Financials Cannabis News

PEI sold nearly $25 million worth of cannabis in 2023-2024

Written by David Brown on October 28, 2024. Posted in Financials.

PEI Cannabis, the provincial agency that manages cannabis sales in the province, sold $24,966,165 worth of cannabis in the year ended March 31, 2024, a total of 5,074 kilograms of weed.

This represented just over $3 million in revenue for the province, up from a target of $1.1 million and just over the previous year’s revenue of $2.9 million. All earnings are distributed to the PEI government. PEI Cannabis also contributed $3.8 million in excise tax revenue to provincial coffers.

Sales of dried flower were 43.2% of all sales in the province, while pre-rolls were 24.56%. Concentrates were the next largest category at 14.83% of sales, edibles were 5.85%, ingested extracts were 3.67%, and beverages were just 1.98%.

PEI Cannabis operates five stores in the province. The most recent opened in Stratford in January 2024. The Charlottetown location posted 54% of sales, Summerside was nearly 24%, and Montague was almost 14%.

Online sales were one-half of one percent of total sales, but those purchases were, on average, much larger basket sizes than those made in-store at $89.59. The O’Leary PEI Cannabis store saw the second-largest average basket size at $42.55, with all other stores ranged from $37.33 to $40.59.

Online basket sizes increased significantly from the previous year where they were $41.11.

“Mainstream” (42%) and “Value” (38%) categories were the most typical product types sold, while “Craft” was 20%.

PEI Cannabis served 622,367 customers in the year ended March 31, 2024. The population of PEI is around 175,000. The Prince Edward Island Cannabis Management Corporation is a wholly-owned Crown Corporation.

PEI is home to cannabis producers like Auxley, FIGR, FOG Organics, Mila, Green Island Genetics, Remidose, and Retro. All of the province’s annual reports can be found here.

Preliminary approval of US$8 million settlement in Aurora Cannabis investor lawsuit

Written by Sarah Clark on October 18, 2024. Posted in Financials.

Aurora Cannabis could end up paying more than $8 million (US) to put to rest allegations that it inflated its stock price in order to mislead investors.

On October 10, 2024, a US federal court judge gave preliminary approval to an $8.05 million cash settlement between Aurora Cannabis Inc. and investors who say Aurora misled them with a $21.7 million round-trip, “sham transaction” between Aurora and another Canadian cannabis company called Radient Technologies Inc.

Radient Technologies Inc. was a Canadian extract maker with ties to Aurora, alleges the lawsuit. Radiant revoked its cannabis licence in 2023. In 2017, Aurora made a CAD$6.2 million investment in Radiant.

A final approval hearing has been set for January 28, 2025. The settlement would apply to investors who purchased Aurora’s common stock on the New York Stock Exchange between October 23, 2018, and February 28, 2020.

For their part, Aurora has denied these allegations. The plaintiffs alleged that Aurora came up with this transaction in order to achieve a desired projection of positive adjusted EBITDA for the fourth fiscal quarter of 2019, ending June 30, 2019.

In their defence, Aurora argued that plaintiffs could not prove loss causation related to the October 9 and October 17, 2019 dates, noting that Aurora’s stock “traded downward in lockstep with other cannabis stocks,” according to court records.

The suit began in 2019 and has gone through several rounds of complaints since that time.

h/t to law360.com

Q3 2024 net revenue sets record for Avant Brands, but reports $2.5 million loss

Written by Sarah Clark on October 15, 2024. Posted in Financials.

Avant Brands generated $9.6 million in gross revenue and $8.5 million in net revenue in Q3 2024, but reported a net loss of $2.5 million after all associated costs.

While losses compared to $1.3 million in revenue in Q3 2024, the company saw an increase in the amount of cannabis sold, a continued push into international exports, and a decrease in the cost of sales.

Gross and net revenue were company records, as was the $5.1 million generated from export wholesale revenue in the three months ending August 31, 2024. Avant sold the equivalent of 3,087 kg of cannabis in this three-month period, a $2 million increase over $6.5 million of net revenue in the same period in 2023 from the sale of 1,558 kg of cannabis.

The company’s cost of sales was $4.3 million in the three-month period ending August 31, 2024, down from $4.5 million in Q3 2023.

Gross margin as a percentage of net sales increased compared to the same period in the previous year, which Avant attributes to growth in “high margin export wholesale revenue and production improvements leading to increased yields and lower average cost per gram.”

Recreational revenue accounted for 33% of net revenues in Q3 2024, with domestic wholesale revenue totalling 7% and export wholesale revenue comprising 60% of net revenues. This compares to 61% for recreational revenue in Q3 2023, with the remainder coming from export wholesale revenue at 36% with domestic wholesale revenue.

Avant Brands Founder & CEO Norton Singhavon said in a press release:

“Avant Brands is on a strong trajectory, and our Q2 2024 results demonstrate the effectiveness of our strategic initiatives. We are capitalizing on the growing international demand for premium cannabis products, while also achieving record profitability. With a focus on international markets and operational excellence, we are well-positioned for long-term success.”

Avant Brands operates several production facilities: 3PL Ventures in Vernon, BC, The Flowr Group Okanagan in Kelowna, BC, Avant Craft Cannabis in Edmonton, Grey Bruce Farms in Tiverton, ON, Tumbleweed Farms in Chase, BC, and Greentec Bio-Pharm in Kelowna, BC.

Court approves RVO for Atlas Global Brands against CRA’s objections

Written by Sarah Clark on October 10, 2024. Posted in Financials.

Following the granting of creditor protection earlier this year, a court approved a reverse vesting order (RVO) on October 7 for Atlas Global Brands, a company behind a handful of cannabis brands in Canada.

The move comes over the “emphatic” objections of the Canada Revenue Agency (CRA), which it argued were “extraordinary.” The CCAA in June was issued by the Ontario Securities Commission, and steps were taken by CRA following Atlas’s failure to remit source deductions, among other issues.

A list of Atlas Subsidiary AgMedica’s creditors as of June 20, 2024, shows an amount owing of $24.2 million, including nearly $5.4 million owed to the CRA for source deductions and excise tax. AgMedica owns Canadian cannabis brands like D*gg Lbs, GreenSeal, and Electric Lettuce.

While the Court heard the Crown’s objections (representing the CRA) to the RVO, it sided with AgMedica, who argued that the CRA’s claims did not take precedence over the claims of its lender and first mortgagee (the AgriRoots mortgage of $16.5 million and the Shalcor DIP Facility).

In its response to these arguments, the Crown used “colorful and emphatic terms” to argue that such a move would “send a signal to the market” and render the court “beholden to the tyranny of the market.”

The court ultimately disagreed, arguing that they see this not as “succumbing to the tyranny of the market, but rather adhering to and enforcing the legislation as written.” Instead, the court said that any claims against the directors and officers in respect of unpaid taxes can be channelled to insurance, leaving the CRA in “no worse position than it would be in a bankruptcy scenario.”

The reverse vesting order decision, said the court, will allow AgMedica Purchased Entities to carry on its business activities as a going concern, to the benefit of employees, vendors, suppliers, and its customers. The court also extended the current stay to the end of October 2024.

AgMedica owns a production and distribution facility in Chatham-Kent, Ontario and primarily operates on the international market.

The AgMedica Transaction for which the ARVO was sought is based on a bid from Shalcor (the DIP Lender) on behalf of the LP Purchaser, and 2596690 Ontario Inc. (AgriRoots, the first mortgagee) on behalf of the Facility Purchaser (together the “AgMedica Purchasers”) to acquire AgMedica, Greenseal Nursery, Ltd. (“Nursery”), a licensed cannabis nursery in Stratford that owns and manages over 1000 cannabis plants’ genetics, and 5047346 Ontario Inc. (“504”), which owns the Chatham Facility (together the “AgMedica Purchased Entities”).

The RVO allows a purchaser to vest out the target’s liabilities and unwanted assets and to acquire shares of a new entity created for the transaction.

h/t to Insolvency Insider

Freedom Cannabis seeks more time to resolve lease dispute

Written by Sarah Clark on October 3, 2024. Posted in Financials.

Freedom Cannabis says it needs more time to finalize the terms of its Sales Investment and Solicitation Process (SISP) and Stalking Horse Agreement to resolve issues with its current landlord, including an outstanding debt.

The company is seeking an extension of the current stay of proceedings for two more months. The previous stay was to expire on October 11. The company now seeks to have the stay extended through December 19, 2024

At the date of the initial order filed earlier this year, Freedom was in default under its lease agreement, with total arrears as of August 1, 2024, of approximately $2,396,456. Then, between December 2022 and April 2024, Freedom says it made monthly lease payments in the amount of $85,000. Lease payments were then reduced to $50,000 per month in April 2024 and thereafter until the initial order was granted.

After that, Freedom paid its landlord the sum of $38,709.68 for the pro-rated August rent, and $50,000 for the September rent.

Freedom leases approximately 111,600 square feet of space at a facility located in Acheson, Alberta. The company is also looking at other facilities to operate out of.

As of August 3, 2024, Freedom’s liabilities included a balance of approximately $9,488,016 owing to the Canada Revenue Agency (CR) due to unremitted excise duties.

Four20 Premium Markets’s NOI proceedings continued

Written by Sarah Clark on September 23, 2024. Posted in Financials.

Four20 Premium Markets had its Notice of Intent (NOI) proceedings continued under the CCAA on September 19.

The parent companies of cannabis retail chain Four20 Premium Markets first filed a notice of intent to make a proposal under the Bankruptcy and Insolvency Act on May 29.

The companies 420 Premium Markets Ltd., 420 Investments Ltd., and Green Rock Cannabis Ltd (GRC)., filed the notices of intent following a $9.8 million judgment against 420 for repayment of a bridge loan and related interest and costs to Tilray subsidiary High Park Shops Inc. High Park was created for the purpose of the acquisition of Four20.

Tilray had initiated litigation against 420 after a failed attempt by Tilray to purchase 420 for approximately $110 million in 2019.

At the time, Four20 had six licensed cannabis retail locations and another 16 locations secured in Alberta. The retailer currently lists 35 locations in Alberta and Ontario.

Four20 then filed a statement of claim against Tilray in 2020 in an Alberta court for $110 million plus $20 million in damages after Tilray chose to end its deal to buy the retailer, with Four20 saying the BC-based cannabis producer had not acted in good faith.

In August, the proposal proceedings of 420 Parent, 420 Premium, and GRC commenced under Division I of Part III of the Bankruptcy and Insolvency Act and were extended to September 26, 2024.

Tokyo Smoke begins Stalking Horse sale process

Written by Sarah Clark on September 19, 2024. Posted in Financials.

Tokyo Smoke has now entered into a share subscription agreement with its parent company, pursuant to which the parent company, TS Investments Corp., will acquire all of the issued and outstanding shares of Tokyo Smoke.

A judge endorsed the agreement on September 18 and announced by Tokyo Smoke on September 19. The purchase price is around $77 million, and the buyer is obliged to take on certain liabilities of Tokyo Smoke.

As part of the stalking horse agreement, Tokyo Smoke was also approved to restructure its previously announced CCAA process from August. This will allow Tokyo Smoke to open the sale and investment solicitation process (SISP).

The Company has obtained approval from the Court in its restructuring proceedings commenced under the Companies’ Creditors Arrangement Act (the “CCAA“) to implement a sale and investment solicitation process (the “Sale Process“) to seek interest in and opportunities for a sale, restructuring, recapitalization or other form of reorganization of the Company’s business for a purchase price above the purchase price being offered by the TS Investments Corp under the stalking horse agreement. TS Investments Corp is Tokyo Smoke’s sole shareholder.

Interested bidders can participate in the two-phase sales process beginning September 20, 2024. The first phase has a goal to solicit non-binding letters of interest. The deadline to submit letters of interest compliant with the sale process terms is 5:00 pm Eastern Time on October 21, 2024. The second phase will seek binding agreements from compliant parties, with bids to be submitted by 5:00 pm Eastern Time on November 11, 2024.

The consummation of any bid, including the bid submitted by the Buyer under the Stalking Horse Agreement, is subject to closing conditions that are customary for transactions of this nature under the CCAA, including compliance with the applicable bidding procedures and approval of the Court.

Tokyo Smoke notes that it began the restructuring proceedings under the CCAA in order to align its operations with current market and regulatory conditions, which it says have changed significantly since the initial licensing regimes were introduced. Tokyo Smoke intends to exit from CCAA protection as a stronger business, better positioned to continue providing premium products to its customers over the long term while continuing to provide jobs to its dedicated employees across Canada.

Toko Smoke’s monitor in the process, Alvarez and Marsal, will post on its website, as soon as practicable, any modification, amendment, variation or supplement to the bidding procedures and inform the bidders impacted by such modifications.

An updated service list posted on September 17 includes Canopy Growth, National Cannabis Distribution, Health Canada, Canada Revenue Agency, the Attorney General of Canada, Ontario Ministry of Finance, the AGCO, Alberta Ministry of Justice, the government of Newfoundland and Labrador, the Manitoba LGCA, the government of Manitoba Department of Finance and Taxation Division, the SLGA, and Saskatchewan Finance.

A list of Tokyo Smoke’s creditors from August 30 shows more than $94 million owed to secured and unsecured creditors.

High Tide reports second consecutive quarter of net income

Written by Sarah Clark on September 16, 2024. Posted in Financials.

High Tide reported $825,000 in net income from $35.5 million in gross profit and $131.7 million in revenue in the three months ended July 31, 2024.

The company behind retail cannabis chain Canna Cabana says its 6% year-over-year growth in revenue was driven by an increase in the number of stores, from 154 the same quarter last year to 180 as of the current quarter (Q3 2024), as well as increases in same-store sales.

Net income was up from a $3.6 million loss in Q3 2023. This is High Tide’s second consecutive quarter of positive net income.

The Alberta-based company reported $115.7 million in revenue from cannabis and CBD products and another $7 million in consumption accessories. High Tide also brought in just over $9 million in revenue from its data analytics program (Cabanalytics Business Data and Insights Platform), as well as advertising and other revenue.

