSE or NASDAQ compared to the CSE or TSX.

The vast majority of “cannabis companies” listed on the NYSE and NASDAQ are biopharmaceutical companies, like GW Pharmaceuticals, that aren’t primarily cannabis companies. The only two companies that are purely cannabis companies that are publicly listed in the United States is Cronos Group and Canopy Growth.

With fewer barriers and fewer risks, numerous companies that previously started as U.S. based companies have begun moving operations north of the border and are making preparations to go public. Some of those companies include Acreage Holdings, Dixie Brands Inc., and MJIC Inc.

In the short term, expect an exodus of cannabis companies either going public or completely moving their operations to Canada and expect them to stay there until the United States finally decides to tackle federal cannabis reform.


StaffStaffMay 1, 2018
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5min11120

Canadian-based cannabis company Sunniva Inc.  (SNNVF),  released its financial results for the fourth quarter and the year ending December 31, 2017. For fiscal 2017, the company delivered $16.1 million in revenue mostly generated from its two acquisitions during the period, Natural Health Services (NHS) and Full Scale Distributors (FSD), which contributed C$11.3 million and C$4.8 million in revenue, respectively.

Still, Sunniva reported a net loss for the year of C$18.5 million as compared to C$6.9 million for 2016. The losses stemmed from C$14.3 million in selling, general and administrative expenses and then the company also incurred costs of goods sold of C$9.4 million due to the contract physician compensation in NHS and product manufacturing costs in FSD.

Fourth Quarter

In the fourth quarter, Sunniva delivered C$5.9 million in revenue compared to zero revenue for the same time period last year. Revenue came from NHS and FSD, which contributed C$3.9 million and $2.0 million in revenue respectively. Net income for the fourth quarter was C$0.2 million as compared to a net loss of C$1.4 million during the fourth quarter of fiscal 2016.

In the fourth quarter, Sunniva booked C$5.2 million in selling, general and administrative expenses and incurred costs of goods sold of C$3.4 million. During the fourth quarter Sunniva said in a statement that it realized a non-cash recovery of C$2.4 million resulting from a fair value decrease in its convertible promissory notes and warrant liability; a recovery of C$1.4 million resulting from the finalization of the NHS purchase price allocation and the resulting impact on amortization of the intangible software assets; and share-based compensation expense of C$0.7 million.

Management Comments

“2017 was a transformative year for Sunniva establishing the necessary infrastructure to become one of the largest vertically integrated cannabis companies operating in the world’s two largest cannabis markets – Canada and California. It has taken us many years to navigate strict federal and state legislative frameworks in California and the recent US presidential support of the legislative rights of individual states affirms our vision of becoming the leading provider of clean, medical grade cannabis within the Golden State,” said Tony Holler, CEO of Sunniva.

“Our vision is to become one of the lowest cost, highest quality cannabis producers in these markets by building large-scale purpose-built current good manufacturing practices designed greenhouses and establishing sophisticated distribution channels, including our ownership of Natural Health Services cannabis clinics in Canada which has surpassed 95,000 active patients as of today, to purchase the significant quantities of high quality Sunniva branded and Sunniva private label cannabis products. Our focus moving forward is to execute and de-risk our business model by forward selling a large portion of our production in both markets, supplementing the previously announced 90,000 KG take or pay contract with Canopy Growth in Canada, with an emphasis on creating long-term shareholder value.”

So Far In 2018

In February, Sunniva and Canopy Growth Corporation entered into a take or pay supply agreement. Canopy Growth will purchase up to 45,000 kilograms of dried cannabis annually and Sunniva will share in the revenues as the product is sold through Canopy Growth’s distribution network including its online marketplace, Tweed Main Street.

The company repaid the FSD note in cash of $2.8 million (US$2.2 million), plus accrued interest, and the remaining portion through the issuance of common shares at the conversion price of US$2.55 per share. In April, Sunniva announced that its US subsidiaries received all the necessary State of California temporary licenses for phase one and two for its purpose-built state-of-the-art greenhouse cultivation facilities in Cathedral City, California.



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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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