Supreme Canabis acquires Truverra, KushCo reports Q3 earnings, Aurora receives cultivation licenses, and more…
This week, The Supreme Cannabis Company (TSX: FIRE) took another step up the marijuana food chain, after the company announced that it had entered into a definitive agreement to acquire all of the issued and outstanding shares of privately-held Truverra Inc, to be effected by way of a three-cornered amalgamation between Truverra, Supreme Cannabis and a wholly-owned subsidiary of Supreme Cannabis.
The Transaction is valued at 14.7 million common shares of Supreme Cannabis, giving the Transaction an approximate dollar value of $20,000,000 as of the Company's closing price on July 16, 2019.
Located in Toronto, Truverra is a private cannabis company, serving the Canadian and international cannabis markets through its wholly-owned subsidiaries, Canadian Clinical Cannabinoids Inc ("CCC") and Truverra Europe. CCC operates a 5,000 square-foot Health Canada licensed facility in Scarborough, Ontario. Supreme Cannabis intends to repurpose CCC's state-of-the-art facility to produce high-quality cannabis extracts, including concentrates and vaping liquids.
In addition to its operations in Canada, Truverra's wholly-owned European subsidiary, Truverra Europe, is located in the Netherlands and sells a broad portfolio of hemp-based CBD products into select European markets.
"With the acquisition of Truverra, we secure a Toronto-based facility equipped to extract our high-quality inputs for concentrates and vaping liquids in the near-term."
– Navdeep Dhaliwal, CEO of Supreme Cannabis.
Aurora Cannabis Inc (NYSE: ACB), the Canadian company defining the future of cannabis worldwide, announced that it has received Health Canada licenses for outdoor cultivation at two Canadian sites.
The new sites in Quebec and British Columbia will be used for cultivation research to develop new technology, genetics and intellectual property in order to drive sustainable, high-quality outdoor production. Aurora purposefully chose the outdoor sites because they represent two different growing environments.
The company will conduct research on cultivation techniques to further excel at growing cannabis in varying climate conditions and will examine approaches to environmentally sustainable cannabis agriculture. The newly-named Western facility will be called Aurora Valley and is a 207-acre operation in Westwold, British Columbia.
The Eastern facility, a 21,000 square foot operation at the Aurora Eau facility in Lachute, is the first approved outdoor grow operation for cannabis in Quebec. Aurora Valley is expected to be planted shortly and Aurora Eau has already been planted.
Organigram Holdings Inc (NASDAQ: OGI)—the parent company of Organigram Inc, a leading licensed producer of cannabis—announced its results for the third quarter ended May 31, 2019.
The company recorded a Q3 and year to date 2019 net revenue of $24.8 million and $64.1 million, respectively, as well as a Q3 net loss and net income from continuing operations of $10.2 million and $12.9 million, respectively. Q3 had an adjusted EBITDA of $7.7 million, or 31%, which was positive for the fourth consecutive quarter and year to date adjusted EBITDA of $27.8 million, or 43%
Significant growth expected for fiscal 2020 as edibles and derivative products legalized, the number of cannabis retail stores expand, Organigram's harvested amounts expected to increase materially, and further economies of scale expected to be realized.
"We are very excited for fiscal 2020 which should build upon an already successful 2019. By the first half of fiscal 2020, we expect to benefit from record harvests of high-quality indoor-grown dried flower, the sale of a variety of vape pen products as well as our initial edible product forms."
–CEO of OrganiGram, Greg Engel
National Access Cannabis Corp (TSXV: META), announced that it had entered into a conditional share purchase agreement through Meta West Coast Ltd—a wholly-owned subsidiary of NAC—to acquire 19.9% of Sicamous Trading Company Incorporated from the shareholders of STC.
STC currently has one retail cannabis store licence application in process with the British Columbia Liquor and Cannabis Regulation Branch. STC plans to add more locations over the next 12 months, building on the foundation of its first location in well-trafficked vacation spot, Sicamous BC, subject to receipt of required retail cannabis store licences.
