Tilray Archives - Green Market Report

StaffStaffNovember 14, 2019
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4min1660

Republished with permission from Thinknum Alternative Data

by Joshua Fruhlinger

The blooming weed industry promised massive revenues, a nascent agrarian industry, a booming supply chain, and soaring local taxes. While it has delivered on all of those things in limited fashion, recent earnings calls from market leaders like Tilray ($NASDAQ:TLRY) have analysts and investors worried that we may be seeing an early floor — or at least normalization — of the industry’s ability to earn as prices settle and operational costs become reality.

Yesterday, Tilray reported a third-quarter net loss of almost $36 million, or 36 cents per chare. That’s up from last year when it reported losses of $19 million, or 20 cents per share. That said, revenue rose to $51.1 million from $10.1 million.

But skyrocketing losses are the focus of investors today, and they appear to have a lot to do with sinking weed prices. Tilray reported that the average price per gram of weed it sold sunk from $6.21 to $3.25.

Tilray isn’t alone here: The price of weed across the industry has been dropping, including at Tilray competitor OCS — Ontario Cannabis Store ($ONTARIOCANNABISSTORE) — where we have pricing data for the past few months.

At OCS, the price of 3.5- and 7.0-gram non-CBD products is showing a steady decline, mirroring that of Tilray and other companies in the space. Since August, the average price has dropped from $13 to $11.42.

While Tilray points to higher operational costs and the acquisition of Manitoba Harvest and Natura Naturals, declining prices will only continue to squeeze revenue and subsequent earnings.

The company has entered a bit of a hiring slowdown as it picks up the pieces as well – openings are down as much as 33% since last summer as the stock price inches to the $20 mark.

About the Data:

Thinknum tracks companies using the information they post online – jobs, social and web traffic, product sales and app ratings – and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.


Debra BorchardtDebra BorchardtNovember 12, 2019
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3min1450

Canadian-based Tilray, Inc. (Nasdaq: TLRY) reported that second-quarter revenue increased 371.1% to $45.9 (C$60.9) million versus last year’s $9.7 million. Tilray said that the increase in revenue was driven by the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market, and growth in international medical markets, particularly in Europe. Excluding excise tax, revenue was $42.0 (C$55.8) million.

Net Losses Rise to $35 Million

The company delivered a net loss for the quarter of $35.1 million or $0.36 per share versus last year’s loss of $12.8 million or $0.17 per share. The adjusted net loss for the quarter was $31.2 million or $0.32 per share for the second quarter of 2019. The adjustments to the net loss are non-recurring acquisition-related charges and a non-recurring non-cash charge related to purchase accounting for the fair value of inventory. Adjusted EBITDA was a loss of $17.9 million compared to a loss of $4.7 million the prior-year period. The company said that the increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, interest expense from our convertible notes, the addition of Manitoba Harvest and Natura businesses, and the expansion of international operations.

“We are pleased with our second-quarter results and strong business momentum,” said Brendan Kennedy, Tilray President, and Chief Executive Officer. “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Prices Fall

The average net selling price per gram decreased to $4.61 (C$6.12) versus last year’s $6.38 (C$8.36). The decrease was due to a reduced mix of higher-priced extract products and a greater mix of adult-use revenue, which are at lower prices per gram compared to other channels. Total kilogram equivalents sold more than tripled to 5,588 kilograms from 1,514 kilograms in the prior-year period.

 

 


William SumnerWilliam SumnerSeptember 11, 2019
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4min2840

It’s time for your Daily Hit of cannabis financial news for September 11, 2019.

Medicine Man Technologies

Medicine Man Technologies, Inc. (OTCQX: MDCL) has entered into a binding term sheet to acquire the cannabis operator Strawberry Fields for $31 million. The acquisition is comprised of $14 million in cash and $17 million in common stock, priced at $2.98 per share. “The integration of Strawberry Fields into our family of Colorado pioneers will be impactful,” said Andy Williams, Co-Founder and CEO of Medicine Man Technologies. “This transaction will provide our Company with low-cost cultivation assets located in Pueblo, a growing manufacturing facility, and branded products. In addition we will be acquiring four retail locations in Western and Southern Colorado, including a high yielding store that is a leader in that part of the state. Adding Strawberry Fields to our portfolio will strengthen our strategy to become the leading integrated cannabis operator of Colorado.”