High Tide’s brick-and-mortar retail stores brought in 94% of revenue from sales.

While the majority of High Tide’s sales are in the Canadian market, it also operates its e-commerce platforms in the US such as Smoke Cartel, Grasscity, Daily High Club, DankStop, NuLeaf Naturals and FABCBD, as well as USA sales on its international e-commerce platforms. In addition, High Tide operates a warehouse that primarily services its e-commerce operations.

Some 94% of High Tide’s revenue came from the Canadian market, while about 6% came from these US holdings. The company continues to see a decrease in revenue from USA and international operations, down 33% in the most recent quarter. High Tide blames this on the weakening CBD sector on the international market and a decrease in consumer spending on accessories “due to economic pressures.”

“Over the last year, the High Tide team has presented investors with compelling proof points as to how we’re different than other retailers, and our third quarter results offer even further evidence of this,” said Raj Grover, Founder and Chief Executive Officer of High Tide.

“Our numbers continue to drive home the fact that we are a well-managed, innovative company that has grown responsibly while continuing to build value for shareholders. Numbers don’t lie and this quarter’s record revenue, positive net income and free cash flow, for the fifth consecutive quarter, sit in stark contrast to some of our big-name competitors recently filing for bankruptcy protection or shutting down completely. Unlike these competitors, we are generating strong free cash flow from our operations, which has been powering our organic growth trajectory in recent months. This has allowed us to grow our cash on hand balance to $35.3 million, the highest ever.”

Featured image via Google Maps

Safari Flower successfully exits creditor protection

Written by David Brown on September 6, 2024. Posted in Business, Cannabis News, Ontario.

Although entering into creditor protection can sometimes mean the end of the road for a business, one cannabis company used the process to successfully restructure and grow their business.

Ontario’s Safari Flower Co. entered into CCAA protection on January 12 of this year, saying at the time that the company intended to use the restructuring process to effect a reverse vesting orders (RVO) transaction with one of its secured lenders that can be used as a way to inject cash into a company.

Then, on August 26, Safari successfully exited from creditor protection. The company’s CEO says Safari is now well positioned to continue to cultivate cannabis as GACP accredited, process cannabis flower under EU-GMP law, and export finished medical products directly to emerging markets abroad like Germany. Safari has already exported nearly one metric ton of cannabis.

“We have worked very hard to accelerate our positive earnings strategy post-CCAA and created value for our stakeholders by targeted product manufacturing for the German medical market and by focusing volume on very few customers whose core business and growth trajectory are synergistic to Safari’s,” says CEO Dr. Brigitte Simons in a company press release.

“This mindset has enabled us to use working capital carefully for the step-wise scale and velocity of high quality cannabis product entrants sold under successful brand partnerships, such as Enua Pharma GmbH. Safari Flower Co. also provides services to other Canadian cannabis producers who wish to sell their products to international distribution partners. The company has successfully exported approximately 940 kg of cannabis flower to Europe and Australia since January 2024.”

David Hyde with Hyde Advisory, assisted Safari Flower Co. through the restructuring process, says he and his team are “pleased to have played a part in the renewal of Safari Flower, having now emerged from CCAA with fresh funding and a clear path to business success. This is a far cry from where the business was only a year earlier.”

“Not all CCAA processes are the same, as we’ve learned from managing a number of them in the cannabis sector,” he adds. “If the underlying business is strong, a well-run Sale and Investment Solicitation (“SISP”) process can lead to the discovery of a buyer committed to leading the company out of CCAA and to new levels of success.”

The cannabis industry in Canada has experienced significant financial challenges. At least 72 cannabis companies filed for some form of creditor protection in 2023 according to listings by Insolvency Insider Canada, which focuses on the Canadian insolvency market. Several more have since filed for CCAA in 2024.

One of the most common filings is for the Companies’ Creditors Arrangement Act (CCAA), which allows insolvent companies to restructure their businesses and finances.

With proper planning, a company can take this step to avoid declaring bankruptcy, Dina Kovacevic, Editor at Insolvency Insider, told StratCannn earlier this year.

Typically, she explained, if a cannabis company is in trouble, it can either file for CCAA protection or a notice of intent to make a proposal, an “NOI” under the Banking and Insolvency Act. This is, ideally, a step taken to avoid being put into bankruptcy or receivership by a creditor or a company declaring bankruptcy themselves.

One of the most significant points Kovacevic highlighted was that distressed companies should ensure they take steps in advance if they see themselves running into long-term financial issues.

“If a company is facing financial issues and it wants to restructure, it doesn’t just want to go out of business, and perhaps it fears that its secured lender is going to put it into receivership. I’d say that it has several options. The first option is to try to work with its creditors and suppliers on an out-of-court restructuring plan. The second would be to file for CCAA protection and even in that type of situation, I would say that the company should be getting key creditors on board before the filing. You don’t want to surprise people.”

Heritage Cannabis announces completion of sale to Hab Cann

Written by Sarah Clark on August 29, 2024. Posted in Financials.

Heritage Cannabis Holdings Corp. announced on August 29 the completion of the company’s sale to a stalking horse bidder called HAB Cann Holdings Ltd.

The company behind a handful of cannabis brands like RAD, Purefarma, Premium 5, Pura Vida, Dank Drops and others had first sought creditor protection in April.

That decision at the time was largely informed by Heritage’s senior secured lender, BJK Holdings Ltd., demanding payment in full of $8.4 million owed by the Heritage group.

In April, the court approved a stalking horse subscription agreement involving Heritage and Heritage West as vendors, with BJK and HAB Cann Holdings Ltd. as the purchasers.

The President of Hab Cann is listed as David Thiessen. A person by the same name is listed as working at BJK in a press release in 2021.

The common shares of Heritage were delisted from the Canadian Securities Exchange at the close of business on August 26, 2024, and from the OTC Pink at the close of business on August 28, 2024.

The purchased entities are Heritage Cannabis Holdings Corp., Heritage Cannabis West Corporation, Heritage Cannabis East Corporation, and Purefarma Solutions Inc.

The Heritage Group lists some $25.3 million in secured and unsecured debt to more than 200 creditors, including $6.8 million owed to BJK Holdings, and nearly $13.4 million to the Canada Revenue Agency for excise and sales tax.

The principal terms of the stalking horse agreement say the purchaser, Hab Cann, will “determine which employees it will assume and employ prior to Closing. In the event that no conditional offer of employment is made to an employee or an employee who receives an offer of employment rejects such offer, such employee shall be deemed to be a “Terminated Employee”.”

The purchase price includes a call for a release of “all amounts outstanding and obligations payable by the applicants under the Senior Loan Agreement and all related loan and security documents, which amount as of June 14, 2024 was $6,837,059.71 (excluding legal fees and expenses).”

Nextleaf reports increased revenues, losses in Q3 2024 report

Written by Sarah Clark on August 29, 2024. Posted in Financials.

Nextleaf Solutions brought in over $4 million in revenue in their most recent quarterly report for the three months ending June 30, 2024, with $884,344 in gross profit but a $317,264 loss.

Total revenue increased significantly from the same period last year when the company brought in about $2.7 million in revenue. Still, losses were up considerably compared to the $419,875 in profit the company reported in Q3 2023.

Nextleaf says the increase in losses was primarily due to “significant share-based payment expenses” totalling approximately $914,000, and “the overall economic environment” as market conditions softened, consumer spending slowed, and operating costs increased. Revenue growth is attributed to expanded product reach and an increase in distribution channels.

The company reported incurring $961,484 in excise duties from their $4 million in sales.

“We’re entering a new phase of our long-term growth strategy,” says Emma Andrews, Interim Nextleaf CEO. “We are committed to building a sustainable legacy and this involves expanding our marketing tactics, investing deeper into inventory, innovation, and product development to remain competitive. Staying true to our DNA we are uncompromising on quality.”

“Building equity through consumer brands takes time. I’ve led teams through a 10x scale-up before and understand the patience, resilience, ingenuity, and stamina required to make it happen. Our Q3 results show the incremental progress made in a few short months, and the exponential potential ahead of us as we continue to scale.”

Nextleaf introduced five new products in the most recent quarter, including Glacial Gold CBN:CBD 10:10 Softgels 10-pack, Atmosphere Twisted Citrus All-in-One 2g Vape, Pure Distillate Banger All-in-One 1g Vape, alongside Crafty Cuts dried craft flower and Crafty Cuts Sampler Prerolls under the brand Miracle Valley.

For the nine months ending June 30, 2024, the company brought in $12.8 million in revenue from wholesale sales. Over half of this ($7.4 million) was sold in BC, while another $5.3 million was sold into the rest of Canada.

The company plans to release a comprehensive update within the next 30 days relating to market and consumer insights, additional product launches expected in 2024, and SKU performance metrics in various regions.

Greenway reports increasing revenue, declining losses

Written by Sarah Clark on August 28, 2024. Posted in Financials.

Greenway Greenhouse Cannabis Corporation reported net revenue of nearly $2.4 million in the first quarter of 2025 ended June 30, 2024, and a $541,478 loss after operating expenses.

The Ontario cannabis producer, which sells under its EPIC Cannabis Co. and MillRite brands, as well as in the B2B wholesale market, saw a 104% increase in net revenue compared to the same period in 2023, along with a 94% increase in grams or grams equivalent sold compared to Q2 2023. This is the second reporting period Greenway has included sales of its branded products.

Greenway’s losses were also down significantly from the same period in the previous year and the previous quarter.

“We are thrilled to announce a record-breaking quarter, achieving a record net revenue, EBITDA, and achiev[ing] a positive net cash flow provided by operating activities,” said Jamie D’Alimonte, CEO of Greenway.

“This performance reflects our focus and commitment to producing quality cannabis and finding the best partners and pathways to bring it to consumers. We achieved this while still keeping our cost of production low and our yields high. This combination is what we believe separates us from other public cannabis companies in Canada.”

The company also recently received CUMS-GAP and GACP certifications for the purpose of international sales. Subsequently, Greenway says it has now harvested its first crop, intended for export.

Greenway expected an average yield per plant of 125 grams in 2024, down from 170 grams in 2023, with the estimated selling price of dried flower staying level at $1.10 per gram. The post-harvest cost to complete and sell that gram of cannabis increased from $0.45 in 2023 to $0.45 in 2024.

Greenway’s EPIC Berry Sunset products became available for purchase in Ontario in this most recent quarter. Greenway operates a cannabis nursery facility in Kingsville, Ontario, and a flowering and processing facility in Leamington, Ontario. It is a majority-owned subsidiary of Sunrite Greenhouses Ltd.

As of June 30, 2024, Greenway reports a working capital deficiency of $940,130 and an accumulated deficit of $18,294,141. The company says it has insufficient cash to pay creditors for its current working capital obligations and operations for the next twelve months. Its ability to continue as a going concern depends on its ability to get sufficient additional funding and generate enough revenues and positive cash flows from its operating activities to meet its obligations and fund its planned investments and operations.

Entourage focuses on expansion despite market challenges: Q2 2024

Written by Sarah Clark on August 27, 2024. Posted in Financials.

Entourage Health Corp. reported net revenue of $9.3 million before excise duties and discounts, but a loss of $10.3 million in its Q2 filing for 2024.

For the three months ended June 30, 2024, the Ontario-based cannabis producer’s revenue decreased by 9% to $12.2 million, compared to nearly $13.4 for the same period in 2023.

Entourage’s loss and comprehensive loss in Q2 2024 increased from a $6.3 million loss in Q1 2024, and a $9.9 million loss in Q2 2023.

“Overall, our year-to-date performance aligns with our expectations and prior achievements. As we move into Q3 and beyond, we are optimistic about the opportunities ahead,” said George Scorsis, CEO and Chair. “This quarter, we focused on the launch of new products and offerings under all our Entourage Brands. The expansion of Dime Bag resulted in significant traction, achieving over 90% distribution in Ontario. We remain dedicated to bringing variety to our consumers and are confident that these efforts will drive improved financial results as we progress through the year.”

The company says the higher loss in Q2 2024 is the result of lower sales and gross margin across its portfolio, which was offset by lower SG&A expenses due to effective cost management and operational efficiencies.

Most of the company’s $9.3 million in sales in the three months ended June 30, 2024, were split evenly between the medical and non-medical supply streams (~$4.1 million each), while about 11% were bulk B2B sales ($1 million).

While revenue from non-medical sales dropped 29% compared to the same period in the previous year, bulk sales increased by 351%. Medical sales stayed relatively level, with a slight 1% decrease compared to Q2 2023.

This amounted to nearly 1.4 million grams of cannabis sold in the medical stream in the three months ended June 30, 2024, 2.1 million grams sold in the non-medical adult-use supply stream and 2.5 million grams sold in bulk, for a total of more than 6.1 million grams of cannabis. This represented a 40% increase in total grams sold compared to the same period in 2023.

The average selling price of a gram of cannabis sold in the medical supply stream was $2.97, while adult-use was $1.95, and bulk sales were $0.39 a gram, for a total average price of $1.52 a gram. This represented a 7% decrease in price in the medical supply stream and an 83% decline in the price in the bulk supply stream, while adult-use non-medical sales stayed level compared to Q2 2024.

The company had $8.4 million worth of cannabis on hand as of June 30, 2024, along with $2.2 million in extracts.

Entourage sells under the brands Color Cannabis, Saturday Cannabis, and Dime Bag in the non-medical stream and through its Starseed Medicinal medical platform and its health and wellness brand Syndicate Cannabis.

Entourage produces dried flower, pre-rolls, oils, capsules, edibles, topicals, vapes, and a heat-free “micro inhaler” for sale in Canada in the medical and adult-use markets.

