It’s time for your Daily Hit of cannabis financial news for April 8, 2021.
On the Site
Canopy Growth Corporation (NASDAQ: CGC) is buying The Supreme Cannabis Company, Inc. (OTCQX: SPRWF) in a deal valued at approximately $435 million on a fully diluted basis. Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held. There is a $12.5 million termination fee. Supreme Cannabis’s portfolio of brands includes 7ACRES, 7ACRES Craft Collective, Blissco, sugarleaf, and Hiway. Supreme Cannabis addresses national and international medical cannabis opportunities through its premium Truverra brand.
The combination of market leader Canopy Growth with Supreme Cannabis’ top position in Canada will lead to a pro forma Canadian recreational market share of 13.6% according to a company statement based on Headset data. This includes 7ACRES which is Canada’s number one premium flower brand, number one in PAX vapes, and Top-5 in pre-rolled joints. The company said that the combined pro forma market share is estimated to be 23.3% of the premium flower segment in Ontario and 21.4% in British Columbia. However, Canopy Growth noted that cost synergies will not be felt for another two years and those are expected to be in the $30 million range.
Virginia is now the 17th state to legalize cannabis for adult use and the fourth state to do so by passing a bill through its state legislature versus going to the voters. On Wednesday, Virginia lawmakers approved a bill that will legalize, regulate, and tax cannabis sales for adults 21 and over. It will probably be another two years before the state sees any retail sales.
In Other News
Verano Holdings Corp. (CSE:VRNO) announced its results for the year ended December 31, 2020. 2020 revenues increased 196% year-over-year to $355 million. Net income in 2020, including the impact of biological assets, was $245 million compared to $10 million in 2019. Cash flow from operations for 2020 was $151 million, 2020 Free Cash Flow1 was $53 million.
Subsequent to going public, the Company has announced and/or closed eight accretive acquisitions, strengthening its presence in Arizona, Illinois, Pennsylvania and Ohio. Pending customary closing requirements, the Company would add 17 dispensaries, 14 active and three planned, and approximately 20,000 sq. ft. in cultivation capacity.
KushCo Holdings, Inc. (OTCQX:KSHB) reported financial results for its fiscal second quarter ended February 28, 2021. Net revenue increased 9% from the prior year period, and 23% from fiscal Q1 2021, to $32.9 million, primarily as a result of an increase in sales to the Company’s MSO and LP customers, as part of the Company’s continued strategy to align with the industry’s leading operators.
- On a GAAP basis, net loss was approximately $5.0 million, compared to approximately $44.4 million in the prior year period. Basic loss per share was $0.04 compared to $0.40 in the prior year period.
- On a Non-GAAP basis, excluding the impact of certain non-recurring charges and gains, net loss for the quarter was $3.1 million, or $0.02 per share, compared to a net loss of $17.5 million, or $0.16 per basic share, in the prior year period.
- Adjusted EBITDA totaled ($0.7) million compared to approximately ($14.8) million in the prior year period. The improvement in adjusted EBITDA was driven by the aforementioned cost reductions.