Tilray

After the market close yesterday, Tilray Inc. (NASDAQ: TLRY) announced in an 8k-filing that it has selected Cowen and Company to sell up to $400 million in stock once an S-3 registration statement is effective, with any sales to be an “at-the-market offering.”

Vapen MJ

Vapen MJ Ventures (OTCQX:VAPNF) announced the appointment of Arizona Attorney Scott A. Hill to the company’s advisory board. Hill is a patent attorney and former stock broker licensed to practice law in the state of Arizona and in the United States District Court for the District of Arizona. “Scott was instrumental in successfully working with the USPTO for Vapen MJ’s utility patent for our Cannabinoid Inhaler without a heating element. Scott crafted the claim in the filing, which makes the recently granted patent as broad as possible,” commented Thai Nguyen, Founder and CEO of Vapen MJ.

Aurora Cannabis

Aurora Cannabis (NYSE: ACB) announced the release of its financial results for the fourth quarter, ending on June 30, 2019. Net revenue for the quarter rose by 61% to $94.6 million. The cost-per gram sold declined t0 $1.14. The gross margin was 58% and adjusted EBITDA was a loss of $11.7 million. “In 2019 Aurora took its place as the global leader in cannabis production, research, innovation, and international market development. We are executing on all our strategic priorities,” said Terry Booth, Aurora CEO. “Our best in class cultivation methods allow us to grow consistent, high-quality cannabis at scale.”


William SumnerWilliam SumnerSeptember 9, 2019
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5min4220

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.”


William SumnerWilliam SumnerAugust 29, 2019
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5min3310

It’s time for your Daily Hit of cannabis financial news for August 29, 2019.

On the Site

Tilray

Tilray, Inc.  (NASDAQ: TLRY) will be buying Alberta-based dispensary chain FOUR20 through its wholly-owned subsidiary of High Park Holdings Ltd. The recreational retail brand provides adult-use cannabis consumers with a premium retail experience focused on high-quality product selection, education, and community. FOUR20 currently operates six licensed retail locations and has 16 additional high-traffic locations secured in desirable locations in Alberta, including Canmore, Calgary, and Edmonton.

Food, Drug or Something Else: What is Hemp-Derived CBD?

It has been just over a month since the public comment period closed in the wake of the public hearing held by the FDA, “Scientific Data and Information about Products Containing Cannabis or Cannabis-Derived Compounds”. Over 4,000 comments were docketed, ranging from controlled scientific data submissions to tales of miracle cures to horror stories. It will be interesting to see what the agency gleans from the docket.

Los Angeles Bringing Back The “War on Drugs” for Illegal Commercial Cannabis Activity

Bringing Back The War – A bit of background on illegal storefront dispensaries tells us And the enforcement in California will come from both state and local authorities. The City of Los Angeles recently launched a massive crackdown on unlicensed, illegal cannabis businesses, filing misdemeanor charges against more than 500 people and shutting down 105 illegal cannabis businesses, including cultivation operations, extraction labs, and delivery companies across the city

In Other News

Cansortium

Cansortium Inc. (CSE:TIUM.U) (OTCQB: CNTMF) reported its second quarter revenue today. Consolidated revenue increased to $6.1 million. The consolidated net loss was $5.3 million. Consolidated EBITDA was $1.8 million. “While we continued to execute our strategy to expand cultivation, processing, and dispensaries during the second quarter, a combination of unexpected delays in construction needed in order to secure final regulatory approvals at our Tampa cultivation Phase 2 expansion, as well as delays in opening certain previously planned Florida dispensaries, led to second quarter revenues that were lower than originally anticipated. As a result, we are experiencing an approximate six-month delay on our plans presented earlier in the year,” said Cansortium CEO Jose Hidalgo.