It sells non-medical products in the Ontario, Alberta, BC, Manitoba, and Saskatchewan markets. Medical sales in Canada are nationwide. The company also has an arrangement with Australia Pty Ltd., a fully-owned subsidiary of Lyphe Group Ltd., for the sale, execution, and fulfillment of its first international order of medicinal cannabis to Australia

“We have achieved stability despite a challenging environment, highlighting the resilience of our business model and the strength of our long-term strategy,” said Vaani Maharaj, CFO. “Although Q2 presented its share of market fluctuations, our steady performance over the past six months demonstrates our commitment to overcoming these obstacles. As we move forward, our focus on execution and capital efficiency will be key to driving future growth and success.”

As a going concern, Entourage reports it has material debt obligations that come due within the next twelve months, noting that it has suffered recurring losses from operations and requires additional financing to fund its business and operations.

If Entourage is unable to raise the additional capital needed and subsequently renegotiate the payment terms of its outstanding loans and borrowing, the company’s financial report says it will be unable to meet its financial obligations. As of June 30, 2024, the company had a working capital deficiency of $163,248,157 and an accumulated deficit of $382,153,256. Management plans to fund the operations through existing cash positions, as well as looking at different strategies with its lender.

Cannabis sales stay strong in New Brunswick

Written by David Brown on August 20, 2024. Posted in Cannabis News, Government, New Brunswick.

Cannabis sales bounced back in New Brunswick in the three months that ended June 30, 2024, following seasonal declines in the previous quarter from January through March.

Total product sales in the province for the quarter were $24.7 million, up 12.6% compared to the same quarter in the previous year. The provincial cannabis agency also brought in $5.9 million in net sales, up 15% from the same period in 2023.

Cannabis sales have continued to increase in the province annually, with consistent spikes in Q2, covering July, August and September, and declines in Q1, covering the first three months of the year.

Cannabis NB operates 27 stores in 18 communities in the province, along with nine private stores since the province began allowing them in 2023. There are also six cannabis farmgate locations in New Brunswick that allow cannabis producers to have a retail store on-site.

The agency’s 2024-2026 strategic plan says legal cannabis sales in the province have been approaching about 50% of the total cannabis market and includes plans to increase the number of retail outlets and products available, as well as exploring on-site consumption and customer loyalty programs.

Competition in the market has helped to bring prices down, continues the report, noting that while some of the big LPs are “struggling and trying to recover from over-investing” in incorrect market assumptions, “many new LPs and micro-producers are being licensed that have learned from the challenges at launch, and are approaching the industry with better information and a more sustainable plan.”

The organization also plans to establish a comprehensive loss prevention program to reduce risk. A Cannabis NB employee was recently charged with stealing more than $5,000 worth of products and cash. The case has been adjourned to September 6.

Auxly reports profitable quarter as it consolidated operations, products

Written by Sarah Clark on August 15, 2024. Posted in Financials.

Auxly Cannabis Group Inc. reported $43.4 million in net revenues from cannabis sales in the three months ended June 30, 2024, and net income of $2 million in its Q2 2024 report.

Net revenues were up 33% over the same period of 2023, which Auxly attributes to its increased focus on the sale of cannabis flower and vape products. This was partially offset by what it says was price compression in the adult-use recreational market.

This is the second in the past eight quarters that the company has reported net income rather than a net loss.

Net income increased 116% from Q2 2023, which the company says is mostly due to improved operational stability from the consolidation of its dried flower and pre-roll manufacturing to the Auxly Leamington greenhouse facility following the sale of its Ottawa facility.

In addition to its wholesale bulk cannabis sales, the company sells cannabis products under the brands Parcel, Back Forty, Foray, Dosecann, and Kolab Project, including dried flower, pre-rolls, vapes, edibles, and concentrates. It sells products in all Canadian provinces and two territories, Yukon and the Northwest Territories.

In May 2024, Auxly also launched its first branded product in Quebec: Back Forty large format 0.75g three-pack pre-rolls.

Although Auxly’s offices are based in Toronto, the company’s primary cannabis facility is in Charlottetown, PEI, for cannabis processing, analytical testing and research under the federal Cannabis Act. Auxly also operates a cultivation and processing facility in Leamington, Ontario. In May 2024, it sold its Auxly Ottawa facility for $1.7 million.

The company does not have any currently active international operations.

Excise taxes on Auxly’s $43.3 million in sales for the three months ended June 30, 2024, were $14.3 million. The Company says it will have insufficient cash to fund its operations for the next 12 months if its sales do not improve or decline.

In a company press release, Hugo Alves, CEO of Auxly, commented: “After our best start to a year ever, we are thrilled to report our best Q2 in history, with exceptional financial performance setting a new Q2 record in revenue and all-time records in gross margin and adjusted EBITDA. Our commitment to product quality, innovation and operational efficiency continues to drive our success. We are particularly proud of our significant gains in market share across all three of our core product categories, especially in the vapor segment where we are currently leading the growing all-in-one category, securing an impressive 32% share of the market.

“This success is a testament to the collective efforts of our talented and dedicated employees, who work hard every day to create quality cannabis products that help our consumers live happier lives. We will be expanding the all-in-one vape portfolio with new flavour profiles under Back Forty throughout the second half of the year, while also launching a new innovative vape format under our Kolab Project brand, available in September. These achievements reflect our drive for continued growth and innovation, our dedication to reaching new financial milestones and delivering exceptional results for our shareholders. As we look ahead, we remain passionately committed to our consumers, focused on surpassing expectations, leading with excellence and achieving sustainable, profitable growth.”

Lower demand, overall economy blamed for second quarter of Rubicon losses

Written by Sarah Clark on August 15, 2024. Posted in Financials, Other.

Rubicon Organics Inc. reported $12.1 million in net revenue in the three months ended June 30, 2024, but a loss of $454,164 in its Q2 2024 report.

This represents an increase in net revenue for the BC cannabis company compared to Q2 2023 (7%) but also an increase in losses. The company says it has experienced a decline in net revenue over the past two quarters due to softened demand in Alberta, Ontario, and Quebec, and the overall economy in Canada.

Rubicon sells various cannabis products, including flower, topicals, and edibles, in Canada under the Simply Bare, 1964 Supply Co, Homestead, and Wildflower brands. Rubicon also recently began selling cannabis vapes under the 1964 brand.

For the period ended June 30, 2024, Rubicon determined the weighted average fair value less costs to sell cannabis was approximately $1.41 per dried gram, up from $1.45 per dried gram as of December 31, 2023.

The company says it observed a year-over-year downturn in both the premium flower and pre-rolls categories from Q2 2023 to Q2 2024, with pre-rolls experiencing a more pronounced decline than premium flower.

“Rubicon Organics’ house of premium brands remains the #1 premium licensed producer in Canada,” said Margaret Brodie, Rubicon’s CEO, in a press release. “I expect this leadership position to grow with our entry into the vape sector where two strains were launched in Q2 2024. I’m proud to report that we have already seen our national distribution hit over 40% of stores in the first two months of sales to July. I expect this growth momentum to continue as we expect to have five vape strains in market by year-end,”

Simply Solventless reports another profitable quarter

Written by Sarah Clark on August 15, 2024. Posted in Financials.

Simply Solventless Concentrates reported net and comprehensive income of $1.2 million from net revenue of $2.9 million in the three months ended June 30 in the company’s Q2 2024 financial report.

The company’s net revenue was up 26% from its previous quarterly report and 60% from the same period in 2023. Net income increases by 143% and 5% compared to the same periods.

The Alberta-based cannabis company says its gross revenue increased due to increased branded product sales for its Astrolab, Frootyhooty, and Lamplighter brands, available in Alberta, Ontario, and Saskatchewan with infused pre-rolls and vapes.

Excise taxes on Simply Solventless’ (SSC) $4.2 million in gross revenue in Q2 2024 were $1.3 million. SSC has achieved net revenue and positive EBITDA in seven of the past eight quarters and positive adjusted EBITDA for eight straight quarters.

On June 25, 2024, the company entered into a services agreement and share purchase agreement with CannMart Inc., a cannabis company located in Etobicoke, Ontario for $2.5 million. SCC recently acquired Lamplighter, as well, in January 2024.

In a recent interview, Jeff Swainson, President and CEO of SSC, said the company plans to move the production of many of CannMart’s products to SCC’s underutilized facility in Alberta. In the past, these products have been exclusively produced by third parties for CannMart.

As of June 30, 2024, the Company had a working capital surplus of $5,909,655, compared to $4,263,711 as of March 31, 2024.

Swainson stated in a press release: “SSC has established a track record of revenue growth and profitability which has resulted in strong strategic positioning within the Canadian cannabis industry. We will seek to continue to leverage this positioning to capitalize on opportunities resulting from industry headwinds, and to finish the second half of 2024 stronger than the first half.

Decibel Cannabis Company posts positive net income, decline in international sales

Written by Sarah Clark on August 14, 2024. Posted in Financials.

In the three months ended June 30, 2024, Decibel Cannabis reported $22.1 million in net revenue and $122,000 in net income.

While net revenue was relatively flat compared to the previous quarter, net revenue was up significantly from a loss of $3.5 million in Q1 2024. On a year-over-year basis, Decibel net sales were down compared to the same quarter in 2023, but the $122,000 in net income was up from a $423,000 loss in Q2 2023.

Of the $33.7 million in gross revenue in Q2 2024, Decibel reported incurring $11.5 million in excise tax (34.2%) and a $12.9 million cost of goods sold. The bulk of the company’s sales were in the Canadian non-medical market, while international sales were just $37,000 in Q2 2024, down from $1.1 million in Q2 2023.

Decibel attributes this decline to the halt of exports to Israel as the company transitioned to a new partner. This was partially offset by Decibel’s first export to Australia.

Decibel is one of three companies named in a recent report by the Commissioner for Trade Levies at the Ministry of Economy and Industry that proposes possible levies on Canadian cannabis products.

The company has now received regulatory approval to export flower and vape products to the UK, with the first shipment expected in Q3 2024.

“Decibel has shown good discipline reducing our current liabilities by ~5mm this quarter,” writes Benjamin Sze, Decibel’s Chief Executive Officer, in a press release. Market share has been challenged, but early indications from Qwest relaunch suggest we will regain market share in flower. A continued focus on execution and capital efficiency will serve as the platform for future growth.”

Increased gross profits, decreased losses in MediPharm’s Q2 2024 report

Written by Sarah Clark on August 14, 2024. Posted in Financials.

MediPharm Labs posted a gross profit of $3.4 million in the three months ended June 30, 2024, but a net loss of $2.6 million.

The Company’s Q2 2024 gross profit was up significantly from the $855,000 reported in the same quarter in 2023, while net loss was down from $2.9 million, which the company attributes to product mix, production efficiencies, cost reductions, and an increase in international sales.

Net revenue was up 8% year-over-year, which MediPharm attributes to increased sales of dronabinol, international sales of oil in Germany, and international sales of vapes in Australia.

MediPharm has sold into ten international markets and conducts business in Australia, Germany, and Brazil. The company is partnered with STADA Arzneimittel AG, Europe’s fourth-largest generic drug company, which supports its business segment in Germany. MediPharm’s Beacon Medical Brand also helps to strengthen its presence in the Australian market. It also recently launched Canadian-produced GMP Beacon Medical Brand cannabis oil and inhalation cartridges in the Australian medical market through Beacon Medical Australia.

MediPharm reports an increase in the expected average fair value of cannabis flower at $1.80 per gram and $0.07 for trim, compared to $1.48 per gram for flower products and $0.07 for trim as of June 30, 2023.

MediPharm Labs operates out of two manufacturing facilities in Ontario, the Barrie Facility and the Napanee Facility. It has recently begun shutting down operations at its Canna Farms facility in BC.

On June 20, 2024, the Company entered into a licensing agreement with Remidose Aerosols Inc. to acquire the exclusive global rights for advanced cannabis products.

David Pidduck, CEO of MediPharm Labs, commented, “We are very pleased with our Q2 results, showcasing substantial improvements in both revenue and profitability. The strategic initiatives implemented, including cost reductions and operational efficiencies, are yielding positive results. We are particularly encouraged by the continued growth in our international sales and the progress in innovation of non-combustible cannabis formats.”

Greg Hunter, CFO of MediPharm Labs, added that “Q2 2024 was a major step in the right direction towards profitability and becoming cash flow positive. Our revenue and Adjusted EBITDA were both the highest in over three years and Q2 put MediPharm on the verge of profitability. Revenue was $10.3M or 8% higher than prior year and Adjusted EBITDA⁽¹⁾ loss was $0.1M which is $3.1M better than prior year and $0.8M better than Q1 2024. Our cash burn was approximately $1M resulting in a cash balance of $16M with less than $3M of debt at the end of Q2 2024. MediPharm is in a strong financial position to capitalize on our strong suite of licences, global customer contracts and assets as we strive for profitability in the back half of 2024.”

SNDL acquires the rest of Nova Cannabis

Written by Sarah Clark on August 13, 2024. Posted in Financials.

SNDL Inc. announced on August 13 that it will acquire all of Nova Cannabis’s issued and outstanding common shares for approximately $40 million.

SNDL and Nova Cannabis had previously announced the termination of their implementation agreement from December 20, 2022, which would have, in part, seen SNDL vending into Nova’s retail network under the Value Buds, Spiritleaf, and Superette banners located in Ontario and Alberta.

The plan had been repeatedly delayed due to what it said was continued review by an unnamed provincial regulator.

The new acquisition secures SNDL’s control of the remaining approximately 34.8% of shares in Nova Cannabis, giving it 100% ownership of the retail chain. SNDL also manages several investments, which include Canadian cannabis companies like Indiva, Delta 9, and Nova Cannabis, along with several US cannabis companies.

“Today’s announcement by our Alberta-based corporations underscores our commitment to sustainable performance in Canadian cannabis,” said Zach George, SNDL’s Chief Executive Officer. “We are committed to building a consumer-centric model at scale, supported by SNDL’s robust shared service model, access to capital, and a well-developed cannabis retail pipeline. These factors are integral to the achievement of sustained profitable growth.”

Nova reported record revenue in their most recent quarterly report covering the three months ended June 30, 2024.

