Investor Ideas #Potcasts; #Cannabis News and #Stocks on the Move: (TSX:
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Delta, Kelowna, BC –October 18, 2019 (Investorideas.com
Newswire) www.Investorideas.com, a global news source covering leading sectors
including marijuana and hemp stocks and its potcast site, www.potcasts.ca release today’s edition of Investorideas.com potcastsCM -
cannabis news and stocks to watch plus insight from thought leaders and
experts.
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Good afternoon and welcome to another episode of
Investorideas.com "Potcast" featuring cannabis news, stocks to watch
as well as insights from thought leaders and experts
In today’s
podcast we look at a few of today’s early announcements as well as the Canadian
retail market one year after federal legalization.
Avicanna Inc. (TSX: AVCN) (OTCQX: AVCNF) announced that Santa Marta Golden Hemp S.A.S.
("SMGH"), a majority owned
subsidiary of the Company, has obtained a United States Department of
Agriculture National Organic Program certification from Control Union
Certifications, for its hemp cultivar, and has obtained registration for an
additional 15 genetic strains of cannabis.
Receipt
of a NOP certification from the USDA for the cultivation of hemp
(non-psychoactive cannabis) makes SMGH the first producer to receive this
certification in Colombia. As a result, SMGH's organic cultivation practices
are now validated by the USDA, which positions the Company to provide certified
organic hemp derivatives for use in supplements and food products produced or
shipped to the United States. The USDA protects consumers by allowing certified
growers to use the USDA organic logo on products that are grown without the use
of synthetic fertilizers, pesticides or herbicides. Any products intended for
medical purposes coming from this organic cultivated hemp are outside of the
scope of this certificate and cannot be commercialized as "organic".
Aras
Azadian, the Company's Chief Executive Officer, stated, "Receiving the
USDA NOP certification marks a significant milestone in our commitment to help
set the highest quality standards in organic and sustainable cannabis
cultivation, as we take another step forward towards becoming a global leader
in the CBD industry. We expect this achievement to facilitate our growth
strategy, which includes the expansion of both our plant-derived active pharmaceutical
ingredients and bulk CBD formulations, as well as our branded lines of finished
derma-cosmetics and phyto-therapeutic products into the U.S. and European
markets where the USDA certification is a premium differentiator for those
product categories that allow hemp to be certified as organic."
The Green Organic
Dutchman Holdings Ltd. (TSX:TGOD) (OTC:TGODF) unveiled a new strategic plan, including a series
of actions to reduce the Company's financing requirements while maintaining its
path to profitability. These actions
will result in increased agility, lower capital requirements and an optimal
production capacity to serve the organic segment.
"These
actions are logical next steps in TGOD's road to profitability. While we are committed to – and our strategy
continues to leverage – our unparalleled scale as an organic producer as well
as our international assets, we have identified areas where our scale would not
provide for meaningful returns in the near term given the slower pace of legal
market conversion. We will optimize our
operating efficiency by deferring excess capacity and expenses, whether they center
on production facilities, international expansion projects or technology,"
commented Brian Athaide, CEO of TGOD.
Given
current market conditions, the Company is adopting a new construction and
operating plan to reduce its cash needs, with a prudent production ramp leading
to expected positive operating cash flow in Q2 2020. The Ancaster greenhouse is complete, and the
Ancaster processing facility is approximately five weeks from material
completion. TGOD's large scale project in Valleyfield, Quebec will be
demarcated into smaller phases, with more to be completed once the market
further develops. The combined facilities will enable TGOD to produce 20,000 kg
to 22,000 kg in 2020.
The
Company estimates that it will need approximately $70M to $80M between now and
the end of Q2 2020 to undertake the plan and reach positive operational cash
flow by Q2 2020; it has engaged with an advisor and is currently evaluating a
variety of options to secure the required funding. This plan maintains the optionality to
recommence completion of Valleyfield Phase 1a to full 65,000 kg capacity and
Phase 1b for a further 65,000 kg once there is a clear path to Canadian retail
store expansions and legal revenue growth. Funding is expected to come from
operating cash flow or with lower cost financing given proven production and
revenue from Ancaster and the smaller first phase of Valleyfield.
"With
the current Canadian legal market being smaller than initially anticipated,
mainly due to a slow rollout of retail locations in key provinces, we believe
that our revised plan will allow TGOD to right size its production to capture
the organic segment, while maintaining optionality to quickly accelerate and
expand as more retail locations begin to open," added Athaide.
