It’s time for your Daily Hit of cannabis financial news for November 26, 2019.
On The Site
On Monday, the U.S. Food and Drug Administration has issued warning letters to 15 companies for illegally selling products containing cannabidiol (CBD) in ways that violate the Federal Food, Drug, and Cosmetic Act (FD&C Act). The FDA also published a revised Consumer Update detailing safety concerns about CBD products more broadly. The FDA also indicated in the press release that it cannot conclude that CBD is generally recognized as safe among qualified experts for its use in human or animal food.
The warning letters sent to these companies were accused of using product webpages, online stores and social media to market CBD products in ways that violate the FD&C Act, including marketing CBD products to treat diseases or for other therapeutic uses for humans and/or animals. The FDA also noted that some of the products were marketed towards infants and children, which could have adverse reactions. Other violations include marketing CBD products as dietary supplements and adding CBD to human and animal foods.
MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) reported first fiscal quarter revenue of $44 million, up 105% year-over-year and 5% sequentially. The company also reported an eye-popping net loss of $82 million. MedMen delivered an Adjusted EBITDA loss of $22.2 million for the quarter.
Approximately $7.4 million of rent expense was not included in Adjusted EBITDA for the quarter due to the application of IFRS 16 Leases. Adjusted EBITDA loss under the previous methodology would have been $29.6 million compared to a $39.4 million loss in the previous quarter.
“We entered Fiscal 2020 on a mission to build a more nimble and financially flexible MedMen,” said Adam Bierman, MedMen co-founder and chief executive officer. “As we right-size our organization and implement an intensified focus on free cash flow generation, our business will become more efficient, in turn allowing us to better serve our stakeholders. Through the successful execution of these goals, we expect MedMen will be EBITDA positive by the end of calendar year 2020.”
Green Growth Brands
Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) reported its results for fiscal first-quarter 2020 ending September 28, 2019. Revenues for the period totaled $12.7 million, a 77% increase over the previous quarter. However, the company delivered a whopping net loss of $30 million versus last year’s net loss of $2.8 million for a net loss of 15 cents per share over last year’s net loss per share of three cents per share.
Harvest One Cannabis Inc. (TSX-V: HVT)(OTCQX: HRVOF) announced a net revenue of $4.1 million for the three months ending September 30, 2019, representing a 34% increase over the previous quarter, and a 142% increase over the same period in 2018. The company also reported a net loss of $5.2 million, which was slightly less than last year’s net loss of $5.7 million for the same time period.
SLANG Worldwide Inc. (CNSX: SLNG) reported its 2019 third-quarter revenue in Canadian dollars of $9.3 million which rose 29% over the $7.2 million of revenue produced in the second quarter of 2019. It easily overshadowed last year’s net revenue of $1.6 million for the same time period. The company said that the increase reflected ongoing business strength in core markets and a favorable shift in product mix, including accelerating sales of premium products in the SLANG portfolio.
Slang also delivered a net income of $0.4 million in third-quarter versus net income of $17.5 million in the second quarter. The company reported a net loss of $16 million in 2018 for the same time period.
In Other News
CannaRoyalty d/b/a Origin House (CSE: OH)(OTCQX: ORHOF) has closed its previously announced non-brokered financing. In connection with the Financing, Origin House issued approximately 9,800,000 common shares of Origin House at a price of C$4.08 per Common Share for aggregate net proceeds of approximately C$39,600,000.
The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) (US:TGODF) entered into an agreement with a syndicate of underwriters led by Canaccord Genuity Corp. to purchase, on a bought deal basis an aggregate of 29,334,000 units at a price of $0.75 per Unit for aggregate gross proceeds to the Company of approximately C$22.0 million.