The company reported a record of $69.2 million in revenue for the three months ended June 30, 2024, the company’s second quarter of 2024. This translated to $16.8 million in gross profits and $859,000 in net and comprehensive earnings, up from a $333,000 loss in the previous quarter.

Nova’s revenue had declined in the past three quarters from a peak of $67.7 million in Q3 2023 to $67.4 million in Q4 2023 and $64.3 million in Q1 2024.

Nova announced it had opened its one hundredth Value Buds store on June 30, 2024. As of August 1, 2024, the company owned and/or operated 100 stores in Alberta, Saskatchewan, British Columbia, and Ontario.

The Alcohol and Gaming Commission of Ontario (AGCO) has rules preventing cannabis producers like SNDL from directly or indirectly owning or controlling more than a 25% interest in any licensed Ontario cannabis retailer.

However, following SNDL’s initial acquisition of Nova’s then-parent company, Alcanna Inc., in 2022, the companies created a special agreement for the sale of retail stores located in Ontario to a separate company called Spirit Leaf Ontario Inc. As of August 2024, the company has 35 locations in Ontario.

There are also 36 Value Buds locations in Ontario as of publication.

In response to a request fro comment, the AGCO told StratCann via email that the agency is aware of the recent announcement made by SNDL.

“The regulator carefully scrutinizes all transactions involving cannabis retail licensees to assess their eligibility under the Cannabis Licence Act,” writes a media representative with the agency. “That process is currently active and so we can offer no further comment at this time.”

Note: This article has been updated to include comments from the AGCO.

Organigram reports first net income in several quarters

Written by Sarah Clark on August 13, 2024. Posted in Financials.

New Brunswick’s Organigram Holdings Inc. reported net revenue of $41.1 million for the third quarter of 2024 and net income of $2.8 million, compared to a loss of $213.5 million in the same reporting period in 2023.

Organigram’s net income increased from the previous quarter in 2024, up from a $27.1 million loss in Q2 2024. This is only the second quarter of net income the company has reported in the last eight quarters.

The majority of the company’s net revenue for the three months ended June 30, 2024, came from sales in Canada’s non-medical “adult use” market ($36.5 million or 89%), while just 6% of sales ( $8.3 million) were to the international markets and 1% of sales ($325,000) were into Canada’s medical cannabis market.

Sale of cannabis flower was 58% of Organigram’s business in Q3 2024, at an average cost of $1.50 per gram, down from $1.67 per gram in the same quarter in 2023 and $1.51 from Q2 2024.

In May 2024, Organigram announced a three-year supply agreement with Avida Medical in the UK, with the potential to supply 1,700 kilograms of indoor-grown dried cannabis flower to Avida. In June, it announced a plan to acquire a minority stake in Berlin-based cannabis company Sanity Group, expanding Organigram’s footprint in Europe.

Organigram reports having harvested 21,420 kg of dried flower during Q3 2024, up from 18,604 kg of dried flower in Q3 2023. The company says it expects Canada-wide legal sales to total $6 billion in calendar 2028.

“We are pleased to report a strong third quarter, highlighted by a 25% year-over-year increase in net revenue, and a significant improvement in adjusted EBITDA”, said Beena Goldenberg, Chief Executive Officer. “Our strategic investments and partnerships, both domestically and internationally, have positioned us for growth and diversification, particularly in the European market with our investment in Sanity Group. Furthermore, the preliminary results from our landmark PK study on our latest patent pending nanoemulsion technology demonstrate our ongoing commitment to innovation and expanding our product offerings. I continue to be very proud of our dedicated team for their hard work and contributions to these achievements.”

In August, Organigram announced new nanoemulsion technology in collaboration with British American Tobacco. Organigram was one of three Canadian cannabis companies named in a report from the Israeli government that proposes levies on Canadian cannabis products entering the country.

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Freedom Cannabis receives creditor protection to pursue restructuring and sales process

Written by Sarah Clark on August 13, 2024. Posted in Financials.

Freedom Cannabis Inc. announced on August 13, 2024, that it and its subsidiaries sought and received an order for creditor protection from the Alberta Superior Court of Justice pursuant to the Companies’ Creditors Arrangement Act (CCAA).

In an email announcement shared by the Alberta-based cannabis producer, it says “difficult but necessary decision to commence CCAA proceedings was made after careful consideration of the Company’s financial position while evaluating all available alternatives and engaging in significant consultation with legal and financial advisors.”

Freedom reports that it needs CCAA protection due to its default under certain material operating agreements and the possibility that the Canada Revenue Agency will not renew its cannabis excise licence.

Freedom had initially sought, and the court established an initial stay of proceedings to August 8, 2024, providing Freedom Cannabis time to restructure its business, engage with key creditors and stakeholders, identify and assess potential restructuring options and review other strategic alternatives to maximize the value of the company for their stakeholders. That process has now been extended to August 18, 2024, and Freedom seeks to extend it again until August 28.

KPMG is the monitor.

Freedom is a privately owned company that has been operating in the Canadian cannabis industry since 2017. Its head office is located in Acheson, Alberta, where it employs around 100 people.

An increasing number of cannabis companies in Canada have been seeking CCAA protection as the industry experiences significant price compression, high excise taxes, and increased competition. Such protection can provide an opportunity for companies to restructure their finances to address creditor concerns.

Galaxie Brands receives CCAA protection

Written by Sarah Clark on August 12, 2024. Posted in Business, Cannabis News, Government, Producers.

The parent company of cannabis packager Galaxie Brands was issued an order pursuant to the Companies’ Creditors Arrangement Act (CCAA) on August 6, on application by The Vancor Group Inc.

The Vancor Group is the largest creditor of Equipment Co., Galaxie Brands’ parent company, which owns the equipment Galaxie uses to conduct business. Galaxie Brands is a licensed producer of cannabis under the Cannabis Act and operates as a producer and co-packer of cannabis and cannabis products.

Galaxie Brands processes cannabis into various products for sale to its customers and provides packaging services at its facility in Puslinch, Ontario. However, neither Galaxie nor Equipment Co. cultivates, manufactures, or grows cannabis flower.

Galaxie’s primary customers include other cannabis producers and provincial partners across Canada, including those in Ontario, British Columbia, Nova Scotia, Yukon, and New Brunswick.

Vancor has invested over $2.7 million in Equipment Co and Galaxie Brands on an unsecured basis. That debt has now matured as of May 31, 2024, and more than $2.1 million in outstanding debt is owed to Vancor. KPMG Inc. has been appointed as monitor of the CCAA process for Vancor.

Vancor is owned by Corry Van Iersel, who also owns True North Cannabis, a chain of cannabis stores in Ontario.

While Galaxie’s production licence is not set to expire until February 2028, the company’s excise licence, set to expire on October 16, 2024, must be submitted by September 16, 2024.

Beginning around September 2023, Galaxie Brands also entered into a payment plan with Health Canada to pay licensing fee arrears.

The plan considers a monthly payment of approximately $15,000 to Health Canada for these arrears. As of August 2024, Galaxie owes about $30,481.05 to Health Canada on account of annual licensing fees for 2023.

As of August 2024, Galaxie is also said to have owed the Canada Revenue Agency (CRA) around $4.1 million in unremitted excise tax. In May, the CRA requested that Galaxie prove it has enough money to continue operating and work on a payment plan.

KPMG, the Proposed Monitor, reports that the CRA is the beneficiary of a $535,000 surety bond issued by Trisura Guarantee Insurance Company as security for Galaxie Brands’ excise tax obligations.

Galaxie Brands also has around $569,000 in arrears related to Harmonized Sales Tax (HST) remittances to the CRA.

Equipment Co and Galaxie also owe some $2 million in accounts payable, primarily to suppliers, shipping and logistics services companies, and other cannabis licensed producers.

The main goal of the CCAA Proceedings is to stabilize Equipment Co and Galaxie’s businesses and to allow them to be sold to address these debts through a court-ordered process.

Galaxie’s sales for the period of August 3 to November 1, 2024, are just over $4 million, with a closing cash balance of -$1.4 million.

In 2023, BZAM completed its disposal of Galaxie Brands Corporation via a share purchase agreement, which it had acquired when it took over the Green Organic Dutchman who had taken over Galaxie Brands in 2021.

Galaxie’s brands include WAGNERS, Highland, ZIP, Stunnerz, Glob Headz, Lite Label, Munchie Box, and Cannabis Cartel.

Canopy reports increased gross profits and loss in Q1 2025

Written by Sarah Clark on August 9, 2024. Posted in Financials.

Canopy Growth Corporation reported $23 million in gross profit in Q1 2025, a 67% increase from Q1 2024, but also posted a $127 million loss, a nearly 204% increase from Q1 2024’s loss of $41.9 million.

This is a decrease in net revenue and net loss from the previous quarter, Q4 2024, in which Canopy reported $72.8 million in net revenue and a net loss from continuing operations in fiscal 2024 of $483.7 million for the three months ended March 31, 2024.

Despite continued losses, Canopy CEO David Klein remains positive.

“The fundamentals of our business continue to strengthen, and our focus on profitable revenue generation is yielding clear results as we set the stage for growth in the second half of fiscal 2025. With our core businesses delivering adjusted EBITDA profitability and primed for growth, paired with Canopy USA’s positioning to benefit from near-term market opportunities in the U.S., Canopy Growth is advancing rapidly and is well established for multi-market cannabis leadership.”

Net revenue from Canadian cannabis sales, both medical and non-medical, for the three months ended June 30, 2024, was $37.7 million. Cannabis sales in international markets brought in another $10.1 million and sales for Storz & Bickel were $18 million, for a total of $66.2 million in net revenue.

The company reported incurring $7.5 million in excise tax from Canadian adult use (non-medical) sales in Q1 2025 and $2.1 million in excise from medical sales.

The segmented gross margin for Canadian cannabis sales was $12.1 million, while international cannabis markets were $3.6 million, and Storz & Bickel was $7.3 million. After a $29.1 million operating loss and $93.9 million in other expenses, loss before income taxes was $123 million.

While $37.7 million of Canopy’s sales in the three months ended June 30, 2024, were from Canada, $15.5 million were from Germany, $8.6 million were from the US, and another $4.4 million were from other parts of the globe.

Canopy attributes a year-over-year decrease in Canadian adult-use cannabis sales to “supply constraints for certain products as a result of financial difficulties with our contract manufacturers and lower sales velocity due to increased price competition.”

The company attributes its year-over-year increase in Canadian medical cannabis sales to an increase in the average size of medical orders, an increase in the percentage of insured customers, and a more extensive assortment of cannabis product choices offered to its customers.

These increases were somewhat offset by a year-over-year decrease in the total number of medical orders, which Canopy says is due to an increasing number of adult-use cannabis retail stores across Canada. As of June 21, 2024, there were 3,663 authorized retail cannabis stores in Canada, down from 3,689 in March, but this number is still higher than the same reporting period in the previous year.

Canopy’s international cannabis sales remained relatively stable compared to the same quarter in 2024, which it says is due to increased sales in Poland and decreased sales in Australia.

Revenue from sales of Canopy’s control of Storz & Bickel was $18.5 million in the first quarter of fiscal 2025, up from $18.1 million in the first quarter of fiscal 2024. Canopy attributes this 2% increase in year-over-year sales to the growth of its Mighty vaporizer and contribution from its newly launched portable vaporizer in the third quarter of fiscal 2024.

The gross margin for Canopy’s Canada cannabis segment was $12.1 million in the first quarter of fiscal 2025, or 32% of net revenue, compared to a $300,000 loss in the first quarter of fiscal 2024, or -1% of net revenue.

Canopy has two cannabis cultivation facilities in Canada: a greenhouse facility in Kincardine, Ontario and its DOJA facility in Kelowna, British Columbia. The Kincardine facility has European Union Good Manufacturing Practices (“EU GMP”) certification which allows for export to medical markets in Europe and other medical cannabis markets around the world.

The company also operates a processing facility at its flagship site in Smiths Falls, Ontario.

Canopy sells in Canada under the Tweed, 7Acres, DOJA, Vert, Hi Way, Deep Space, Wana, and Spectrum brands, while international sales are under Canopy Medical and Spectrum Therapeutics.

Increased Canadian cannabis sales for Village Farms in Q2 2024

Written by Sarah Clark on August 8, 2024. Posted in Financials.

Village Farms International, Inc. brought in USD$40.7 million in cannabis sales in Canada in the second quarter of 2024, $10.7 million in gross profit, and $1.4 million in net income (reported in US dollars).

While cannabis sales in Canada increased by $12.7 million compared to the same quarter in 2023 ($28.1 million), gross profits on those sales actually declined slightly from $10,716,000 to $10,705,000. Branded sales in the Canadian cannabis market were $50.4 million, while non-branded sales were $8.3 million.

The company attributes the increase in cannabis sales in the Canadian market primarily to a 32% increase in net branded sales and an 182% increase in non-branded sales. The latter increase is attributed to “improved supply conditions and pricing created by the shift of many producers to asset-light models, including sales of non-brand-spec inventory.”

The company reports incurring excise duties on its Canadian cannabis sales of $20 million (CAN$27 million) for the three months ended June 30, 2024, or 39% of gross branded sales. Village Farms says the Canadian excise duty is the single largest cost of participating in the branded adult-use market in Canada.

Pure Sunfarms was one of three Canadian cannabis companies named by the Israeli Commissioner for Trade Levies at the Ministry of Economy and Industry in an investigation into “product dumping” of Canadian cannabis into the Israeli market. The preliminary report proposes a 74% levy on imports from Pure Sunfarms.

Village Farms International operates two cannabis facilities for the Canadian legal adult use (recreational) market and for export to international markets like Israel, Germany, Australia, and the United Kingdom. The company’s Canadian Cannabis segment is made up of Pure Sunfarms in BC and an 80% ownership in Rose LifeScience in Quebec.

International sales increased by 9% in Q2 2023, primarily due to higher sales to Germany and the UK. These were partially offset by lower sales to the Australian cannabis market.