Right
now there are roughly 500 licensed cannabis providers authorized to sell
cannabis, though few are up and running, compared with the approximately 100
shops that opened on legalization day last year.
Alberta
has been leading the way with more than 300 licensed private cannabis providers
for just 4.37 million people.
Ontario,
with 14.57 million people or 40 per cent of the nation’s population, has just
24 stores, but the government is in the process of increasing that number to
75.
According
to one article, “In July, the latest numbers available,
pot retail sales were $104.4 million, surpassing the $100 million mark for the
first time, with Ontario as the largest contributor with $29.6 million with
just two dozen bricks-and-mortar outlets. British Columbians have bought just
$25 million worth of legal pot since legalization, less than the far smaller
provinces of New Brunswick and Saskatchewan, at $29.3 million and $44.5
million, respectively.”
The
article continued, “For retailers lucky enough to open a store in Ontario, the
slow rollout has been a boon. Alcanna signed a licence agreement with a lottery
winner who opened a store in downtown Toronto. The Queen Street store is
averaging $450,000 in sales a week, more than double its busiest stores in
Edmonton and more than six or seven times the average store, Alcanna’s Burns
said.”
Below
is a look at some of the Canadian retail providers and the number of stores
opened so far.
Canopy Growth
Corporation (TSX: WEED) (NYSE: CGC) launched its 27th retail location and
introduce customers in Brandon, Manitoba to its second location, conveniently
located in Brandon's Corral Centre.
"Retail
presence is a key driver of brand recognition in a competitive market,"
said Rade Kovacevic, President, Canopy Growth. "With twenty-seven
locations already open and many more in the works we are confident we're
establishing a national presence that can pay dividends for years to
come."
The
province of Manitoba has effectively rolled out their retail strategy and has
ensured that the brands Canadians know and trust are easily accessible within
each community. As we have seen, having physical retail locations has proven to
be the most effective way to build brand loyalty by creating reliable
educational hubs, supplied with high-quality, regulated products.
Tokyo
Smoke, Canada's award-winning and design-focused cannabis retailer is now
present across two provinces, while Canopy's second retail banner, Tweed, is
located across four provinces. With 27 retail stores either owned or licensed,
Canopy's retail banners represent the 4th largest cannabis retail
network in Canada.
The
Tokyo Smoke store team looks forward to meeting its neighbours and creating a
hub for adult recreational cannabis education and culture. The company is
committed to building on its retail presence to drive brand awareness and
continue to offer consumers convenient access to quality cannabis products,
while combatting the black market through an effective retail structure.
Fire & Flower
Holdings Corp. (TSX: FAF) announced that its wholly-owned subsidiary, Fire
& Flower Inc. has closed the transaction previously announced on July 22,
2019 to acquire all of the shares of a licensed retail cannabis operator in
Regina, Saskatchewan from Mera Cannabis Corp.
Fire
& Flower's Regina store will re-open today, on Friday, October 18 at 10:00
am local time, and is located at 680 E Victoria Avenue. Fire & Flower
welcomes members of the community and local media to attend the grand opening
of the location on Friday morning.
"We
are very pleased to be opening a Fire & Flower location in the key urban
market or Regina and this store continues to strengthen our position within the
Saskatchewan market," shared Trevor Fencott, Fire & Flower's Chief
Executive Officer. "Saskatchewan continues to be a key market for Fire
& Flower because of our ability to buy directly and efficiently from
licensed producers through our wholesale business, Open Fields Distribution.
This province provides a test market for cannabis products through the HifyreTM
digital cannabis retail and analytics platform."
High Tide Inc. (CSE:HITI) (OTCQB:HITIF)
recently announced that
the KushBar retail store located in Unit #7 at 8807 100th Street in Morinville
received its first delivery of cannabis products from Alberta Gaming, Liquor
and Cannabis and will begin selling recreational cannabis products and
accessories. To celebrate the grand opening of this location, festivities will
take place at the KushBar Store on Saturday, October 19th.
High
Tide currently has 26 branded locations selling recreational cannabis products
across Canada, inclusive of the KushBar Store. "Based on the early success
of the first KushBar store opened in Camrose last month, we are excited to
continue opening more locations across Alberta and bringing this modern retail
experience to new customers," said Raj Grover, President and Chief
Executive Officer of High Tide. "Located just north of Edmonton,
Morinville is a growing community and holds a unique place in the province. We
look forward to being part of the community for the long term," added Mr.
