Investor
Ideas #Potcasts 646, #Cannabis News and #Stocks on the Move- (NASDAQ: $SNDL) and (NASDAQ: $OGI)
Delta, Kelowna, BC, February 15, 2023
(Investorideas.com Newswire), investorideas.com, a global news source covering leading sectors
including marijuana and hemp stocks and its potcast site release today’s podcast edition of cannabis news and stocks to watch plus insight
from thought leaders and experts.
Listen to the podcast:
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Today’s podcast overview/transcript:
In today’s podcast we look at recent news
regarding continued layoffs in Canada, cannabis bills being put forward in
Texas and California, pre ground bud sales and cannabis in Thailand.
SNDL
Inc. (NASDAQ: SNDL) announced changes to its operations through a
rightsizing of cannabis cultivation in Olds, Alberta, in an effort to focus the
facility on premium products and brands. The Valens Company Inc. transaction
has accelerated the need to optimise and rationalise SNDL's manufacturing and
operational footprint to better address market saturation and oversupply.
"We have made the difficult decision
to materially reduce staffing and activity levels in Olds, Alberta, in order to
improve the efficiency of our operations as one of Canada's largest adult-use
cannabis manufacturers," said Zach George, Chief Executive Officer of
SNDL.
"With the Olds facility already in
operation when I joined SNDL, I am proud of the cultivation capabilities and
high-quality flower that our teams have developed and produced. We estimate
that more than 1 billion grams of flower are sitting in Canadian vaults today.
Oversupply and excess capacity have resulted in high-quality flower being
widely available and sold well below the marginal cost of production. Using
available and existing biomass, we will be better equipped to leverage the
current pricing environment to materially improve our cost of goods sold and
margins. We are taking a proactive approach with our cultivation and
manufacturing strategy to evolve with the market while continuing to deliver
exceptional products across a variety of product and price segments."
SNDL has initiated a headcount reduction of
approximately 85 employees at the Olds facility as a part of a larger phased
cost savings program that is expected to deliver close to $9 million in savings
across labour and operational costs. The cost savings initiatives are expected
to position SNDL to exceed its previously announced integration savings target
as a result of the acquisition of Valens. SNDL expects to complete most of this
transition within the first quarter of 2023, and the cost savings will be
immediately accretive to adjusted EBITDA. The Company expects to report record
net revenue and net cash provided by operating activities for the fourth
quarter of 2022, with the year-end and fourth quarter of 2022 results expected
to be announced at the end of March 2023.
The Company's ongoing focus on high-quality
cannabis cultivation operations, combined with Valens' low-cost biomass
procurement capabilities, will enhance SNDL's ability to offer a wide range of
customised, innovative products to meet customer demand and current market
conditions. SNDL is confident that consumers will not see changes to the
availability and quality of the Company's brands. Through its integration and
rationalisation efforts, the Company is assessing all assets and will continue
to make decisions based on sustainable profitability.
This recent string of layoffs that has
included other LP’s in Canada is being discussed today as the Cannabis Council
of Canada President & CEO, George Smitherman, will be holding a press
conference with several cannabis sector CEOs on Parliament Hill to discuss the
impact recent layoffs and facility closures are having on producers of all
sizes across Canada.
Cannabis legalisation has been a success
for Canadians, as well as for federal, provincial and territorial governments,
but the industry cannot be sustained without urgent action.
Participation in the question and answer
portion of this event is in person or via Zoom, and is for accredited members
of the Press Gallery only. Media who are not members of the Press Gallery may
contact pressres2@parl.gc.ca for temporary access. The event takes place at
11:15am EST today.
In recent news, Texas cities and counties could
legalise recreational marijuana if a new bill passes the state Legislature.
Currently two-thirds of Texans approve of legalising marijuana for recreational
use by people ages 21 and older, according to a recent poll by the Hobby School of Public
Affairs at the University of Houston.
House Bill 1937, filed by Rep. Jessica González,
a Democrat from Dallas, would allow counties and municipalities to make their
own decisions regarding the recreational use of cannabis for Texans ages 21 and
older. This would allow local
governments to take action to allow adults to possess and transport up to 2.5
ounces of marijuana as well as the bill would also impose a 10% tax on all
cannabis products, which would be directed toward cannabis regulation, cannabis
testing, government oversight and funding for schools.
Currently, Republican leaders including
Gov. Greg Abbott and Lt. Gov. Dan Patrick have repeatedly said they don't support legalising
recreational cannabis use.
"While Texas has made progress with
the Compassionate Use Act, we have been left behind on a potential revenue
source that would increase investments in public education, stop unnecessary
arrests for cannabis possession, and create jobs in our state," González
said in a statement.