The company also holds 85% ownership of LeliHolland, which has one of ten licenses to cultivate cannabis legally in the Netherlands under that country’s Closed Supply Chain Experiment program. Located in Drachten, the facility is targeted to begin production in the fourth quarter of 2024.

In the US, Village Farms owns Balanced Health, which focuses on consumer CBD products. It had $4.3 million in sales and $12.3 million in losses.

The company also sells produce and energy through its renewable natural gas project.

Village Farms posted sales of $92.2 million in the three months ended June 30, 2024, and a loss, including non-controlling interests, of $23.6 million.

Featured image via Twitter

Net revenue, net loss up for Cronos in Q2 2024

Written by Sarah Clark on August 8, 2024. Posted in Financials.

Cronos brought in its highest quarterly net revenue yet at $27.8 million in the second quarter of 2024 but still reported a net loss of $8.8 million (reported in US dollars).

Cronos Group Inc. saw a 46% ($8.7 million) year-over-year increase in net revenue, which the company attributes to increased domestic and international sales.

The company’s gross profits also increased, up $3.2 million in the three months ending June 30, 2024, from the same reporting period in 2023.

Cronos’ net loss of $8.8 million is up from a $2.4 million loss in the previous quarter, and up from a $5.7 million net loss in Q2 2023.

Net revenue for the three months ended June 30, 2024, was $38.7 million, with $10.9 million in excise taxes. Cost of sales was another $21 million, while sales at marketing were $4.3 million out of $21.9 million in total operating expenses.

Net revenue from cannabis flower sales was $20.7 million in Q2 2024, while net revenue from cannabis extracts was $7 million, a 47% and 43% year-over-year increase respectively. The majority of these sales were in Canada ($19.8 million), while $6.9 million were to Israel and $1 million to Germany and the United Kingdom (up 46%, 27%, and no material change compared to the same quarter in 2023, respectively.

Israel is in the process of considering adding levies to cannabis imported from Canada. Cronos also operates Cronos Israel, which has a nursery, cultivation, and distribution licenses. It is in the process of constructing a custom-built greenhouse and manufacturing facility for cannabis.

“Cronos achieved its highest quarterly net revenue on record in Q2 2024 at $27.8 million, up 46% year-over-year,” said Mike Gorenstein, Chairman, President and CEO of Cronos. “The top line was propelled by 46% growth year-over-year in Canada, 27% growth year-over-year in Israel, growth in Germany and the initiation of sales in the United Kingdom. These results reflect the hard work and dedication of our entire team, reinforcing our confidence in sustained growth and success,”

Cronos also recently announced a $51 million (CAD$70 million) expansion of Cronos Growing Company Inc. (Cronos GrowCo) to address increased international demand for its cannabis. Cronos GrowCo reported preliminary unaudited net revenue to third parties, excluding sales to the Company, of approximately $2.7 million in the second quarter of 2024.

In 2023, Cronos purchased approximately $21 million of biomass from GrowCo, and GrowCo sold approximately $20 million to third parties.

Cronos sells its cannabis under the brands Spinach, Lord Jones, and Peace Naturals.

Aurora Cannabis shows increase in net revenue, finally reports net income

Written by Sarah Clark on August 7, 2024. Posted in Financials.

Aurora Cannabis reported an increase in net revenue and net income in the three months ending July 30, 2024, driven by increased exports, domestic medical sales, and plant propagation sales.

The cannabis company reported $83.4 million in net revenue in the first quarter of 2025, a 12% increase from the previous quarter compared to $74.7 million in the same quarter in 2024.

The company also reported $5.1 million in net income, up from a $28.3 million loss in the same period last year and a $20.8 million loss in the previous quarter (Q4 2024).

Medical sales revenue was $47.2 million, a 13% year-over-year growth, while non-medical sales were $11.5 million, a 10% YOY decline.

Net revenue from wholesale bulk cannabis sales was $1.6 million, up from $371,000 in the same quarter in the previous year.

Aurora attributes its increase in medical cannabis sales in Canada as a result of additional product offerings to both insurance and non-insurance-covered patients.

The increase in exports was primarily due to increased sales to Australia. Aurora’s main medical markets are currently Canada, Germany, the UK, Poland, and Australia, as well as the Caribbean, South America and Israel. MedReleaf Australia is also seeking to expand sales into New Zealand.

Aurora is one of three active in-country producers of medical cannabis in Germany and recently received its production and R&D license under the new cannabis law. The company intends to use this facility to serve not only the German market but also all medical markets in Europe and any future opportunities for non-medical sales in the region. However, it says it has no current plans to expand production in Germany.

Aurora also reported a significant increase in revenue from plant propagation from its Bevo vegetable and ornamental plants operation in the former Aurora Sky facility in Edmonton, Alberta. Revenue from plant propagation brought in another $23 million, a 16% YOY increase and a 122% increase from the previous quarter. Aurora attributes these increases to the “seasonality” of the Bevo business, “which delivers higher revenue in the late winter and spring months as orders are fulfilled.”

The company reported $8.6 million in excise taxes from $91.9 million in revenue from sale of goods, $2.9 million from medical sales, and $5.7 million from non-medical “consumer” sales.

Aurora sells medical products under the brands CanniMed, +Aurora, MedReleaf, and WMMC. Non-medical brands include Greybeard, drift, San Rafael ’71, and Tasty’s.

Christina Lake Cannabis reports increasing losses in Q1, Q2 2024

Written by Sarah Clark on August 2, 2024. Posted in Financials.

Christina Lake Cannabis reported a loss and comprehensive loss of nearly $1.6 million from $3.3 million in sales in the three month period ended May 31, 2024.

The company released their Q1 and Q2 2024 financial statements on June 25, 2024, with $1.2 million in losses in Q1 from just under $3 million in sales.

As at May 31, 2024, the Company had working capital of $4,957,122 (2023 – $6,009,129), which consisted of cash of $1,427,361 (2023 – $1,468,028), receivables of $1,746,747 (2023 – $1,846,669), prepaid expenses of $54,221 (2023 – $462,322), inventory of $3,928,919 (2023 – $5,654,514), and assets held for sale of $581,767 (2023 – $nil).

Current liabilities, being accounts payable and accrued liabilities, the current portion of loan and current portion of convertible debentures, were $2,781,893 (2023 – $4,004,171).

Christina Lake Cannabis’ (CLC) operates a facility on a 32-acre property that includes over 950,000 square feet of outdoor grow space, offices, propagation and drying rooms, research facilities, and a facility dedicated to processing and extraction. Christina Lake Cannabis also owns a 99-acre plot of land adjoining its principal site.

The company focuses its production on extracts and distillate for its B2B client base, with cultivars specifically developed for outdoor cultivation for the purpose of extraction. CLC has determined the fair value, less costs to sell, and less incremental processing costs of cannabis distillate to be $1.53 per gram. The average harvested yield of biomass is 1,306 grams per plant, with an average yield from dried biomass to distillate of 6% to 9% depending on the cultivar.

In November 2022, the company reported an average selling price of $3 a gram for dried flower. In November 2023, that had dropped to $1.90.

On June 1, 2024, CLC entered into a 24-month rental agreement for equipment with a monthly payment of $1,700 per month. The company has the option to purchase the equipment at the end of the rental period. A director of CLC owns the rental company.

SNDL releases Q2 2024 results

Written by Sarah Clark on August 2, 2024. Posted in Financials.

SNDL Inc. brought in $228.1 million in net revenue in the second quarter of 2024, a gross profit of $58.1 million, and a $4.6 million loss in adjusted operating income, announced in their most recent quarterly report ending June 30, 2024.

The Alberta company, which operates liquor and cannabis retail stores as well as cannabis production, saw the bulk of its revenue from its liquor stores, followed by cannabis retail and cannabis production.

Adjusted operating income from SNDL’s liquor retail was $8.2 million, while its cannabis retail was $2.3 million. Its cannabis operations showed an adjusted operating loss of $13 million.

Net revenue from SNDL’s cannabis retail was $76 million, up from $71.9 million in the same quarter in 2023. The company attributes this increase to newly opened and acquired stores and an increase in “proprietary licensing arrangements,” and brought in $3.8 million from its proprietary data licensing program.

It also reported same-store sales growth of 2.3% year-over-year.

As of August 1, 2024, SNDL has 82 Spiritleaf stores (20 corporate and 62 franchise stores), 100 Value Buds stores, four Superette stores, and one Fireside Store. SNDL owns 65% of Nova Cannabis, which operates Value Buds. SNDL’s 187 stores across Canada represent 10% of private cannabis stores in the country.

SNDL also manages several investments, which include Canadian cannabis companies like Indiva, Delta 9, and Nova Cannabis, along with several US cannabis companies.

Its brand portfolio in the Canadian cannabis market includes Top Leaf, Contraband, Palmetto Vacay, Versus, Value Buds, Grasslands, and Bonjak. It operates a cannabis processing facility and an edibles facility in BC, a cannabis beverages facility in Ontario, and a cultivation facility in New Brunswick.

Net revenue for SNDL’s cannabis operations was $25 million for the three months ended June 30, 2024, up from $20.9 million in the same quarter in 2023. Gross profit after cost of sales was 12.7%, or $$3.2 million, from bulk and packaged sales.

The company says the increase in net revenue is from increased distribution and operational efficiencies.

Record revenue in Q2 2024 for Nova Cannabis

Written by Staff on August 1, 2024. Posted in Financials, Other.

Nova Cannabis Inc. has released its interim consolidated financial statements and management’s discussion and analysis for the three and six months ended June 30, 2024.

The company reported a record of $69.2 million in revenue for the three months ended June 30, 2024, the company’s second quarter of 2024. This translated to $16.8 million in gross profits and $859,000 in net and comprehensive earnings, up from a $333,000 loss in the previous quarter.

Nova’s revenue had declined in the past three quarters from a previous peak of $67.7 million in Q3 2023 to $67.4 million in Q4 2023 and $64.3 million in Q1 2024.

As of June 30, 2024, the Alberta-based retail chain owns and/or operates 99 locations across Alberta, Ontario, and Saskatchewan, primarily under its “Value Buds” and “Firesale Cannabis” banners.

The company currently has 61 cannabis stores in Alberta, 34 in Ontario, three in BC, and one in Saskatchewan. It has about a 19% market share in Alberta and a 4% share in Ontario.

Nova’s approach with their Value Buds and Firesale stores is to gain market share by operating in the near term at profit margins of 14-17%, around half that of many other cannabis stores.

Value Buds also sells products under its Value Buds label from its parent company, SNDL.

While Nova says its financial performance and liquidity have improved since the year ended December 31, 2023, it also notes that its ability to continue as a going concern relies on the ongoing support of its majority shareholder, SNDL, through the Revolving Credit Facility and the management and administrative services agreement made effective March 22, 2021.

SNDL is the parent company of Nova Cannabis, and as of June 30, 2024, SNDL Inc. holds an approximate 65% ownership interest in Nova.

On April 1, 2024, Nova and SNDL extended the maturity date of the Revolving Credit Facility to March 31, 2026, and amended the Revolving Credit Facility to remove SNDL’s right to demand repayment before the maturity date, subject to certain conditions. Nova and SNDL also agreed to increase the annual base fee payable by Nova under the Service Agreement from $1.25 million to $5.8 million per year.

On March 31, 2022, SNDL completed its acquisition of all of Alcanna Inc.’s issued and outstanding common shares, including its majority-owned subsidiary, Nova Cannabis Inc. This acquisition brought Alcanna’s ownership of cannabis stores in Alberta, Saskatchewan, and Ontario, along with liquor stores in Alberta and BC.

Those Ontario stores operate under Spirit Leaf Ontario Inc.’s licence to comply with Ontario regulations that don’t allow producers like SNDL to directly or indirectly own or control more than a 25% interest in any licensed Ontario cannabis retailer.

Earlier this year, SNDL Inc. agreed to assign its rights to own or operate four Dutch Love stores to Nova Cannabis Inc., giving Nova a footprint in BC’s retail cannabis space.

“For the three months ended June 30, 2024, cash provided by operating activities was $1.5 million, a $1.1 million decrease from the $2.6 million cash provided by operating activities for the same prior year period. The decrease in cash provided is primarily related to the decrease in non-cash working capital items of $0.7 million.

“On August 1, 2024, the Company had a cash and cash equivalents balance of $ 5.3 million.”

Nova’s Diesel and Berries SKUs were launched in May in Alberta and Ontario in 14 gram and 28 gram flower and 28 x 0.5 gram pre-roll formats, representing the Company’s first pre-rolls in the market.

Nova’s most recent quarterly report also notes that it continues to use its “proprietary data licensing program” to “deliver continued margin and revenue expansion through program optimizations and its ability to provide market-driven solutions”.

The company boasts that its access to its broad data and analytics “allows the opportunity to realize incremental revenue through intellectual property optimization.”

Its proprietary licensing brought in $3.8 million in the most recent quarterly report, up from $2.7 million in the same quarter in 2023. Proprietary licensing revenue was just under $3.3 million in Q1 2024, up from $1.5 million in Q1 2023.

Nova’s previous quarterly report noted that the increase in proprietary licensing revenue was due to an “updated proprietary licensing services agreement, scalable for customers’ needs, which allows customers to purchase specific sales data to assist them with planning for current and future product decisions.”

Decrease in net revenue, increase in losses for Greenway Cannabis in annual report

Written by Sarah Clark on July 30, 2024. Posted in Financials.

Greenway Cannabis reported a $4.7 million loss from $5.2 million in net revenue for the year ending March 31, 2024.

This is a decrease in net revenue ($5.6 million in 2023) and an increase in loss and comprehensive loss ($2.6 million in 2023) compared to the previous year. The Ontario cannabis producer reports incurring $3,641 in excise tax for the year ending March 31, 2024.

Greenway Greenhouse Cannabis Corporation operates a nursery facility in Kingsville and a flowering and processing facility in Leamington.

