Investor Ideas #Potcasts; #Cannabis News and #Stocks on the Move: (TSX: $AVCN.TO) (TSX: $TGOD.TO) (TSX: $WEED.TO) (NYSE: $CGC) (CSE: $HITI.C) (TSXV: $META.V) (CSE: $ISH.C)
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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