Investor Ideas #Potcasts, #Cannabis News and #Stocks on the Move: (NASDAQ: $ACB) (TSX: $ACB.TO) (NASDAQ: $HEXO) (TSX: $HEXO.TO)
Delta, Kelowna, BC, June 16, 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.
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Today’s podcast overview/transcript:
In today’s podcast we go over a few public company announcements, Canadian cannabis and indigenous communities as well as a new potential source for CBD.
In recent news, Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), like many Canadian LP's, has been looking to increase savings after wrapping a transformation plan that delivered at least $400 million in savings over the last three years.
The company announced on Wednesday with its financial reports, that it wants to uncover another $40 million in savings by the end of next March, which marks the end of the company’s fiscal year.
“This incremental reduction puts us squarely on the path to reach our next financial milestone, which is positive free cash flow,” Miguel Martin announced on a call with analysts.
Free cash flow is an indicator of a company’s financial performance because it encapsulates money a company makes after accounting for expenses that support operations.
Profitability has been difficult across Canada’s cannabis industry, where a lack of demand, strict regulations and the strength of the illicit market have hampered the financial performance of most businesses. Many, including Aurora and its rivals, have resorted to layoffs, facility closures and intense evaluations of their product mix to weather such conditions.
Aurora, which has been pursuing sales in several European markets, recently decided to close its Nordic production facility in Denmark and rely on its Canadian facilities to supply the market.
The Canadian facilities have lower per unit costs, higher quality and a much more reliable supply, chief financial officer Glen Ibbott said on the same call as Martin.
“We believe this change, in addition to reduced costs, will allow us to compete even more effectively in the growing European market, where we already have a substantial leadership position,” he said.
Across the entire business this fiscal year, he said Aurora was aiming to take away at least $5 million quarterly as less efficient operations are eliminated and at least another $5 million from cost reduction initiatives.
He also expects the company to save about $2 million per quarter in interest as it pays off the remainder of its convertible debt, which stands at about $80 million. Ibbot said Aurora intends to pay the debt off at the end of this fiscal year.
In a recent article from MJBiz Daily, another Canadian LP, Hexo Corp. (NASDAQ: HEXO) (TSX: HEXO) reported a total net loss before tax of 129.7 million Canadian dollars ($98 million) in the company’s third quarter, bringing accumulated losses since 2016 to more than CA$2 billion. Hexo disclosed plunging revenue while reporting its fiscal third quarter Thursday.
In the February-April period, Hexo’s net sales were CA$21.6 million, down by approximately 50% compared to the same period last year.
In that same quarter, recreational cannabis sold at retail was CA$26.5 million, down 46% from last year., medical sales were CA$647,000, down 28% from last year and International revenue fell 90% compared to last year, to CA$649,000.
The only revenue stream that did not experience a significant year-over-year decline was wholesale transactions. Hexo’s wholesale sales increased 22% over last year’s quarter to CA$4 million.
In a conference call with an analyst, Hexo CEO Charlie Bowman blamed:
● Soft performance in key markets, including Alberta, Ontario and Quebec.
● Fierce competition within the industry.
● SKU rationalization in which Hexo discontinues poorly performing product offerings.
Another reason was that its subsidiary, Zenabis Global filed for bankruptcy protection and was therefore deconsolidated from Hexo’s earnings.
Hexo has not generated positive cash flow or earnings since 2016, the company also disclosed. Also in the third quarter, Hexo said it entered into a definitive agreement for Tilray to acquire all of Hexo’s outstanding shares.
Hexo said its shareholders approved Tilray’s acquisition of the issued and outstanding common shares of the Quebec company.
The final arrangement between Hexo and Tilray remains subject to court approval.
In other news from Canada, a Senate committee recently commented on how the current cannabis market and legislation has kept Indigenous Peoples from sharing in the economic opportunities that the legalisation of recreational cannabis has created.
The standing Senate committee on Indigenous Peoples said Thursday that it wants the country to shift its approach to cannabis to help Indigenous communities and entrepreneurs better benefit from the pot market.
A review the committee undertook left members "severely disappointed but not surprised" to hear that Indigenous Peoples found themselves often shut out of or facing additional barriers in the cannabis market.
"Once again, Indigenous Peoples have been excluded from participation in the economic prosperity of the country," said Brian Francis, a P.E.I senator hailing from Lennox Island First Nation, at a press conference in Ottawa.
"And once again, little regard has been given to how our lives have been impacted."
The committee he sat on found the Indigenous community's difficulties in fully taking advantage of cannabis legalisation stem from legislation around the sale and distribution of cannabis, licensing and even the regulation and policing of the substance.
Many problems the community faces were identified before legalisation happened in October 2018 in consultations that were "inadequate at best" and "could and should have been addressed five years ago," Francis said.