As of March 31, 2024, Greenway reports a working capital deficiency of $852,605 (compared to $419,683 for March 31, 2023) and an accumulated deficit of $17,752,663 (March 31, 2023 – $14,453,209).

The Company says it has insufficient cash to pay creditors for its current working capital obligations and operations for the next twelve months. Its ability to continue as a going concern is dependent upon its ability to obtain sufficient additional funding and generate sufficient revenues and positive cash flows from its operating activities to meet its obligations and fund its planned investments and operations. This indicates the existence of a “material uncertainty that may cast a significant doubt about the Company’s ability to continue as a going concern.”

Greenway sold the equivalent of 5,548,692 grams of cannabis in its most recent fiscal year, a 33% increase from the previous year. As of March 31, 2024, it had an average cash cost of $0.74 per gram and a weighted average cash cost per gram of $0.60 of finished goods inventory on hand.

Cash cost per gram sold increased in Q4 2024, but cash cost per gram in finished goods decreased to its lowest level in the past year.

“This year, we’ve achieved record sales volumes, dramatically reduced liabilities, launched our first consumer brands in Ontario, completed a $3.5m private placement, and subsequent to our year end received the accreditation necessary to begin exporting Greenway cannabis internationally,” said Jamie D’Alimonte, CEO of Greenway. “Our team has been working to open up new avenues for our products and to diversify our revenue. The next steps for our team is to continue to increase the value we get from every gram we produce, and to continue to expand into our cultivation area to meet our ever-increasing demand.”

On April 26, 2024, Greenway announced that it had received CUMS-GAP and GACP certification, providing a pathway to distribute its product internationally.

On June 13, 2024, Greenway announced its MillRite Pink Moon was launching in a 2 x .5 gram pre-roll format across Ontario. It has also had its first two brands and SKUs accepted by the Ontario Cannabis Store (“OCS”) through the Winter 2023-2024 product call.

MTL Cannabis reports $2.5 million in net income in 2023-2024

Written by Sarah Clark on July 29, 2024. Posted in Financials.

MTL Cannabis Corp. brought in $2.5 million in net income from $83 million in net revenue for its fiscal year ending March 31, 2024.

This is an improvement for MTL Cannabis Corp., formerly Canada House Cannabis Group Inc., which reported a $2.2 million loss for the previous year, ending March 31, 2023, from $31 million in revenue.

MTL’s gross profits for the most recent fiscal year were $26.4 million, after nearly $17.8 million in excise taxes, along with factors like operating costs and costs of sales.

As of the fiscal year ending March 31, 2024, MTL says it has completed retrofitting all three operating facilities, specifically Montréal Cannabis Medical Inc. and IsoCanMed Inc. in Quebec, and Abba Medix Corp in Ontario.

The retrofits allow MTL to expand its consolidated estimated cultivation capacity by up to 6,500 kg per year, bringing the total estimated cultivation capacity for the consolidated entity up to 19,500 kg a year.

“MTL’s Q4 and record full-year results represent the unwavering commitment from our team to delivering high-quality and consistent cannabis products and services to our customers and patients, while delivering strong results and fundamentals to our shareholders,” said Michael Perron, CEO of MTL. “As we move forward, MTL will continue to build on the foundation we have established and ensure that we continue to be a trusted partner to the ever-growing global cannabis industry.”

MTL Cannabis Corp. is the parent company of Montréal Medical Cannabis Inc. (MTL Cannabis), a licensed producer operating from a 57,000 sq ft licensed indoor grow facility in Pointe-Claire, Québec; Abba Medix Corp., a licensed producer in Pickering, Ontario that operates a leading medical cannabis marketplace; IsoCanMed Inc., a licensed producer in Louiseville, Québec growing best-in-class indoor cannabis, in its 64,000 sq. ft. production facility; and Canada House Clinics Inc., operating clinics across Canada that work directly with primary care teams to provide specialized cannabinoid therapy services to patients suffering from simple and complex medical conditions.

To calculate the fair value less costs of disposal of the Licensed Producers CGU and Canada House Clinics CGU, the Company used a post-tax discount rate of 27% (Canada House Clinics – 27%), a pre-tax discount rate of 39% (Canada House Clinics – 37%), a terminal growth rate of 3% (Canada House Clinics – 3%), and EBITDA projections based on past experience and management’s best estimates regarding future revenue growth considering internal and external available information. For the year ended March 31, 2024, the Company concluded that the recoverable amount of each CGU was higher than its carrying value, and accordingly, no goodwill impairment charge was recognized.

Tilray reports year-over-year increase in revenue, decrease in losses in Q4 2024

Written by Sarah Clark on July 29, 2024. Posted in Financials.

In its newest quarterly report covering the three months ending May 31, 2024, Tilray reports a net revenue of $229.9 million and gross profit of almost $82.4 million. All figures are in US dollars.

Although these were both increases from the same quarter in 2023, the company still reported a nearly $15.4 million loss. The company reports paying more than $22 million in federal excise taxes in the most recent quarter, a cost it says is eating into their profit margins, representing 31% of total revenue.

Tilray’s beverage alcohol business generated the highest revenue, at $76.7 million, followed by its cannabis business at $72 million. Its distribution business brought in another $65.6 million, while its wellness business brought in $15.7 million.

Revenue from Canadian medical cannabis in the most recent quarter was $6.4 million, while revenue from Canadian adult-use cannabis was $61.5 million. Tilray brought in just under $13 million in revenue from wholesale cannabis sales and $13.1 in international cannabis sales.

“Tilray Brands also successfully completed three acquisitions,” says Irwin D. Simon, Chairman and CEO, “the eight iconic craft brands from Anheuser-Busch Companies, LLC., HEXO Corp., and Truss Beverage Co.

“These acquisitions were strategic in fortifying Tilray’s house of brands, strengthening our operations, and positioning the Company as a leader across several industries and regions. In the U.S., Tilray Beverages is the fifth largest craft brewer and Tilray Wellness is the leader in hemp products. In Canada, Tilray Cannabis holds the number one recreational cannabis market share, while in Europe, it is the market leader in medical cannabis. Leading the convergence of cannabis, beverages, and wellness, Tilray Brands is poised to continue to disrupt the CPG industry globally.”

Tilray recently announced they received a cannabis production licence in Germany, expanding the number of cultivars they can grow at their Aphria RX facility in Neumünster. The facility gives Tilray the ability to serve not only Germany’s medical cannabis market but also other nearby future and emerging cannabis markets in Europe.

Delta 9 receives amended and restated order for creditor protection through Sept 15

Written by Sarah Clark on July 26, 2024. Posted in Business, Cannabis News, Producers.

Delta 9 Cannabis, the Manitoba company granted CCAA protection on July 15, due to expire on July 25, has now received an extension of a stay of creditor claims until September 15, 2024.

In a press release earlier this month, the company stated that obtaining CCAA protection is in the best interest of it and its shareholders, especially in light of recent “aggressive” actions by its creditors, namely recent demand notices from SNDL Inc. on May 21 and July 12 and SNDL’s recent acquisition of all the Company’s senior secured debt for $21 million.

Those creditor claims are now held off until September 15, giving Delta 9 and FIKA several more weeks to address them.

On July 15, Delta 9 also announced that it had entered into a binding term sheet for the FIKA Company to act as a plan sponsor to its CCAA proceedings. Through this process, FIKA would acquire Delta 9’s retail cannabis and distribution business while also assisting with a sale and investment solicitation process for the assets of the licensed cannabis production business. In exchange, Delta 9 would receive equity in FIKA.

FIKA will participate in and fund the costs of Delta 9’s CCAA proceedings through interim financing and present one or more plans of compromise or arrangements to Delta 9’s creditors. Under the agreement, FIKA will provide up to $3 million to fund the costs of the CCAA proceedings and up to $13 million to repay the secured obligations owing to SNDL Inc.

The newest extension, granted after a court hearing on July 24, Delta 9 and its subsidiaries—Delta 9 Logistics Inc., Delta 9 Bio-Tech Inc, Delta 9 Lifestyle Cannabis Clinic Inc., and Delta 9 Cannabis Store Inc.—includes the approval of the $16 million FIKA has offered in interim financing, as well as a key employee retention plan in the amount of $650,00.

In an affidavit posted on July 22, Delta 9 CEO John Arbuthnot says Delta 9’s current excise tax arrears are approximately $7,800,000. The affidavit continues that in November 2023, the company applied to the Canada Revenue Agency (CRA) for relief of interest and penalties “due to financial hardship.” Arbuthnot believes there is a chance to reduce that amount by approximately $2 million.

Because of Delta 9’s tax arrears, the CRA moved to only renew the company’s excise licence on a 30-day basis, beginning in December 2023. Delta 9 Bio-Tech was also required to enter into a payment plan to address its owed excise tax in monthly payments of $50,000.

To keep the licence renewed, the company must make not only the $50,000 payment but also the go-forward monthly excise tax amount, which Arbuthnot says is a significant financial strain on the company.

The Toronto Stock Exchange (TSX) has scheduled the delisting of Delta 9’s common shares on the TSX for August 22, 2024, for failure to meet the TSX’s continued listing requirements. Trading in the Common Shares is currently halted on the TSX.

Cannara Biotech reports strong Q3 2024 results

Written by Sarah Clark on July 26, 2024. Posted in Financials.

Cannara Biotech Inc. announced its fiscal third quarter 2024 financial and operating results for the three and nine-month periods ended May 31, 2024, with $19.5 million in revenue and just over $2 million in net income.

Just under $1 million of the company’s net revenue in Q3 2024 came from its two Quebec cannabis operations, with the rest from its real estate operation.

Cannara owns and operates two Quebec‐based cultivation facilities. The first, in Farnham, is 635,000 sq ft, of which 170,000 sq ft is licensed for cultivation and 414,000 sq ft of leased warehouse space.

The second, a greenhouse facility in Valleyfield, is home to 600,000 sq ft of growing space and a 200,000 sq ft rooftop greenhouse.

Cannara sells products under the brands Tribal, Nugz, and Orchid CBD, under which they sell an array of dried flower, vapes, concentrates, pre-rolls, and accessories. The company reports a 9.7% market share in Quebec, 2.9% in Ontario, 3.13% in Alberta, 0.82% in BC and 0.40% in Saskatchewan in the most recent quarter.

Out of the $26 million in revenue from cannabis sales in Q3 2024, the company owed just over $8 million in excise tax. Although revenue after tax was still $18.3 million, operations costs and expenses pared this down to $992,177 in net income.

This was a decrease from the same quarter in 2023, which saw $20 million in revenue from sales of goods from its cannabis operations but just under $4.2 million in net income from cannabis operations. This was due to much higher segment operating income and lower losses from changes in fair value of inventory sold.

“The cannabis industry is navigating a highly competitive landscape with significant price compression due to challenging conditions,” stated Nicholas Sosiak, Chief Financial Officer of Cannara.

“Despite these pressures, Cannara’s resilience is evident in our increased net revenues of $19.5 million versus this time last year and our thirteenth consecutive quarter of positive Adjusted EBITDA, totalling $2.8 million this quarter. We also achieved an operating income of $3.6 million and generated $1.2 million in free cash flow this quarter. While price compression has impacted our growth quarter over quarter, we believe current industry conditions are unsustainable for many of our competitors with less scale and higher costs.

“We fully expect a return to stronger pricing and demand as those who cannot compete cease to operate. Cannara’s ability to generate positive cash flows in this environment helps us navigate these dynamic market conditions and is a testament to our strength to succeed. We are investing in sales and marketing to expand our distribution and capture more market share from competitors, setting the stage for future success as market conditions improve. Our focus remains committed to profitable growth and steady cash flow, delivering high-quality, innovative products to Canadians through our leading brands.”

Wholesale cannabis sales, CPI increase in May

Written by Staff on July 19, 2024. Posted in Business, Cannabis News, Retail.

Wholesale cannabis sales increased to $553 million in May after a steep decline in April, following record-high rates in March 2024.

Cannabis continues to outperform much of the Canadian economy, with sales declining in five of seven sectors. Excluding petroleum products and other hydrocarbons, as well as oilseed and grain, wholesale sales fell 0.8% in May across Canada.

Wholesale cannabis trade and inventories also saw an increase in May, rising to $294,102 from $289,764 in April. The previous high point was $301,077 in November 2022.

The most recent monthly retail cannabis sales figures show sales rebounded in February and April after dropping to their lowest in nearly a year in January 2024.

While wholesale cannabis sales in May were around $553 million, this was more than double what cigarette and tobacco product merchant wholesalers brought in, at about $228 million.

Wholesale merchants’ sales of cannabis, seasonally adjusted, were up 12.1% in May 2024 from May 2023 and up 19% from April 2024 to May 2024.

Meanwhile, Statistics Canada’s consumer price index shows that the price of cannabis increased by one tenth of a point from May to June and from June 2023-June 2024 (71.6).

This small increase was after a seven month decline, which itself was preceded by a brief spike in prices in October 2023. The CPI baseline was set at 100 in December 2018, following legalization.

Avant posts increase in net revenue, driven by exports and rec sales

Written by Sarah Clark on July 15, 2024. Posted in Financials.

Avant Brands (formerly GTEC Holdings) reported net revenue of $16.4 million for the first half of 2024, producing 6,417 kg of cannabis and selling 5,493 kg.

Despite these gains, a 9% increase from the same period in 2023, the company posted a $6.7 million loss for H1 2024 (first six months/half of 2024). The company posted nearly $2 million in federal excise taxes from its $18.4 million in gross revenue, nearly $9 million in cost of sales, and $13.9 million in losses from the change in fair value of biological assets realized through inventory sold.

Recreational cannabis sales accounted for nearly half (41%) of net revenues during the six-month period ended May 31, 2024. Domestic wholesale sales were 14% of net revenue, while export wholesale was 43%.