Vireo Health

Today, Vireo Health International, Inc. (CNSX: VREO) (OTCQX: VREOF) reported its financial results for the second quarter. Operating revenue totaled $7.2 million, and the net loss was approximately $1.9 million.  EBITDA and adjusted EBITDA were $0.8 million and $2.3 million, respectively. “Increasing patient enrollment in Minnesota and New York continued contributing to organic revenue growth during the second quarter, and wholesale demand trends in Maryland and Pennsylvania have also been encouraging signs that our products can compete effectively within a broader marketplace,” said Vireo Founder and CEO, Kyle Kingsley.

Gabriella’s Kitchen

Gabriella’s Kitchen Inc. (CSE: GABY) also released their financial results for the quarter. Revenue was $2.5 million, up from $319,737 in the same period in the previous year. The gross loss declined from $264,607 to $49,712. As of June 30, 2019, the company has $11.5 million in cash and $37.3 million in assets. “When we announced our target on May 7, 2019 of $35 million in pro-forma revenue for the fiscal year, we took into account that Q2 would be a slower quarter due to the delayed closing of our $20 million raise, the company’s short-term decision to allocate available capital to maintain relationships and shelf space with dispensaries, and the transitioning from a shared distribution model in Southern California to a sole distribution model, staffed with our internal salespeople,” said Margot Micallef, Founder and CEO of GABY.


Debra BorchardtDebra BorchardtAugust 29, 2019
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2min3940

 Tilray, Inc.  (NASDAQ: TLRY) will be buying Alberta-based dispensary chain FOUR20 through its wholly-owned subsidiary of High Park Holdings Ltd. The recreational retail brand provides adult-use cannabis consumers with a premium retail experience focused on high-quality product selection, education, and community. FOUR20 currently operates six licensed retail locations and has 16 additional high-traffic locations secured in desirable locations in Alberta, including Canmore, Calgary, and Edmonton.

“FOUR20 offers a premium retail experience for the mainstream cannabis consumer and builds on our broader retail strategy, which includes several minority investments in other leading cannabis retailers,” says Tilray Chief Corporate Development Officer Andrew Pucher. “With FOUR20, we will elevate the retail experience for consumers by offering the best quality-tested products while preparing for the next wave of legalized product launches taking place by year’s end.”

Tilray said it would leverage FOUR20’s retail expertise and brand and market knowledge to expand into other Canadian provincial markets where Licensed Producer retail ownership will be permitted in the future.

Terms of the Deal

According to the company statement, Tilray will deliver up to C$110M consisting of C$70M in Tilray Class 2 common stock at closing and $40M in Common Stock subject to the achievement of certain performance milestones by FOUR20.

High Park and its affiliates have fulfilled adult-use supply agreements and purchase orders across Canada since the federal legalization of adult-use cannabis on October 17, 2018. High Park will continue to offer consumers a broad-based portfolio of high-quality adult-use products as it grows its supply chain and expands its production capacity in Canada. FOUR20 will operate as a wholly-owned subsidiary of Tilray and will continue to offer consumers a diverse selection of brands and products from craft and mainstream producers including High Park.


Debra BorchardtDebra BorchardtAugust 21, 2019
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3min2110

Tilray, Inc. (NASDAQ: TLRY) said that it has entered into an agreement with Cannamedical Pharma GmbH through its wholly-owned subsidiary Tilray Portugal Unipessoal Lda. to export a wholesale shipment of $3.3 (€3) million worth of medical cannabis from Portugal to Germany. The shipment, which is expected to be completed in fall 2019, will be Tilray’s first from its state-of-the-art EU campus in Portugal to supply patients in Germany.

“This is a significant milestone for Tilray as we ramp up our capacity to serve international markets and generate revenue from our EU campus through the end of 2019,” says Tilray CEO Brendan Kennedy. “We believe our 2.5 million square feet of cultivation and state-of-the-art processing space in Europe is an important differentiator, which will enable us to reduce costs and improve margins while hedging against regulatory risk.”

Roughly 5.5 % of Tilray’s revenues are generated in Germany, but Cowen & Co. analyst Vivien Azer believes international markets could represent approximately $2.8 billion in business as the company expands into other countries. She has forecast that by 2021, the international business could contribute 30% of the company’s total sales.

Germany based Cannamedical is fully licensed and GDP-certified to import and distribute high-quality medical cannabis products. The privately-owned company is a leading independent supplier of medical cannabis products to 2,500 pharmacies and clinical facilities across Germany.