It should be noted that González filed a similar bill in 2021, but it didn't get to a
vote and there is speculation that even if this bill gets voted on and passes,
it's not likely that Abbott would sign it.
In other news over in California, there is a new
proposed bill aimed at changing the landscape of cannabis use in California.
The legislation put forward this month by
Assemblyman Matt Haney (D-San Francisco) would legalise the sale of food and
nonalcoholic beverages at cannabis retailers and lounges.
“It’s not unlike a neighbourhood bar or
cafe where people gather and get a lot of social value [out] of that,” Haney
said. “We allow in many places, on-site consumption of cannabis, but they’re
pretty sad places right now because you can’t eat or drink.”
Alcohol would not be allowed at the
“cannabis cafes” under Assembly Bill 374, Haney noted.
If passed, the bill and its counterpart
introduced in the state Senate would allow localities and cities to permit the
consumption of food and drink at cannabis retailers. The state would not force
the new regulations on municipalities, Haney said. Haney’s bill would also
allow cannabis cafes to host live performances and sell tickets to the events.
Haney said he has spoken with marijuana
retailers from Los Angeles to the Coachella Valley, all of whom say their
businesses must expand to survive.
“If we want this legal industry to survive
in California, we have to change these laws. They’re losing to the illegal
cannabis industry, and one thing that the legal cannabis small business can
offer is an experience,” Haney said. “Cannabis businesses told us that they may
have to close their doors unless the laws change. The regulations that prohibit
them from offering other products like food are a huge burden.”
In a recent article from MJBiz Daily, a growing
number of Canadian cannabis consumers are picking up a trend of buying
pre-ground flower that’s ready to roll into a joint or pack into a pipe or
vaporizer.
Growth in the ground-cannabis segment
appears to be propelled by convenience-seeking, value-conscious consumers,
although the Canadian trend hasn’t reached U.S. cannabis markets.
Although ground flower remains a niche,
value-oriented segment, its growth in Canada over three years merits attention.
At the beginning of 2020, ground-flower
sales were near-zero in the four Canadian provinces tracked by Seattle-based
cannabis analytics firm Headset: Ontario, Alberta, British Columbia and
Saskatchewan. By December 2022, ground flower comprised 7.3% of all flower
sales in the four Headset-monitored provinces, which include Canada’s three
biggest provincial cannabis markets.
“That’s very, very much a significant
portion of the highest-revenue category,” Headset Analytics Manager Cooper
Ashley said.
Organigram
Holding Inc. (NASDAQ:OGI) which has their Shred brand, has
been leading the ground-cannabis segment in the provincial markets tracked by
Headset.
Shred launched in September 2020 as a
ground-cannabis offering, but the brand has since been extended to include
pre-rolled joints, edibles and vapes.
Organigram Holdings’ CEO Beena Goldenberg
said Shred’s core ground-flower product revolves around convenience and
consistency.
Unlike the potential stereotype of
ground-cannabis flower as an industrial byproduct – shake and trim left over
from processing whole cannabis buds – Goldenberg described Shred as deliberate
blends of different cannabis cultivars formulated for specific aroma profiles,
without using added terpenes.
“We have a team of R&D people making
sure that, depending on the input materials, the amount, the mix of the blends
is going to be different so that we always get the same output flavor and
aroma,” she said.
Goldenberg said Shred consumers tell
Organigram they get “the same experience every time – they know what they’re
going to get, they know what to expect from it.”
Lastly, in news from Thailand, the country is
tightening the country's marijuana regulations, issuing new guidance and
measures intended to curb a rapid rise in recreational use of the drug since
its decriminalisation last year.
The topic is likely to be a major issue in
general elections scheduled to happen by May.
The government said last month that showing
identification will be required when buying cannabis flower buds, which are
rich in hallucinogenic compounds. Bangkok aims to incorporate buyer information
into a national database to track and analyse cannabis sales and purchases.
Businesses that fail to comply risk having their sales licence revoked.
Authorities also have intensified
surveillance of dealers, arresting more than 30 people by January in places
like Bangkok and the resort city of Pattaya for selling without a licence,
local media report.
Efforts to prevent abuse by foreign
tourists have also been strengthened. The Public Health Ministry last month
released 10 guidelines for travellers on using marijuana in Thailand, including
conditions for purchasing and growing. The guidelines also warn that people who
smoke marijuana in a public place can be jailed for up to three months or fined
25,000 baht ($740).
The average monthly number of cases
involving impaired consciousness and other issues due to marijuana use has
quadrupled since the legalisation, the health ministry said.
Investor ideas reminds all listeners to
read our disclaimers and disclosures on the Investorideas.com website and that
this podcast is not an endorsement to buy products or services or securities.
Investors are reminded all investment involves risk and possible loss of
investment.
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