The overall weighted average selling price of cannabis decreased by 15% in the first six months of 2024 to $3.48 per gram, with the average for recreational cannabis at $4.98. The average recreational gross pricing per gram, calculated by determining the total flower sales divided by the total number of flower grams sold, was down from $7 a gram in the first six months of 2023.

Avant says the decrease in average selling price was primarily due to an increase in bulk domestic and export sales and a combination of general price compression in the industry.

The company’s cost of sales decreased to $8.6 million in the six-month period ended May 31, 2024, compared to $9.4 million in the first half of 2023. Avant says this decrease in costs was due to reductions in costs associated with its cannabis operations, incremental improvements in operational processes, and reductions in facility costs.

Avant has facilities in BC, Alberta, and Ontario. In BC: Vernon (3PL Ventures), Kelowna (Flowr Group) Greentec Bio-Pharmacueitcals (Construction in Progress), and Chase (Tumbleweed Farms). Alberta: Edmonton (Avant Craft). Ontario: Tiverton, (Grey Bruce Farms).

CanadaBis continues trend of profitability with focus on pre-rolls and extracts

Written by Sarah Clark on June 26, 2024. Posted in Financials.

CanadaBis Capital Inc, the parent company of cannabis brands like Stigma Grow, reported its third quarter fiscal 2024 results, with $2.2 million in gross profits and 109,824 in net and comprehensive income.

The majority of the Calgary-based cannabis company’s profits was from the sale of extracts, with $170,946 in gross profits from dried flower sales and just under $2 million in extract sales for the three months ended April 30, 2024. This is an increase in gross profits from cannabis flower sales from the same quarter in 2023 ($59,579) and a decrease in gross profits from extracts sales ($2.6 million).

The Company reported a 44% decrease in its sales of extract products in the provinces of Alberta, Ontario, Saskatchewan, and British Columbia. However, it has seen continued growth in the sale of its flavoured, infused pre-rolls and its Electric Dartz pre-rolls. CanadaBis also lists its butane hydrocarbon (BHO) extraction process as a competitive advantage in the industry.

The company lists $763,447 in excise duty from its sales of flower (~48% of $1.6 million gross sales) and almost $2.4 million in excise duty for extracts sales (from $5.5 million gross sales), both representing around 40-50% excise rates, for Q3 2024.

The Company currently owns a 66,000-square-foot facility in Alberta, with around 44,000 square feet of the building developed and equipped to grow 225 kg of cannabis per year. In the most recent quarter, they released 17 new SKUs into the Canadian market and have been attempting to position themselves as the leader in infused pre-rolls and “super slim” pre-rolls, as well as expand the Dab Bods brand across Canada.

The company’s overall gross revenues were up in Q3 2024 compared to Q2 2024, but higher excise taxes meant lower net revenue. This was somewhat offset by a lower cost of sales, which led to net income remaining relatively stable from Q2 to Q3.

“CanadaBis Capital’s performance in Q3 2024 was robust, driven by our strategic investments and continuous efforts to optimize our operational efficiencies,” said Travis Mcintyre, Chief Executive Officer of CanadaBis Capital. “We are focused on enhancing shareholder value through prudent financial management and forward-thinking strategies in the evolving cannabis market.”

Nova Scotia sold $121 million worth of cannabis in 2023

Written by David Brown on June 26, 2024. Posted in Cannabis News, Financials, Government.

The Nova Scotia Liquor Corporation (NSLC) released their most recent year-end financial report on June 25 covering April 1, 2023-March 31, 2024.

The Crown corporation, which operates 49 retail cannabis locations, sold $121 million worth of cannabis, an 8.9% increase from the previous year. Sales of local Nova Scotia cannabis products accounted for $39.5 million, or 32.7% of all cannabis sales, a 17.9% increase from the previous year.

Cannabis transactions increased by 12.2%, but the average basket size decreased by 3% to $37.27, along with a 4% reduction in the average price per gram of $5.96.

“We continue to see strong growth in cannabis sales demonstrating our continued progress in competing with the illicit cannabis market,” said Greg Hughes, NSLC president and CEO. “In addition to the expansion of our cannabis retail network, our strong vendor partnerships, including our valued local cannabis producers, have played an important role.”

NSLC also reports that 79% of Nova Scotians now live within 10 kilometres of a licensed cannabis store.

The agency, which also manages the sale of alcohol in the province, reported total annual sales of $874.5 million, with alcohol sales accounting for $753.4 million. Total earnings were $283.8 million.

Nova Scotia forecast $17.4 million in their share of federal cannabis excise for 2023-24, and $18.3 million for 2024-25. In 2022-2023 they reported $14.8 million in cannabis tax.

Atlas Global Brands granted CCAA protection

Written by David Brown on June 21, 2024. Posted in Business, Cannabis News, Financials, Producers.

Atlas Global Brands, the company behind cannabis brands like D*gg Lbs, GreenSeal, and Electric Lettuce along with its subsidiaries, has been granted an initial order under the Companies’ Creditors Arrangement Act (CCAA).

Atlas Global includes GreenSeal Cannabis Company Ltd., GreenSeal Nursery Ltd., AgMedica BioScience Inc., Wellworth Health Corp., 5047346 Ontario Inc., 8050678 Canada Inc., and Tavivat Naturals Inc. as its subsidiaries. The company says the CCAA order will provide an opportunity to restructure its business and financial affairs.

Atlas Biotechnologies Inc. and Atlas Growers Ltd had previously gone into receivership in 2023.

Headquartered in Chatham, Ontario, Atlas Global operates its business of cultivation, extraction, manufacturing, marketing, and distribution through its wholly-owned Canadian subsidiaries, GreenSeal and AgMedica. Atlas Global operates two licensed cannabis facilities in Canada, one of which has European Union GMP certification, as well as three medical pharmacies in Israel. Atlas Global distributes its products within Canada and to seven other countries: Australia, Denmark, Germany, Israel, Norway, Spain and the United Kingdom.

At the end of 2023, Atlas Global employed 185 full-time employees in Canada and two full-time employees in Israel. In early 2023, Atlas announced it was moving its operations from Alberta to Ontario and laying off 50 workers in the process. In August 2023, the company listed a notice of sale for many of its assets. In January 2024, the Agriculture Financial Services Corporation filed a bankruptcy order against Atlas Growers.

A bankruptcy creditor package filed in February of this year lists $3.5 million in total realized assets. It lists the Agriculture Financial Service Corporation as a secured creditor with the company for a total of $8.6 million.

The Atlas Group is scheduled to return to Court for a comeback hearing on June 27, 2024, at which time it plans to seek, among other relief, an Amended and Restated Initial Order, an extension of the stay of proceedings, and interim financing to allow the Atlas Group to stabilize its operations, consider possible transactions, and emerge from the CCAA Proceedings as a going concern.

One of the Company’s creditors, Stoke Canada Finance Corp., has applied to have a receiver appointed over the Company’s receivables and related assets. Unless resolved, that application will be heard at the Comeback Hearing.

The Company says it continues to believe that the protection afforded by the CCAA will allow it to stabilize operations in order to consider potential restructuring transactions that would benefit all stakeholders, including the sale of all or substantially all of the business or assets of the Atlas Group through a court-supervised sales process.

Aurora quarterly report shows increase in net revenue, decrease in losses

Written by Sarah Clark on June 20, 2024. Posted in Financials.

Aurora Cannabis reported $67.4 million in net revenue for the three months ending March 31, 2024, but a $20.8 million net loss.

The net revenue represented a 5% year-over-year increase, while the net loss represents a $66 million increase in net revenue from the $86.8 million loss for the same three months in 2023.

Aurora’s loss from operations ($2.7 million) also declined significantly in the three months ending March 31, 2024, compared to the previous three months ending December 31, 2023, with a loss from operations of $18 million and $31.1 million in the three months ending March 31, 2023.

Of Aurora’s $67.4 million in net revenue, $45.6 million was from sales of cannabis for medical purposes, while $10.2 was from sales of cannabis for non-medical (“consumer”) purposes. Another $10.4 million in net revenue was from plant propagation (from its non-cannabis “Bevo” operation).

Net revenue from medical sales was up 20% from the three months ending March 31, 2023, while net revenue from “consumer” cannabis was down 29% compared to the three months ending March 31, 2023. Plant propagation revenue was down 3% from the first three months 2023.

Aurora’s average net selling price of dried cannabis, excluding bulk sales, was $5.37, with 15,179 kg sold in the first three months of 2024. The average selling price increased from $4.74 in the first three months of 2023 when the company sold 16,578 kg of cannabis.

Of the $45.6 million in medical cannabis sales, $26.5 million was from sales in Canada, while $19.2 million was in international sales. Aurora also reported $1.1 million in net revenue for wholesale bulk cannabis. While Canadian medical cannabis sales declined slightly (by $652,000) compared to the first three months of 2023, international sales increased slightly (by $86,000).

Aurora attributes the increase in international sales partly to the current year, consisting of four quarters compared to three quarters in the prior year, as well as “significantly” higher sales to Australia and “improved” sales to Poland and the United Kingdom. Aurora’s main medical markets are Canada, Germany, the UK, Poland, and Australia.

On February 7, 2024, Aurora Cannabis acquired Indica Industries Pty Ltd. (Australia), giving them full control of the Indica operations for a purchase price of $44.7 million.

In March, Aurora became one of the first Canadian cannabis companies to receive European Union Good Manufacturing Practice (“EU GMP”) certification from Australia’s Therapeutic Goods Administration (TGA) for its Canadian production facilities, River and Ridge.

“We are incredibly pleased to be reporting our strongest fiscal year ever at Aurora,” said CEO Miguel Martin. “Total fiscal year 2024 net revenue increased 21% compared to the trailing four quarters, while adjusted EBITDA was positive on an annualized basis for the first time in our history, reaching $12.8 million. We also strengthened our balance sheet, ending with a strong net cash position of approximately $180 million as of March 31^st, and fully repaid our convertible debt.”

Christina Lake Cannabis files year-end report for 2023

Written by Sarah Clark on June 19, 2024. Posted in Financials.

After some delays, BC’s Christina Lake Cannabis (CLC) recently released its financial statements for the year ending November 30, 2023.

The indoor and outdoor cannabis producer and processor posted a total revenue of $11.8 million in 2023, up from $10 million in 2022 and $3.6 million in 2021. The company posted a net loss of $4.1 million for 2023, compared to a net loss of $2 million in 2022 and $2.1 million in 2021. The company also reported more than $227,548 in regulatory fees for the year ending November 30, 2023.

Revenue was primarily from distillate sales, with CLC attributing a year-over-year decline in gross margin percentage to price compression in the wholesale distillate market.

CLC operates two outdoor production sites in BC, one on a 32-acre property and the other on a 100-acre property. It also processes its own biomass into distilled and winterized oils, kief, and other extracts for sale to other producers.

After the end of this most recent reporting period, the company also secured a third outdoor production site in BC, BZAM’s former Midway site, along with related harvesting and manufacturing equipment and approximately 19,000 kg. of biomass.

The Midway property is 342 acres, with just over 100 acres of licensed cultivation space. With this acquisition, CLC will expand its licensed outdoor cultivation footprint to over 120 acres. Further expansion of additional acreage is available and could be licensed by the company should the demand arise.

The company plans to grow the first 80-acre crop of their proprietary CLC cultivars in 2024 at the new site, with expansion to 100 acres planned for 2025.

In January, Christina Lake Cannabis also repaid its Canada Emergency Business Account loan in full. Because the loan was repaid before the January 18, 2024 deadline, $10,000 of the original $40,000 interest-free loan was forgiven.

High Tide reports increase in retail footprint, revenue

Written by Sarah Clark on June 13, 2024. Posted in Financials.

High Tide Inc. reports a 5% year-over-year increase in revenue and a 175% year-over-year increase in income in its most recent quarterly report.

The company behind Canada’s largest non-franchised retail cannabis chain brought in $124.3 million in revenue in the three months ending April 30, 2024, up from $118.1 million in the same period in 2023, but down slightly from the $128.1 million in revenue from the first three months of 2024.

High Tide’s net income for the second quarter of 2024 was $171,000, an improvement from a $5,000 loss in the previous quarter and a $1.6 million loss in Q2 2023. The Company is free cash flow positive for the fourth consecutive quarter, ending with a free cash flow of $9.4 million.

High Tide attributes its 5% year-over-year growth in revenue largely to the continued increase in cannabis stores under its control, as well as growth in same-store sales. This growth is partially offset by the increase/decrease in data analytics and e-commerce revenues. The company operated 168 cannabis stores in the second quarter of 2024, primarily under its Canna Cabana brand.

Revenue from sales of cannabis products in Q2 2024 was $108 million, another $7.3 million was from consumption accessories, and just under $9 million was from its data analytics service “Cabanalytics,” as well as advertising and “other revenue.”

The Cabanalytics Business Data and Insights Platform is billed as giving subscribers access to High Tide’s monthly report of anonymized consumer purchase data with a stated goal of helping retailers with “forecasting and planning their future product decisions and implementing appropriate marketing initiatives.”

High Tide’s CEO, Raj Grover, says the company still holds its position as the highest revenue-generating cannabis company reporting in Canadian dollars.

“I am thrilled to report that in an environment where many cannabis companies, including some of our retail competitors, have been forced to seek bankruptcy protection, our team has been able to deliver positive net income in Q2, while also generating record-breaking free cash flow. In fact, over the past four quarters, we have generated $22.7 million in free cash flow, fueling our strong organic growth. We accomplished this despite Q2 being a seasonally slower quarter with two fewer days, as we tightly managed our G&A while also rapidly growing our store count and increasing our Canadian retail market share to 10.9%.”

Retail chain Four20 files NOI under Bankruptcy and Insolvency Act

Written by Sarah Clark on June 3, 2024. Posted in Business, Cannabis News, Financials, Retail.

The parent companies of cannabis retail chain Four20 Premium Markets filed a notice of intent to make a proposal under the Bankruptcy and Insolvency Act on May 29.

