You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
Friends,
What a week! For those watching the Canadian cannabis market develop, this was a week to watch and possibly to have taken action. Large Canadian LP stock prices melted and the financial reports fell short of expectations.
We continue to view Canopy Growth and Tilray’s futures as challenged. Both companies need to greatly boost profitability and their recent quarterly reports added to our concerns. Aurora Cannabis fell 42% just this past week, but its outsized decline was related to an equity offering that left the company looking a lot more attractive (cash up, high vs. cash burn level). We took no action, but the dynamics favor Aurora Cannabis in our view.
Exclusive Interviews
It has been about five years since Treez, a cloud point-of-sale and commerce platform serving the cannabis industry, was launched. The core of its platform is a point-of-sale offering. However, it also offers inventory management, integrated payment solutions, data analytics and sales fulfillment tools. New Cannabis Ventures interviewed Treez co-founder and CEO John Yang about how the company’s platform works, its growing market reach and the recent Series C round.
Statistics Canada reported March retail sales increased 10.7% sequentially to C$358.8 million. Sales were up 20% from a year ago, down from the 24% February growth rate. An increase in the number of stores, as well as falling flower prices that bring consumers from the illicit market, are being attributed to the sales boost.
In The News
The Boston Beer Company, maker of Samuel Adams, Truly Hard Seltzer and Twisted Tea, announced the launch of TeaPot, which will be available in select Canadian provinces in July. The first release is a Good Day Iced Tea, made with real lemon black tea and infused with Pedro’s Sweet Sativa, a unique cultivar which is grown in Strathroy, Ontario by licensed producer Entourage Health Corp. and sold exclusively under its retail brand Color Cannabis.
The New Jersey Cannabis Regulatory Commission has given Ayr Wellness the green light to start adult-use cannabis sales in the Garden State. Ayr already owns three medical dispensaries in Central New Jersey and all three were cleared for adult use. “New Jersey is expected to become a highly influential state for the U.S. cannabis industry, and we are honored to help shape the market landscape from its early stages,” said Jonathan Sandelman, founder, chairman and CEO of Ayr. This week, Ayr Wellness also announced closing on acquisition of Herbal Remedies Dispensaries, LLC.
Aurora announced that it raised $125 million at $2.45 via a bought deal which is a 76% discount to their last bought deal a little more than a year ago. The agreement was with a syndicate of underwriters led by Canaccord Genuity and BMO Capital Markets. The following day the company amended its terms and announced the deal was boosted by another $25 million for a total of $150 million. The net proceeds of the offering will be used for general corporate purposes according to the company.
Harborside will be transitioning to StateHouse Holdings in June 2022
Get up to speed by visiting the Harborside Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.
Earnings Recap
Decibel Q1 revenue rose 19% sequentially and 32% year-over-year to C$16.7 million. The company said growth was driven by the launch of its new infused pre-roll lines and continued growth in demand for flower, vape and concentrate products, despite Q1 historically being a seasonally weak period.
4Front Ventures Q1 revenue declined 8% sequentially to $26.1 million, but grew 13% from a year ago. The company’s CEO Leo Gontmakher said business changed during the first quarter as a result of investments and efficiencies made in the last 18 months to meet its long-term strategic goals. “We now have a fully-capitalized infrastructure in place to drive robust growth through this year and well into the future,” Gontmakher said. At the end of January, 4Front closed on the purchase of New England Cannabis Corporation. The transaction more than doubled the company’s total flower canopy in Massachusetts to more than 30,000 sq. ft., with expansion potential for an additional 10,000 sq. ft.
Ayr Wellness Q1 revenue was unchanged sequentially at $111.2 million, though up 90% year-over-year. The company’s founder, chairman and CEO noted, “We have made excellent progress this year to complete major capex projects and receive regulatory approvals across our footprint.” The company is now looking forward to unlocking revenue streams with the start of adult use sales in New Jersey and Boston next month.
Verano Q1 revenue slipped 4% sequentially to $202.2 million. However, revenue increased 67% compared to the first quarter 2021 when it was $120.9 million. The company’s founder and CEO George Archos said, “We remain focused on execution, evidenced by our continued retail footprint expansion, where we added seven locations in the first quarter, including our first Zen Leaf dispensary in West Virginia.” In January, Verano announced the acquisition of Goodness Growth Holdings in order to establish a strong foundation in the attractive markets of New York, Minnesota and New Mexico.
Jushi Q1 revenue fell 6% sequentially to $61.9 million, but increased year over year by 49%, up from $41.7 million. Jim Cacioppo, founder and CEO, noted that while taking steps to manage their costs, the company is invested in building out their store base, expanding cultivation and processing facilities in Pennsylvania and Virginia, scaling the wholesale channel in MA, PA & VA and integrating two recently acquired businesses in Nevada (NuLeaf and Apothecarium Dispensary).
Humble & Fume Q3 revenue dipped 4% sequentially and 13% year-over-year to C$16.1 million. The company’s CEO Joel Toguri said they are “laser focused” on cost cutting, optimizing the business and improving the end-to-end customer service experience as Humble executes its strategy to become the leading North American distributor for cannabis and cannabis accessories. Additionally, the company’s rapid expansion into cannabis distribution in California is ahead of schedule and operational.
Harborside Q1 revenue grew 14% sequentially to $17.2 million and increased 39% from prior year. Earnings reflect only one month of contribution from UL Holdings (Urbn Leaf), which the Company acquired on March 1, and no contribution from LPF JV (Loudpack), which it acquired subsequent to quarter-end on April 4. In November, the company announced that following its acquisitions it would be renamed StateHouse Holdings, subject to shareholder and regulatory approval.
Canopy Growth Q4 revenue fell 21% sequentially to C$111.8 million. Year-over-year revenue was down 25%. The company explained that its recreational cannabis sales decreased due to an increase in competition from the rapid amount of third party retail locations across the provinces. CEO David Klein said the company is taking additional initiatives to streamline and drive efficiencies for its global cannabis business.
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Sincerely,
Alan & Joel
info@newcannabisventures.com
