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Cannabis Countdown: The Sector’s 10 Biggest Stories For The Week of May 24

10. Gage Growth Corp. Announces Record First Quarter 2021 Results and Provides Business Update

Gage Growth Corp., a leading high-quality cannabis brand and operator in Michigan, reported its financial results for the three months ended March 31, 2021. All currency references used in this press release are in U.S. dollars unless otherwise noted.

  • Record Q1 2021 revenue of $17.6 million, an increase of 219.4% YoY and 67.9% quarter over quarter
  • Ended the quarter with over $43.6 million of cash
  • Gross margins of 26.1% compared to 17.3% in Q4 2020, sequential quarter growth of 880 basis points
  • Eight cultivation facilities in operation today compared to two cultivation facilities in Q1 2020; the Company expects to expand to 13 cultivation facilities by year end
  • Strong average basket size of $158 in the first quarter of 2021

9. HEXO Corp announces acquisition of Redecan to create Canadian market leader in adult-use sales

HEXO Corp. entered into a definitive share purchase agreement to acquire all of the outstanding shares of the entities that carry on the business of Redecan, Canada’s largest privately-owned licensed producer, with leading market share across a number of categories, through the issuance of common shares of HEXO and subject to certain customary adjustments.

Under the terms of the Share Purchase Agreement, the $925 million purchase price will be paid to the Redecan shareholders as follows:

  • $400 million of consideration due on closing paid in cash; and
  • $525 million of consideration due on closing paid through the issuance of HEXO common shares at an implied price per share of $7.53.

8. SLANG Worldwide Announces First Quarter 2021 Financial Results

SLANG Worldwide Inc. released financial results for the three months ended March 31, 2021, stated in Canadian dollars unless otherwise noted.

  • Revenue of $9.9 million in Q1 2021, a 112% increase over Q1 2020
  • Gross margin of 37% in Q1 2021, compared with 33% in Q4 2020
  • Cash and cash equivalents of $12.4 million as of March 31, 2021
  • Strong brand performance, with approximately 747,927 Branded Units sold in Q1 2021 (a 44% increase over Q1 2020)

Excluding California, the Company showed considerable growth. 747,927 Branded Units were sold in Q1 2021, an increase of 44% compared with 520,239 Branded Units sold in Q1 2020; and 56.5 million Branded Servings were sold in Q1 2021, an increase of 23% compared with 46 million Branded Servings sold in Q1 2020.

7. Jushi Holdings Reports First Quarter 2021 Financial Results

Jushi Holdings Inc. announced its first quarter 2021 ended March 31, 2021 financial results. The company also provided an update with respect to the filing of its audited annual financial statements for the year ended December 31, 2020, the related management’s discussion and analysis, related CEO and CFO certificates and annual information form for the year ended December 31, 2020.

  • Total revenue of US$41.7 million, an increase of 29.0% sequentially
  • Gross profit of $20.1 million, an increase of 14.1% sequentially
  • Net loss of $26.1 million, driven primarily by the increase in the derivative warrant liability, interest expense, income tax expense, and losses on debt extinguishment
  • Adjusted EBITDA of $3.0 million
  • $167.9 million of cash and cash equivalents and investments in securities on the balance sheet as of March 31, 2021

__________

TDR: Revenue for Q1 2021 beat the 4-analyst estimate of $40.67 million. This was also the third consecutive quarter of positive Adjusted EBITDA, which leaves no doubt that self-sustained funding is close at hand. As of March 31, 2021, the Company had $167.9 million of cash and short-term investments.

6. Florida medical marijuana rules upheld by Supreme Court

In a setback to companies hoping to enter one of state’s fastest growing industries, the Florida Supreme Court ruled Thursday that state medical marijuana regulations are likely legal.

In a decision released in the case of Florida Department of Health v. Florigrown, LLC, justices found that Florigrown’s challenges to state regulations did not have a “substantial likelihood of success.” It reversed a decision by the First District Court Of Appeal to put those rules on hold.

5. Louisiana Marijuana Decriminalization Bill Advances To Senate Floor, One Step From Governor’s Desk

A bill to decriminalize marijuana possession in Louisiana that already passed the House was approved in a Senate committee on Tuesday, sending it to the full chamber for final passage.

The legislation, sponsored by Rep. Cedric Glover (D), would make it so possession of up to 14 grams of cannabis would be punishable by a $100 fine without the threat of jail time. It cleared the Senate Judiciary C Committee in a 3-2 vote.

If the decriminalization bill is approved on the Senate floor without amendments it will head to the governor’s desk.

