We’re getting closer to the holidays but the news keeps rolling in. This week we learned that Dutchie founders brothers Ross and Zachary Lipson are suing the company. In November it was reported that they left the company, but neither contributed a quote to the press release. Now the two say they were improperly kicked out of the company by the current board and are insisting they are still directors and officers of the company. They claim they were ambushed at the November board meeting during a board coup. The court documents are sealed but we’ll keep trying to get more information on this.
We also got a few earnings announcements this week.
Fire & Flower announced its fiscal 2022 third-quarter revenue increased 8% sequentially to $43.8 million from $40.7 million. However, revenue fell by 3% from $45.4 million for last year’s third quarter. Fire & Flower delivered a net loss of $28.1 million in the quarter.
HEXO Corp. (TSX: HEXO) (Nasdaq: HEXO) posted earnings that beat revenue expectations as restructuring acrobatics over the past year continue to play out for the company. The Canadian producer reported its financial results for the first quarter with a net of C$35.8 million, down 29% versus C$50.2 million in the same period last year, and sequentially down 16% versus C$42.5 million in the previous quarter. The company said that the decline was attributable in part to “the timing of revenue recognition as certain shipments failed to reach their destination due to severe weather towards the period end.” HEXO cited other challenges stemming from that, such as shortages and trimmed purchase orders “as the company continues to implement its revised demand planning process.”
Grown Rogue International Inc. (CSE: GRIN) (OTC: GRUSF) posted temperate earnings results that show rising revenue and positive free cash flow. Grown Rogue posted revenue of $5.07 million, a 35% rise versus $3.76 million in the fourth quarter last year. It also improved over the previous quarter’s revenue of $4.2 million.
California-based plant therapeutic wellness brand and certified B Corp. company Prima, is buying Prospect Farms for an undisclosed amount. The combination will be called Uplifter Brands, PBC, and billed as “a next-gen CPG house of clean and conscious brands across personal care, supplements, spa and hospitality, private label, and pet wellness.” Prospect Farms is known for its relationship with high-end gyms and spas like Equinox, Exhale Spa, Castle Hot Springs, and Cowshed at Soho House. While Prima brings national distribution at Sephora and The Vitamin Shoppe to the table.
Green Market Report published a great story this week that did a deep dive into the prices of legal recreational cannabis across New York. They will likely be at least twice as much as marijuana sold by unlicensed dealers and smoke shops, which will lead to a struggle for survival for much of the industry, according to a white paper authored by a pair of tax attorneys.
The paper calculated that the average price of a legal eighth of cannabis flower in New York state with 30% THC will cost $75.53, when all taxes are factored in. By contrast, last week we found multiple easily accessible dealers in New York City who were already offering eighths of marijuana flower for $10-$45.