Cannabis's Innovators

Better buckle up, because there were a number of massive announcements this week, as vaporiser technology firm, Pax Labs, managed to secure $420 million in equity financing this week.

Pax is well-known for having one of the most dependable vaporiser lines on the market with its' flagship products—PAX Era for oil concentrates and PAX 3 for dry flower—having sold more than 500,000 and 1 million devices respectively.

The funding was derived from existing investors—such as Tiger Global Management and Tao Capital Partners—and global institutional investors representing technology, healthcare, consumer products and diversified public equities.

"PAX is investing heavily in growing its brand as well as developing innovative new products to scale and capture an enormous opportunity. This financing round allows us to invest in new products and new markets, including international growth in markets like Canada and exploring opportunities in hemp-based CBD extracts."

– CEO of Pax Labs, Bharat Vasan

 

 

CannTrust (TSX:TRST) launched a $200 million equity offering and updated the market on its preliminary operational and financial results for the quarter ending 31 March 2019.

CannTrust have said that the net proceeds from the offering will be used to fund upkeep and expansion projects, including upgrades for GMP Certification and biosynthesis development, expanded outdoor growing, cultivation and facility expansion, international expansion, and enhanced extraction capacity.

The public offering of common shares is expected to be priced by market context, while underwriters will most likely be given a 30-day option to purchase up to an additional 15 percent of the number of common shares sold.

On Monday CannTrust published an update to its preliminary operational results, announcing that the its' Niagara perpetual harvest greenhouse is quickly approaching its stated capacity of 50,000kg per year, following a 96% sequential increase in production over the previous quarter.

The company also released preliminary financial estimates for the quarter this week, announcing that net revenue is expected be approximately $17 million, which represents an increase of 116% when compared to the same period last year. Gross profits are expected to reach between $27 to $28 million, thanks to an increase in unrealized fair value gains on biological assets.

 

 

MedMen (CSE:MMEN) announced that it had entered into definitive agreements in respect of a US$250,000,000 secured convertible credit facility with Gotham Green Partners, an investor in the global cannabis industry. MedMen have confirmed that they intend to use the net proceeds from drawdowns on the Facility to fund the future capital needs of the business.

Additionally, the growth capital will also be used to operationalize existing retail licenses, accelerate geographic expansion, and support the national roll-out of higher-margin in-house branded products.

 

 

The vertically-integrated cannabis company, Harvest Health & Recreation (CSE: HARV), released fourth quarter and FY 2018 financial results this week, reporting a total revenue increase of 52 percent for Q4 2018. The company has continued to operate profitably, with an adjusted EBITDA of $10.3 million for the twelve months ending December 31, 2018.

Harvest generated a total revenue of $16.9 million for Q4 2018, which represents an increase of 135 percent compared to the same period in 2017. The company also managed to secure $7.2 million in gross profit—excluding the impact of biological assets—which is a 342 percent increase on the $1.6 million generated this time last year.

Harvest's net losses for the last three months of 2018 were $71.1 million, an include a non-recurring, non-cash fair value charge of $50.7 million associated with convertible debt that was converted to equity during the year.

 

 

There was good news from the Alberta-based retail-focused cannabis corporation, High Tide Inc. (CSE:HITI), after it announced approximately $441,000 in systemwide gross revenues from April 19th to 21st, 2019. This marks a 234% increase over the $132,000 reported for the same three-day period last year.

The revenue boost was driven by the company's 13 Canna Cabana-branded stores—including two partnered Ontario locations in Hamilton and Sudbury that opened April 20—as well as the Grasscity, Famous Brandz and Smoker's Corner e-commerce websites.

"It was incredible to make history by selling cannabis and accessories across Canada on the first 4/20 after the legalization of recreational cannabis for adult use."

– Raj Grover, President and Chief Executive Officer of High Tide

 

 

SOL Global (CSE: SOL) also got in on the action this week, after it signed a binding letter of intent with the cannabis-focused private equity firm, Merida Capital Partners, to acquire their Michigan-based subsidiary, MCP Wellness, Inc.

SOL have agreed to pay an aggregate purchase price of US$150 million for MCP, which currently holds the rights to acquire two Michigan cultivation licenses, a processing license, and 3 fully licensed cannabis provisioning centres in Michigan with a fourth scheduled to open in Ann Arbor in May. Once MCP's expansion plans are complete, SOL expect gross revenue from the acquired business to generate in excess of US$61 million this year, and more than US$121 million in 2020.

 

 

Cresco Labs released highly profitable fourth quarter 2018 results, taking home $17 million in revenue, which represents an increase of 411% year-over-year and 33% quarter-over-quarter. The company reported that the revenue increase was driven by expansion into new markets and existing market share gains.

The CEO of Cresco Labs, Charles Batchell, said that the company has been building on momentum from 2018, and is already making "incredible progress this year in building Cresco Labs' leadership position in the cannabis industry".

 

 

TerrAscend (CNSX: TER) also published results for Q4 2018, totalling $5 million in revenue for the three months ending December 31, 2018. However, the company also recorded a net loss of $11.7 million—or $0.13 per share—for the same period.

Despite these losses, TerrAscend claim they are experiencing strong sales momentum in Canada, and are making substantial progress towards becoming a leading US multi-state operator.

Going forward, the company has confirmed that it will be focused on procuring new licenses across the US and strategic acquisitions of existing licensed operations.

 

 

VIVO Cannabis (CVE: VIVO) announced that its' wholly-owned subsidiary, Canna Farms Limited, received local municipal approval for its Phase 5 expansion. Once complete, the expansion will add an incremental 2,500 kilograms of indoor capacity to its facility in Hope, B.C

VIVO have stated that the expected capital cost of the expansion will be $3.5 million, and will increase Canna Farms total internal production capacity to 13,500 kilograms by early 2020.

"This expansion will further increase Canna Farms' production capacity to help meet the significant market demand for premium B.C. dry bud. This project represents a strategic deployment of a minor portion of our strong cash position as the Company continues to invest to drive future growth."

– Chief Executive Officer of VIVO, Barry Fishman

 

Watch this space for future weekly updates.

Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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