AHGIF - Cannabis Weekly Round-Up: Financial Reports Dominate
During the past trading week (August 26 to 30), a variety of cannabis companies offered a snapshot of the industry with quarterly financial reports.
The decision by a Canadian cannabis producer to enter the infused beverage market industry made headlines, while also new distinguished additions to the US marijuana space caught attention.
Here’s a closer look at some of the biggest news during last week’s trading period.
Quarterly earnings season in full swing
As the Q2 earnings reporting period continues, cannabis companies across the board reported financials to investors and provided insight into the current state of the industry.
On Wednesday (August 28), Green Thumb Industries (GTI) (CSE:GTII,OTCQX:GTBIF), announced it had bump its revenues by 60 percent to US$44.7 million. The jump was credited to the acquisition and operational benefit of the Essence retail line, with key stores in Las Vegas, Nevada. The multi-state operator (MSO) also confirmed its acquisition of Fiorello Pharmaceuticals, one of the only 10 New York licensed medical cannabis producers.
Fellow MSO Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) also indicated higher revenues for its quarter. The company continues to aggressively expand its footprint in the US state marijuana markets. However, the firm reported a net loss for the earnings period of US$24.4 million. Curaleaf attributed the losses partly to acquisition costs and a US$5.8 million depreciation.
Nevada-based marijuana firm Planet 13 Holdings (CSE:PLTH,OTCQB:PLNHF) told the market it nearly represented 10 percent of the total sales across all Nevada dispensaries during its most recent quarter.
Larry Scheffler, co-CEO of the company, said the company is seeing steady growth in its Nevada assets and volume of consumers. The company operates a massive store, called the Cannabis Entertainment Complex, in Las Vegas.
“We’ve had almost 800,000 visitors since we opened with approximately 80 percent coming from outside Nevada proving that if you want to build a national cannabis brand, you need to be in the SuperStore,” Bob Groesbeck, co-CEO, said in a statement.
While some US companies shared flashy results, Cansortium (CSE:TIUM.U,OTCQB:CNTMF) was forced to cut its yearly outlook in half due to delays in its Florida operations.
Cansortium’s CEO Jose Hidalgo said the delays in its phase cultivation site in Tampa Bay lead to the company’s poor results. The executive informed investors the company is now facing a six-month delay for its projections.
The firm had projected its full year 2019 revenue to reach just over US$80 million; now, the company is projecting revenues of US$40 million.
A trio of Canadian cannabis companies also posted quarterly results, including Canopy Rivers (TSXV:RIV,OTC Pink:CNPOF), which posted a net loss of C$2.9 million as its investments continue to expand. Cannabis producers Delta 9 Cannabis (TSXV:DN,OTCQX:VRNDF) and WeedMD (TSXV:WMD,OTCQX:WDDMF) also issued steady results as the two companies continue to see the benefits of adult-use sales in Canada.
Cannabis company unveils beverage efforts to challenge alcohol industry
This past week, Zenabis Global (TSX:ZENA) confirmed its entry into the heavily anticipated cannabis infused beverage market in Canada. The company announced a supply agreement for plain water-soluble cannabis-infused inputs with an undisclosed Canadian beverage technology company.
“Alcohol has had a monopoly on the recreational experience in the market for an incredibly long period of time,” Andrew Grieve, CEO of Zenabis, told INN. “As a result, people have not had an alternative.”
The company is promising a cannabis drink with an onset time, meaning how long it takes for the drink to affect its consumer, of less than five minutes.
“I believe that, if you have a beverage technology with a known onset and offset and limited calories — and the flavor profile that people want — people will choose a cannabis infused-beverage for their recreational experience over an alcoholic beverage,” the Zenabis executive told INN.
Industry welcomes former acting attorney general and Gronk
The short stint of Matthew Whitaker as acting Attorney General for US President Donald Trump ended in February 2019. Now, Whitaker is joining the cannabis industry by way of counselling services to Ontario-based Alternate Health (CSE:AHG,OTCQB:AHGIF).
The company is positioning this announcement as a way to stay ahead of regulations on the US cannabidiol (CBD) market — a market Alternate Health is greatly interested in. Additionally Whitaker and his law firm, Graves Garrett, will be representing the cannabis firm legal affairs against a competitor in California.
“I think there is serious potential in the CBD industry, and everyone at Alternate Health will work hard to be a leader in the industry,” Whitaker said in a statement.
Abacus Health Products (CSE:ABCS,OTCQX:ABAHF) ushered in a new celebrity spokesperson for the CBD industry when it announced former NFL player Rob Gronkowski would join the company through an endorsement deal.
“During my career, I pushed myself while recovering from nine surgeries and countless injuries,” Gronkowski, who played for the New England Patriots for nine seasons, said in a statement. “I was in near constant pain and needed to make a change.”
In a press conference, Gronkowski said he is now living pain-free thanks to CBD products. His new duties will include the marketing for Abacus’ line of hemp-derived CBD products designed for pain relief.
Market updates
After dragging its heels for just over three years — and facing a court deadline — the Drug Enforcement Administration (DEA) announced it will move forward with reviews for applications of companies looking to grow cannabis federally approved for research purposes.
In a joint statement with the Department of Justice, the DEA said it wold propose new policies to monitor the research cannabis grower program before approving any of the waiting applications.
“DEA is making progress in the program to register additional marijuana growers for federally authorized research, and will work with other relevant federal agencies to expedite the necessary next steps,” Uttam Dhillon, the DEA’s acting administrator, said in Monday’s release.
According to a report from the Associated Press, the DEA was given a deadline of Wednesday (August 28) to respond to the court filing after the Scottsdale Research Institute, one of the applicants, filed a court complaint.
Tilray (NASDAQ:TLRY) announced a purchase for its very own retail network in Canada. The company plans to acquire Alberta-based 420 Investments (FOUR20) for C$110 million in an all shares deal.
The Alberta retailer holds six currently open shops in the Western province. Additionally, the company holds licenses for 16 extra stores in Alberta. Tilray indicated the company wants to expand beyond Alberta in the future.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.