"This oversight, to put it as charitably as I can, cannot readily be corrected," he said.
"The cannabis market is now largely saturated. First Nations entrepreneurs will have to work twice as hard to gain a foothold in this market."
The committee found some First Nations are completely blocked from participating in the cannabis market because the federal government set the scope of the legal sale and distribution of pot, but left regulation of legal activity to provinces and territories.
This meant some First Nations groups had to enter into regulation and sale agreements with provinces and territories
While agreements have been reached in British Columbia, Ontario and Saskatchewan, Indigenous communities told the committee Quebec and the Northwest Territories have not made similar moves.
Thus, the committee would like the Minister of Health to amend the Cannabis Act to permit First Nations to regulate the possession, sale and distribution of cannabis on their lands. It is also recommending a meeting be held with First Nations, federal, provincial and territorial governments to solve jurisdictional challenges they face.
Legislation has also left few Indigenous communities with the licences from Health Canada and the Canada Revenue Agency (CRA) that are necessary to operate in the cannabis industry.
As of last September, the committee counted 55 Indigenous-affiliated applicants for commercial cannabis licences, with 12 of those located in First Nations communities. Some 47 Indigenous-owned or affiliated businesses have received commercial licences, including six in First Nations communities.
The committee feels this number is small and indicates Indigenous cannabis entrepreneurs may face additional barriers in the licensing process, so it would like the CRA to review the licensing process.
The committee also turned its attention to the excise tax, which is imposed on cannabis products when they're delivered to buyers and shared between the federal, provincial and territorial governments.
For dried and fresh cannabis, plants and seeds, the tax amounts to the higher of $1 per gram or a 10 per cent per gram fee.
For edibles, extracts and topicals, it's a flat rate based on the number of milligrams of total THC in the product. There are additional duties in Alberta, Nunavut, Ontario and Saskatchewan.
First Nations communities do not receive a portion of the tax, but the committee wants the government to look at how they could share in the levy.
Rounding out the recommendations were suggestions around the policing, research and medical insurance related to cannabis, along with the committee urging the government to hear from the Inuit and Metis communities, which it did not reach because of the COVID-19 pandemic.
"There's certainly some work that still has to be done, but I would say this is a golden opportunity for the government to act," said David Arnot, a Saskatchewan senator, at the same conference as Francis.
"We've given them clear recommendations and if they follow those recommendations, that will really set the stage for a reconciliation, certainly, economic reconciliation."
In the world of CBD news, a recent news article says Scientists have apparently discovered cannabidiol, also known as CBD, in a common Brazilian plant, opening potential new avenues to produce the increasingly popular substance, a lead researcher said Thursday.
The team found CBD in the fruits and flowers of a plant known as Trema micrantha blume, a shrub which grows across much of the South American country and is often considered a weed, molecular biologist Rodrigo Moura Neto of the Federal University of Rio de Janeiro told AFP.
CBD, increasingly used by some to treat conditions including epilepsy, chronic pain and anxiety, is one of the main active compounds in cannabis, along with tetrahydrocannabinol, or THC – the substance that makes users feel high.
The compound's effectiveness as a medical treatment is still under research.
Neto said chemical analysis had found "Trema" contains CBD but not THC, raising the possibility of an abundant new source of the former – one that would not face the legal and regulatory hurdles of cannabis, which continues to be outlawed in many places, including Brazil.
"It's a legal alternative to using cannabis," he said.
"This is a plant that grows all over Brazil. It would be a simpler and cheaper source of cannabidiol."
Scientists had previously found CBD in a related plant in Thailand, he said.
Neto, who has not yet published his results, said he now plans to scale up his study to identify the best methods to extract CBD from "Trema" and analyse its effectiveness in patients with conditions currently treated with medical cannabis.
His team recently won a 500,000-real (US$104,000) grant from the Brazilian government to fund the research, which he estimates will take at least five years to complete.
A study last year by market analysis firm Vantage Market Research estimated the global market for CBD at nearly US$5 billion, and projected it would grow to more than US$47 billion by 2028, driven mainly by health and wellness use.
Lastly, if you like myself and many others are suffering from seasonal allergies or lung irritations from smoking, there’s one local “weed” you may want to look into, mullein.
Verbascum thapsus, more commonly known as mullein, is a member of the snapdragon family. It’s considered a weed by some and a godsend by others.
The plant has been shown to aid in loosening mucus, calming inflammation and fighting germs.
In health stores, you can find mullein extracts, capsules, oils and teas. For respiratory issues, take mullein by mouth. People often drink mullein tea — sipping a cup of tea of any kind is soothing, and mullein may add health benefits. You can also take a mullein capsule, extract or oil. Mullein benefits your respiratory tract — especially when fighting illness.
You also go out and harvest some yourself and it could become a great addition to any joint or bong bowl.
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