“We at Cannamedical Pharma are committed to helping doctors, medical specialists and pharmacists improve their patients’ quality of life,” says Cannamedical CEO David Henn. “Tilray’s product has passed our strict quality control standards, and we’re excited to have found a partner able to deliver medical cannabis products for use in Cannamedical’s own brands. We look forward to increasing access for patients in need across the country.”

According to Azer, the international growth for Tilray is expected to be driven by Germany, then followed by Australia, New Zealand, and other countries. She thinks the three countries mentioned will be a $1.1 billion medical cannabis market by 2021.

“We are pleased to enter into an agreement with a partner who shares Tilray’s commitment to product quality and safety and patient access,” says Sascha Mielcarek, Tilray’s Managing Director, Europe. “This initial shipment will be the first of many from our EU Campus in Portugal to Germany as well as other European and international markets.”


Debra BorchardtDebra BorchardtAugust 13, 2019
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3min4740

Tilray, Inc. (Nasdaq: TLRY) reported financial results for the second quarter ending June 30, 2019 revenue increased 371.1% to $45.9 (C$60.9) million, compared to the second quarter of last year, driven by the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market, and growth in international medical markets, particularly in Europe. Excluding excise tax, revenue was $42.0 (C$55.8) million.

The company reported a net loss of $35.1 million or $0.36 per share compared to a loss of $12.8 million or $0.17 per share for the same time period in 2018. The adjusted net loss for the quarter was $31.2 million or $0.32 per share for the second quarter of 2019. Tilray said that the adjustments to the net loss were non-recurring acquisition-related charges and a non-recurring non-cash charge related to purchase accounting for the fair value of inventory.

The company’s stock was falling in after-hours trading by over 5% to $43.35.

The adjusted EBITDA was a loss of $17.9 million compared to a loss of $4.7 million last year. The increased net loss and adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, interest expense from our convertible notes, the addition of Manitoba Harvest and Natura businesses, and the expansion of international operations.

“We are pleased with our second quarter results and strong business momentum,” said Brendan Kennedy, Tilray President and Chief Executive Officer. “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Kilograms Sold Tripled

The company said its total kilograms sold more than tripled to 5,588 kilograms from 1,514 kilograms in the prior-year period. The average net selling price per gram dropped to $4.61 (C$6.12) compared to $6.38 (C$8.36) in the prior-year period. The average net selling price excluding excise taxes was $3.92 (C$5.20) per gram for the second quarter of 2019. The decrease was due to a reduced mix of higher-priced extract products and a greater mix of adult-use revenue, which are at lower prices per gram compared to other channels.

 


William SumnerWilliam SumnerJuly 23, 2019
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3min5800

Amplify Investments is getting into the cannabis industry. Today, Amplify ETF’s announced the launch of Amplify Seymour Cannabis ETF (NYSE Arca: CNBS), an actively managed ETF covering the cannabis industry. Tim Seymour, CIO of Seymour Asset Management and CNBC Fast Money co-host, will act as the fund’s portfolio manager.

As one of the world’s most premier financial journalists, Seymour recently served as the headline speaker for the Green Market Summit in Chicago, Illinois. You can watch his fireside chat with Peter Miller, CEO of Slang Worldwide Inc. (SLGWF), about the explosive growth of the cannabis industry here.

“The global legal cannabis industry is still very much in its infancy and presents an attractive growth opportunity for investors looking to capitalize on this emerging frontier,” Seymour said. “Amplify has a track record of offering investors access to disruptive areas of the market via the ETF structure, and the cannabis industry certainly fits this mold.”

As portfolio manager, Seymour will base his decisions off of publicly available data, regulatory filings, third party research, and his evaluations of companies’ financial fundamentals.

The CNBS portfolio will include cannabis companies that are federally legal in the countries in which they operate. Specifically, the portfolio will cover companies that fall into one of three categories: cannabis/hemp plant, support cultivation and retail, and ancillary companies that provide goods and services to the cannabis industry.