Grover. The Company will soon have 30 branded retail cannabis locations across
Canada, barring any changes to the current rate of licensing by AGLC.
The
development permits for the remaining Canna Cabana and KushBar stores needed to
achieve the AGLC's maximum of 42 are secured and in-hand, with each location
currently under various stages of development and construction. Outside of
Alberta, High Tide currently has a Canna Cabana retail cannabis store in Swift
Current, Saskatchewan, along with 3 branded locations in Hamilton, Sudbury and
Toronto, Ontario.
Inner Spirit
Holdings Ltd. (CSE:ISH), recently announced an October 10, 2019 opening for its newest
franchise retail cannabis store in Southeast Calgary's Penbrooke community and
also that it has received cannabis retail store licences from Alberta Gaming,
Liquor and Cannabis for a franchise location in Sexsmith, Alberta and from the
British Columbia Liquor and Cannabis Regulation Branch for a franchise location
in West Kelowna, British Columbia.
The
Company also announced that its subsidiary, Spirit Leaf Inc., has terminated
two Exclusivity Agreements in Ontario previously announced on August 28, 2019
as the lottery-winning individuals are no longer pursuing licences to operate
retail recreational cannabis stores in the province.
"We
are very pleased to be opening our 35th Spiritleaf operating
location in Calgary's Penbrooke community and adding to our presence in
northern Alberta with Sexsmith and in British Columbia's Okanagan region with
West Kelowna. We remain very interested in making further investments in the
Ontario market and will be relying on AGCO and the Ontario government to
continue on their path to providing certainty for the cannabis industry and
specifically for retailers. Our retail cannabis store in Kingston was one of
Ontario's first outlets to open this year and has enjoyed significant operating
success to this point," said Darren Bondar, President and CEO of Inner
Spirit.
The
Spiritleaf retail cannabis store network includes locations in Alberta, British
Columbia, Saskatchewan and Ontario. Spiritleaf is poised to have 35 retail
cannabis stores open and operating this week with more than 40 projected to be
open by the end of 2019.
Bondar
noted that the Spiritleaf brand has more than 20 franchise partners in Ontario
currently waiting for opportunities to open their retail cannabis stores in the
province to serve customers in their local communities.
National
Access Cannabis Corp. (TSXV: META), Canada's largest publicly traded
cannabis retailerii, recently provided investors with a
corporate and retail sales update.
The Company is successfully executing on its growth strategy and has achieved
over $60 million in retail sales since legalization, with cumulative gross
margin of 32%. The Company is targeting to have 40 operating stores by the end
of calendar 2019.
"NAC is already one of the highest
revenue generators in the Canadian cannabis space and by revenue, is the
largest publicly traded recreational cannabis retailer in the countryii.
In a highly regulated market like Canada , we view owning retail shelf space
and the data gleaned from millions of customer interactions as a pipeline to
accessing customers and developing long-term brands and loyalty," said
Mark Goliger , CEO of NAC. "With one of the largest and most visible
networks of retail storefronts across Canada and a proven track record of
repeat customers, NAC is well-positioned to continue playing a pivotal role in
the growing industry. I am proud of our team for bringing us to over $60
million since federal legalization and for generating positive and growing
Adjusted EBITDA on a retail basis, all while significantly expanding our store
network."
Mr. Goliger added, "As the cannabis
industry continues to evolve, and the introduction of new products is on the
horizon, NAC has a well-defined growth roadmap focused on building shareholder
value. We are focused on building value for shareholders as our team continues
to drive performance from existing stores, introduces enhanced store concepts
and executes on a robust pipeline of new store locations. We believe that
retail is the most strategic segment of the cannabis value chain, as it is the
retailers who are able to interact directly with clients and influence their
purchasing decisions, it is the retailers who have access to data associated
with millions of customer transactions, and it is the retailers who make the
decision as to what products to sell."
The Company's current portfolio of 35
licensed locations is split as follows:
● 25 NewLeaf Cannabis™ stores in Alberta
● 9 Meta Cannabis Supply Co.™ stores in
Manitoba
● 1 Meta Cannabis Supply Co.™ store in
Saskatchewan
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