The parent companies, 420 Premium Markets Ltd., 420 Investments Ltd., and Green Rock Cannabis (EC1) Ltd., filed the notices of intent following a $9.8 million judgment against 420 for repayment of a bridge loan and related interest and costs to Tilray subsidiary High Park Shops Inc. High Park was created for the purpose of the acquisition of Four20.

Tilray had initiated litigation against 420 after a failed attempt by Tilray to purchase 420 for approximately $110 million in 2019.

At the time, Four20 had six licensed cannabis retail locations and another 16 locations secured in Alberta. The retailer currently lists 35 locations in Alberta and Ontario.

Four20 then filed a statement of claim against Tilray in 2020 in an Alberta court for $110 million plus $20 million in damages after Tilray chose to end its deal to buy the retailer, with Four20 saying the BC-based cannabis producer had not acted in good faith.

According to court documents, High Park then filed a Counterclaim on March 20, 2020, in relation to a loan advanced in connection with the Arrangement. High Park had advanced $5 million to Four20 under the Loan on August 29, 2019, and a further $2 million on November 29, 2019.

On April 14, 2020, Four20 defended the Counterclaim, arguing that the money advanced to it under the loan agreement was not due because High Park’s and Tilray’s alleged notices of termination of the agreement were invalid.

High Park filed an application for summary judgment in relation to the loan on March 2, 2023. On February 7, 2024, a court granted High Park summary judgment against Four20 on its counterclaim for $7 million plus interest.

The Applications Judge then dismissed Four20s application for an interim stay of the Judgment on March 22, 2024, pending the determination of an appeal on the merits, with Four20 arguing that Tilray had “buyer’s remorse” and felt they had overpaid for the retail chain.

That appeal was dismissed in April 2024, with the judge finding that Four20 had not demonstrated that it would suffer irreparable harm. In that case, the judge wrote, “There is no dispute that Four20 received the Loan proceeds of $7,000,000 and has used those funds to build out its retail store network. Four20 asserts that paying back the funds it borrowed, pending appeal of the Judgment, would be a greater harm than High Park going without the funds that it lent Four20 under the Loan. I disagree.”

AgriCann continues to struggle

Written by Sarah Clark on May 30, 2024. Posted in Financials.

AgriCann Solutions Corp. provided an update to shareholders, noting that its wholly owned subsidiary, Newline Ventures Inc., a micro cultivator and processor located in Vernon, BC, continues as a “bare-bones operation” as existing inventory is being sold off.

AgriCann remains under a “Cease Trade Order” (“CTO”) issued by the BC Securities Commission. The company also operates Craft Nurseries Canada Ltd., a cannabis nursery located in Lake Country, British Columbia.

In April, AgriCann said it would be shutting down new cultivation for a three-month period, “given the buildup of inventory and disruptions at the leadership level,” to allow for “a re-assignment and rationalization of core personnel and to facilitate the processing of harvested flower and related packaging and refocus on developing sales and retail store relations.”

A consultant hired in April at Newline left early without providing recommendations to the board. In February, the company’s CFO resigned, and the accountant brought in at the Newline facility to assume their duties is said to have failed to complete the company’s expected December 31, 2023 Q3 consolidated reporting obligations. The CFO did update Newline’s bookkeeping.

The Company anticipates that it will not have the necessary resources to engage an auditor for its March 31, 2024, fiscal year annual audit, typically a $50,000 engagement demanding upfront payment under the circumstances.

In December 2023, AgriCann’s CEO also stepped down. They had been acting as an RPIC. Founding director and former COO Tim Tombe immediately assumed an interim CEO position.

AgriCann also says that its sales in the Ontario market have entirely shut down since Newline fell behind on excise payments.

In April, the company wrote: “In hindsight, the Company’s long-term growth aspirations as executed over 2023 sacrificed the achievement of steady-state production, revenue and expense coverage. The resulting cash burn became increasingly unfinanceable, given projections regularly missed and goalposts extended. The lengthy Newline acquisition closing delay encountered was a complicating factor. Last-minute cash calls were used to compensate. Simply put, operations required a substantially greater financial commitment than envisioned, which the Company could not effectively raise without key shareholder support. Meanwhile, the cannabis sector was experiencing its own challenges and dislocation, with significant investor distress and aversion.”

For the six months ended September 30, 2023, AgriCann reported a net loss from operations of $837,520 and revenue of $3,118.

Shiny Bud files notice of intention to make a proposal under Bankruptcy and Insolvency Act

Written by Sarah Clark on May 28, 2024. Posted in Cannabis News, Ontario, Retail.

The parent company of Shiny Bud, a cannabis retail chain in Ontario, announced it has filed a Notice of Intention to make a proposal pursuant to the provisions of the Bankruptcy and Insolvency Act.

The parent company, Shiny Health & Wellness Corp., emphasizes that it is not bankrupt. Instead, it says the primary purpose of the Notice of Intention (NOI) filing is to “create a stabilized environment for the Company and its financial advisors to run an orderly and flexible sale, investment and solicitation process (“SISP”) with the goal of identifying one or more interested parties that wish to acquire or make an investment in the Company’s business or all or some of its assets.”

Shiny Bud says it currently operates 20 locations in Ontario. On May 16th, the company announced it had temporarily closed five of its retail cannabis stores effective immediately. It had previously closed another three locations and opened one since October 31, 2023. Its website currently lists 36 locations. The AGCO lists 37 locations as authorized to open.

If the agreement is approved, Shiny Health believes it has enough resources to fund its operations during the SISP, and its stores will remain open for business during that time. This would be subject to any restructuring steps the company may take during this process.

It expects that its 20 licensee stores will not be impacted by the NOI and will be able to continue to use the Shiny Bud brand in accordance with the licence agreements.

Due to the NOI filings and other “financial resource constraints,” Shiny Health says it does not expect to file its annual financial statements and accompanying management’s discussion and analysis for the fiscal year ended January 31, 2024, by the prescribed deadline of May 30, 2024.

In addition to its retail cannabis stores, Shiny Health also owns one pharmacy in Ontario, initially intending to create a chain of pharmacies that would provide access to cannabis, as well. A recent report proposed allowing sales of medical cannabis through pharmacies in Canada.

As of October 31, 2023, Shiny Health had cash of $239,817, liabilities that exceeded current assets by $7.4 million, an accumulated deficit of $26.7 million, and a shareholders’ deficit of $5.1 million.

“The current negative working capital deficit indicates the existence of material uncertainties that may cast significant doubt on the company’s ability to continue as a going concern,” says its most recent report for 2023. “Management’s view is that the success of the Company is dependent upon its ability to generate sufficient positive cash flow from its total operations to cover all its costs, including overhead and public company costs and obtaining financing through a combination of equity and additional debt where possible for working capital, debt service and to sustain its operations until positive overall cash flow is achieved.”

For the three months ended October 31, 2023, Shiny Health had $4.3 million in revenue, with a loss of $752,594 and a net comprehensive loss of $5.9 million.

In the same period, it brought in $3.6 million in revenue from its retail cannabis operations, $220,849 from its “data program,” and $346,828 from its pharmacy. This represented about a 45% decline in revenue for its retail cannabis operations and data program from the same period in 2022.

For the nine months ended October 31, 2023, retail cannabis operations brought in $14.8 million, a 30% decline from the same period in 2022 and $852,450 from its data program, down 33% from the same period in 2022.

The company blames the decrease in cannabis sales and data program revenue on the market conditions in Ontario and the closure of some of its stores.

Simply Solventless reports seventh consecutive quarter of positive EBITDA

Written by Sarah Clark on May 27, 2024. Posted in Financials.

Simply Solventless Concentrates (SSC) brought in $502,536 in net revenue in the first three months of 2024 from gross revenue of $3.1 million and net revenue after taxes of $2.3 million.

The Alberta-based company is behind cannabis brands Astrolab, Frootyhooty and the recently acquired Lamplighter, all available in Alberta, Ontario, and Saskatchewan with infused pre-rolls and vapes. Simply Solventless acquired Lamplighter on January 17, 2024. The company is looking to enter Manitoba and hopes to enter BC soon.

SSC says it has been experiencing rapid revenue growth, with average gross revenue of approximately $233,281 per month in 2022, around $581,117 per month in 2023, and $1,033,334 per month in the first three months (Q1) of 2024.

Excise tax on the $3.1 million in gross revenue for the first three months of 2024 was $823,959. The cost of goods sold in the net revenue of $2.3 million was nearly $1.2 million for a gross profit of $1.1 million. Adjusted EBITDA for Q1 2024 was $611,571. The company has reported positive adjusted EBITDA for the past seven quarters.

This represents an increase in gross and net revenue for the company compared to Q1 2023. However, the company reported lower gross profit and net income than in the same period, as excise taxes were not listed as remitted in Q1 2023.

Net and comprehensive income was $502,536 in Q1 2024, compared to $758,828 in Q1 2023 and a loss of $1 million in Q3 2023.

Salaries and wages also increased significantly in the most recent quarter (246%) compared to the similar period of 2023 due to a higher number of employees in sales and management roles.

SSC lists $9.5 million in raw material and processed intermediates in its inventory as of March 31, 2024, compared to $7.7 million as of December 31, 2023. The company says this increase is due to its acquisition of Lamplighter and in preparation for increased sales volumes.

As of March 31, 2024, SSC had a working capital surplus of $4.3 million, up from $3.7 million as of December 31, 2023.

“What we want to do is we want to bring solventless products to larger markets. And the largest markets in cannabis right now are infused pre rolls, vapes, and its predominantly flavoured distillate.”

Indiva reports strong edibles sales, net loss of $1.8 million in Q1 2024

Written by Sarah Clark on May 23, 2024. Posted in Financials.

Indiva reported a net loss of $1.8 million from $9.3 million in net revenue in the first three months of 2024 as the Ontario producer maintained its market position as top edibles sales in several major provinces.

The company’s gross and net revenue increased from the same reporting period in 2023, while its net loss decreased by 27% year-over-year.

Indiva holds the top market share in the edibles category in BC, Alberta, and Ontario with the sales of its Pearls by Grön gummies, No Future gummies, Bhang Chocolate, 1432 Chocolate, and Doppio Sandwich Cookies.

The company’s net revenue in Q1 2024 of $9.3 million was a 14.1% sequential decrease from Q4 2023 and a 0.9% decrease year-over-year from Q1 2023.

While edibles sales were driven by its Pearls brand, which saw net revenue grow by more than 160% year-over-year, revenues were tempered by an 85% decline in year-over-year sales of its Wana Sour Gummies line of products, as well as the loss of revenue from its lozenges, which Health Canada determined were not compliant in the edibles category.

Indiva says the loss of revenue from this latter product category being removed from shelves reduced net revenue in Q1 2024 by more than $1.3 million compared to the same quarter in 2023.

Net revenue from edible products was the majority (89.7%) of Indiva’s revenue at $8.4 million in Q1 2024, up 14.5% from $7.3 million in the same period in 2023.

Gross profit increased by 18% to $2.8 million, 29.7% of net revenue, compared to $2.3 million or 24.8% of net revenue in Q1 2023.

The company sold products containing 186 million milligrams of cannabinoids in the first three months of 2024, a 14.7% decrease when compared to the 218 million milligrams in product sold in Q4 2023, but a 66.3% increase from the 112 million milligrams sold in Q1 2023.

EBITDA was a loss of $0.2 million in the quarter. In comparison, adjusted EBITDA decreased to a profit of $0.1 million in Q1 2024, compared to a profit of $1.5 million in Q4 2023, and a profit of $0.4 million in Q1 2023.

Indiva’s Blips products, which come in 25 and 55 pack options, have somewhat replaced sales of the company’s lozenges line, offering consumers tablets of 10 mg THC per serving. The company launched its 55-pack to its existing 25-pack of these tablets in Alberta and British Columbia, and expects them to hit Ontario in June 2024.

Indiva also expanded its offering of Indiva Blips Tablets with two additional new 20-count SKUs, one with a cannabinoid ratio of 1:2 THC:CBG that will ship to British Columbia and Alberta in May, and the other with 1:1 THC:CBD, which will also ship to Alberta in May.

In April 2024, Indiva repaid $2 million of the principal amount outstanding from a strategic investment of $22 million provided by cannabis company SNDL.

The Company expects that it will need to raise additional financing in the form of debt and/or equity to continue funding its operations, as well as its convertible debenture repayments and capital expenditures.

The Company also expects its Q2 2024 net revenue to be higher on a sequential basis and year-over-year, exceeding $10 million. This is partly based on record net revenue in April 2024, driven by sales of its Pearls gummies, as well as its No Future gummies and Indiva Blips tablets. It also expects margins to improve sequentially in Q2 2024 due to higher sales, improved product mix, and improved overhead absorption. The company also expects record net revenue for fiscal year 2024.

“We are very pleased with our performance in the first quarter of 2024, our seasonally weakest quarter,” said Niel Marotta, President and Chief Executive Officer of Indiva. “Indiva’s business has transformed in the last year, as greater than 50% of our net revenue, specifically the revenue from Wana which has declined due to the transition to contract manufacturing, and the elimination of revenue from lozenges, has been replaced in the last 12 months.

“Now that these difficult cross currents have subsided, Indiva is positioned to demonstrate sustainable organic growth in its core brands without fighting against the loss of revenue from Wana and lozenges. Growth in our core brands, namely Pearls gummies, where depletions in the big three provinces have more than doubled year-over-year, and the continued growth of the No Future and Blips brands, more than offset the loss of net revenue caused by the movement to contract manufacturing of Wana and the discontinuation of lozenges caused by regulatory requirements. Greater than 30% of our net revenue in Q1 2024 was derived from brands created and owned by Indiva, including Indiva 1432 Chocolate, Indiva Blips tablets, Indiva Doppio Sandwich Cookies, and No Future Gummies and Vapes, up from 20% of net revenue in Q1 2023. Indiva remains committed to product innovation that will support both industry and edible category growth and we have a robust pipeline of new products across No Future, Pearls and Indiva Blips brands which will hit market between June and September of 2024.”

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