Herbal Dispatch Inc., a Canadian cannabis company serving the medical and non-medical markets in Canada and abroad, says it has completed a debt financing for gross proceeds of $600,000.

The financing, which carries a two-year term, incurs interest at a rate of 18% per annum, and is repayable in equal monthly installments of $29,955, will go towards supporting the company’s growth initiatives. 

In conjunction with the loan agreement, the lenders were also issued 3 million warrants, each entitling the holder to acquire one common share of the company at an exercise price of $0.0650 per share. The warrants will expire on March 19, 2029. Additionally, a closing fee of $12,000 was incurred in connection with the transaction.

The proceeds from the debt financing will be allocated to working capital to support Herbal Dispatch’s growth initiatives, including expanding export sales to existing and new international markets. This funding will also help the company prepare for its initial export to the German cannabis market, which is expected in the coming months.

Philip Campbell, Herbal Dispatch’s president and CEO, represents one of the lenders, and via a wholly owned company, provided $100,000 of the debt financing gross proceeds and will receive 500,100 of the warrants issued in conjunction with the debt financing.

The warrants to be issued will be subject to the policies and review of the Canadian Securities Exchange, and the warrants to be issued to Philip Campbell may be further subject to minority shareholder approval pursuant to MI 61-101 “Protection of Minority Security Holders in Special Transactions” of the British Columbia Securities Commission due his status as a “related party” to the company.

The warrants issued pursuant to the debt financing will be subject to a four-month hold period in accordance with applicable Canadian securities laws. 

As of 2024, Herbal Dispatch had products in 1,740 stores in Ontario, 486 in BC, 187 in Manitoba, and more than 3,800 across Canada. Herbal Dispatch sells under the brands HD Craft, Happy Hour, Golden Spruce, Nature’s Nu, and Hero Dispatch. 

The company reported $3.3 million in gross revenue and $2.7 million in net revenue for the three months ended September 30, 2024 (Q3 2024), for a net loss of $388,156.

Gross sales for the cannabis e-commerce platform and non-medical cannabis provider were up 120% from the same quarter in the previous year ($1.5 million). Net revenue grew to $2.7 million in the third quarter of 2024 from $1.2 million in Q3 2023 (up 132%), and to $7.6 million year-to-date in 2024 from $2.6 million last year (up 191%).

However, gross sales and net revenue were both down from the previous quarter (Q2 2024), as was net income, which was $59,000 in the previous three-month period, the company’s only net gain in the past eight quarters. 

The company says its year-over-year growth in recreational cannabis sales was driven by several factors, including the expansion of its listings in new retail locations across British Columbia, the expansion of sales to include the Liquor Distribution Branch of the Government of British Columbia commencing in Q3 last year, and the introduction of new products and brands, including the “Happy Hour” brand launched earlier this year.

The BC-based cannabis company also saw growth in export sales, propelled by strong demand and growing customer relationships with customers in Australia and Portugal. 

“We are encouraged by our strong revenue growth and achieving positive adjusted EBITDA,” said Philip Campbell at the time. “As we look toward 2025, we are focused on developing new profitable sales channels and efficiently scaling our operations. Our goals include expanding domestic sales across Canada and growing our export sales in both established markets, such as Australia and Portugal, and new international markets.”

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