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.
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.
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.
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.
“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.
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