4. Cresco Labs Announces First Quarter 2021 Financial Results Under U.S. GAAP

Cresco Labs Inc. announced its financial results for the first quarter ended March 31, 2021. All financial information presented in this release is in U.S. GAAP and U.S. dollars, unless otherwise noted, and all comparisons to prior quarter and prior year are made on an as-converted basis under U.S. GAAP.

First Quarter 2021 Financial Highlights

  • Revenue of $178.4 million, an increase of 9.9% quarter-over-quarter and 168.8% year-over-year
  • Gross profit of $87.0 million, or 48.8% of revenue, an increase of 16.8% quarter-over-quarter and 268.9% year-over-year
  • Adjusted EBITDAof $35.0 million, an increase of 16.5% quarter-over-quarter and 507.2% year-over-year
  • Record net wholesale revenue of $95.6 million, an increase of 5.7% quarter-over-quarter and 150.8% year-over-year
  • Record retail revenue of $82.8 million from 24 stores, an increase of 15.2% quarter-over-quarter and 193.2% year-over-year

Financial Outlook

  • Annualized revenue run-rate of more than $1 billion by the end of 2021
  • Gross profit margins in excess of 50% in the remaining three quarters of 2021
  • Adjusted EBITDA1 margin run-rate of at least 30% by the end of 2021

__________

TDR: Revenue of $178.4 million was dead-on with the 16-analyst estimate of $178.44 million. Analysts were generally glowing in the post-earning and guidance aftermath, with AGP (Buy, $25) and BTIG (Buy, $24) reiterating ratings and price targets. Stifel issued a positive post-earnings note as well. Cresco Labs stock rose ↑5.66% on the day results were announced on Thursday morning and CRLBF tacked-on an additional ↑2.68% to close the week.

3. Ayr Wellness Reports First Quarter 2021 Results

Ayr Wellness Inc. reported financial results for the three months ended March 31, 2021. Unless otherwise noted, all results are presented in U.S. dollars. As of first quarter 2021, the Company is now reporting in US GAAP.

  • Q1 Revenue up 74% Y/Y to $58.4 Million
  • Q1 Adjusted EBITDA of $20.0 million on an IFRS basis; $18.4 million on a US GAAP basis, up 136% Y/Y
  • US GAAP Operating Loss of $8.4 Million Included Non-Cash and One-Time Expenses of $26.5 Million
  • Closed on Acquisition of Liberty Health Sciences, Adding 42 Sited Retail Dispensaries, the Fourth Largest Footprint in Florida
  • Closed on Arizona and Ohio Acquisitions, Bringing Total Footprint to Six States; Seventh State (New Jersey) Expected to Close this Summer
  • Company Provides 2Q21 Guidance for an estimated $90 Million in Revenue, up Over 218% Y/Y and Over 54% Q/Q, with Adjusted EBITDA Margins in the 30% Range

The results of our successful execution thus far can be seen in our April monthly revenues, which have nearly doubled since January. We expect step function growth across Q2, Q3 and especially Q4 2021, with further milestones reached when additional cultivation projects come on-line and we close our New Jersey acquisition later this summer.

Jonathan Sandelman, CEO of Ayr Wellness

The Company is reiterating its target for 2022 revenue of at least $725 million. On a US GAAP-adjusted basis, it is also reiterating its guidance for 2022 Adjusted EBITDA of $300 million, which is comparable to $325 million on an IFRS basis.

2. Minnesota Governor Signs Bill Legalizing Smokable Medical Marijuana

The governor of Minnesota on Tuesday signed a large-scale bill that includes provisions to expand the state’s medical marijuana program, in part by allowing patients to access smokable cannabis products.

Earlier this month, a bicameral conference committee approved the reform, in addition to several other marijuana-related changes, as part of an omnibus health bill. The full House and Senate then took it up and passed it last week—and now Gov. Tim Walz (D) has signed the measure.

This comes after the House approved a bill to legalize marijuana for adult use following 12 committee assignments. That legislation stalled in the GOP-controlled Senate, however.

1. Bill To Federally Legalize Marijuana Reintroduced In Congress As Senate Prepares Separate Measure

A bill to federally legalize marijuana and promote social equity in the industry was reintroduced in the House on Friday.

The legislation, sponsored by Judiciary Committee Chairman Jerrold Nadler (D-NY), was filed with a number of changes compared to the version that was approved by the chamber last year.

The bill—which would remove marijuana from the Controlled Substances Act (CSA), allow people with cannabis convictions to have their records expunged and create a federal tax on marijuana with the revenue going to support community reinvestment and other programs—comes as Senate leadership is preparing to introduce a separate reform proposal with similar objectives

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