Another qualification is that at least 80% of the companies in the ETF must receive 50% or more of their revenue from the hemp or cannabis industry. The fund portfolio currently covers 25 of the cannabis industry’s leading companies; such as Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), Hexo Corp. (NYSE: HEXO), Tilray (NASDAQ: TLRY), and WeedMD (OTCMKTS: WDDMF)

“Cannabis and hemp are seeing a new wave of potential use cases across multiple industries, and investors are eager to gain access to this emerging sector,” said Christian Magoon, founder and CEO of Amplify ETFs. “Tim is a recognized voice and active investor in the cannabis space, and we’re excited to harness his investment expertise and specialized insights to navigate and capture the expanding opportunity in the rapidly evolving industry.”


William SumnerWilliam SumnerJune 13, 2019
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6min4550

It’s time for your Daily Hit of cannabis financial news for June 13, 2019.

On the Site

Cannabis’ Black Market Continues to Thrive Amidst Continued Legalization

Despite legalization continuing to spread, and efforts advocating towards federal legalization of cannabis, the black market in the U.S. for cannabis continues to thrive across the nation.Simply put, despite access and legal product being available, people are still as or more likely to purchase their cannabis from black market sources, with this trend not showing any signs of stopping.

HEXO Corp.

HEXO Corp (TSX:HEXO) ( NYSE-A:HEXO)  reported its financial results for the third quarter of the 2019 fiscal year with $15.9 million in gross revenues and a net loss of $7.7 million. The company claims it is on track to reach $400 million in net revenue in 2020 and says it will double net revenue in the fourth fiscal quarter.

Executive Spotlight: Amanda Ostrowitz, Founder & CEO of RegsTechnology

Amanda Ostrowitz is a regulatory attorney and entrepreneur who’s identified a need for a user- friendly, scalable platform to research regulations and laws in the cannabis industry. Amanda founded RegsTechnology and its current product, CannaRegs, as a tool to aid attorneys, business people, and governments with localized tracking of regulatory issues.

MJMicro Conference

Although adult-use cannabis is legal in nine U.S. states, problems persist with companies trying to gain access to capital and essential financial services. Consequently, the industry has devised a series of methods and institutions to circumvent these difficulties; from credit unions to keeping their funds in a giant safe. Another unique way that the cannabis industry has adapted to the issue has been connecting companies with private capital investment through investor forums. A perfect example of this is the MJMicro Conference planned for June 25, 2019, in New York City.

In Other News

Tilray

Tilray, Inc. (NASDAQ: TLRY) today announced the appointment of Kristina Adamski as Executive Vice President, Corporate Affairs. Adamski will help coordinate the company’s corporate affairs team and help oversee the company’s public relations, corporate social responsibility and government affairs functions. Adamski previously served as Nissan North America’s Vice President of Corporate Communications for more than three years. “We’re thrilled to welcome Kristina to our growing senior leadership team. We’re confident that her vast experience in corporate affairs and global communications will support Tilray’s long term global growth strategy as we expand around the world,” says Brendan Kennedy, CEO, Tilray.

Treehouse REIT

Treehouse Real Estate Investment Trust, Inc. announced that it has closed on nearly a $16 million debt commitment with a large, federally insured and regulated commercial bank. As the company continues to acquire cannabis-use properties, the note commitment will carry a 5.6% interest rate and provides for a revolving facility for future notes. “Treehouse is excited to announce that we have successfully procured federally insured commercial bank financing,” said Brian Kabot, Stable Road Capital Chief Investment Officer and Treehouse Board Member. “The capital relationship allows us to continue executing cannabis-related real estate acquisitions in a scaled, non-dilutive manner that is most accretive to our investors. We are witnessing federally regulated lenders enter the cannabis space and we are thrilled to be at the forefront of those efforts.”

Canndescent

The luxury cannabis brand Canndescent announced that it has signed a definitive agreement to acquire buildings and operating licenses in Nevada, Michigan and Massachusetts for $28.5 million. The acquired building will be retrofitted to support the company’s proprietary cultivation and extraction methods. “Our expansion is a huge win for cannabis consumers as the best of California cannabis will finally be available in other markets,” said Canndescent CEO Adrian Sedlin. “We’re sort of the ‘anti-MSO’ or as I like to call it, we’re an MSBO, Multi-State Brand Operator, having nailed brand and execution first and now rolling up assets with intentionality and understanding.”



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