NAC has entered into a management agreement with STC whereby NAC will provide certain store development and operational services to support STC in its retail store development in exchange for management fees calculated as a set percentage of STC's store-level EBITDA for its first store and every successive store opened.
Trulieve Cannabis Corp (CSE: TRUL)—a leading and top-performing cannabis company in the United States—announced that company founders have entered into a voluntary lock-up agreement with the company effective immediately, in respect of 65,253,093 subordinate voting shares of the company (on an as-converted basis), representing 59.25% of the subordinate voting shares of the company, assuming the conversion of all issued and outstanding multiple voting and super voting shares.
The voluntary lock-up agreement stipulates that these shareholders will not offer to sell, contract to sell or otherwise dispose of any of Trulieve securities subject to the lock-up agreement, or enter into any transaction to such effect, directly or indirectly, in addition to other restrictions, on or before July 25, 2020.
Effective January 25, 2020, an additional 15%, or 11,205,960, of the subordinate voting shares of the company subject to the lockup agreement shall be released from the restrictions of the lockup agreement. 54,047,133 of the subordinate voting shares of the company shall remain subject to the lockup agreement restrictions until July 25, 2020.
"This extension of the lock-up period demonstrates the continued confidence the company founders have in the execution of our long-term strategy."
– CEO of Trulieve Cannabis Corp, Kim Rivers
MMJ Group Holdings Ltd (ASX:MMJ)—a global cannabis investment company—concluded the financial year with an impressive 33% investment return, after the value of its portfolio of listed and unlisted holdings grew to $95.5 million in 2019.
The MMJ Group's portfolio of investments offers exposure to large sections of the cannabis and hemp value market, with a particular focus on consolidation, acquisition potential and possible market leaders. The portfolio currently has four listed investments which are estimated to be worth a combined $49.5 million, along with another nine unlisted investments totalling $19.4 million.
The company also holds approximately $26.6 million in cash and other investment receivables. And the value of MMJ's portfolio of assets is likely to receive further boosts in the future, as a number of its unlisted holdings are currently seeking additional funding from the market to more aggressively pursue their investment plans.
According to statements from the MMJ Group, the company's $95.5 million portfolio represents a net tangible asset value—before tax—of 38.74 cents per share.
Valens GroWorks Corp (TSXV: VGW)—a vertically integrated provider of industry leading extraction products and services—reported its financial results for the second quarter of fiscal 2019.
Revenue increased to $8.8 million, a 296% increase over the first quarter of 2019, while gross profit increased to $5.1 million, or 58.0% of revenue, for the second quarter of 2019 compared to $0.9 million or 38.3% of revenue in the first quarter. The company recorded an adjusted EBITDA of $2.0 million in the second quarter, or 23.0% of revenue.
Valens ended the quarter with a strong balance sheet with $65.5 million in cash and cash equivalents and short-term investments and a net working capital position of $76.3 million as at May 31, 2019.
"The second quarter of 2019 provided a number of significant achievements for Valens as the team continued to successfully execute on our commercial production plan which translated into revenues of $8.8 million for the second quarter, a 296% increase from the first quarter of 2019."
– CEO of Valens GroWorks, Tyler Robson
Innovative Industrial Properties, Inc (NYSE: IIPR) announced the pricing of an underwritten public offering of 1,300,000 shares of its common stock at $126.00 per share for gross proceeds of $163.8 million.
The offering is expected to close on or about July 16, 2019, subject to customary closing conditions. The company has also granted the underwriters a 30-day option to purchase up to an additional 195,000 shares of its common stock. All of the shares are being sold by the company.
The company intends to use the net proceeds from this offering to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry that are consistent with its investment strategy, and for general corporate purposes. The offering of the company's common stock will be made only by means of a prospectus supplement and the accompanying prospectus.
KushCo Holdings, Inc (OTCQX: KSHB) reported financial results for its third fiscal quarter ended May 31, 2019, showing an increase in net revenue of 221%, year-over-year to $41.5 million, compared to the same quarter a year ago and 17.9% on a sequential basis versus the second fiscal quarter of 2019.
On a GAAP basis, gross profit increased to 17.8%, compared to 12.9% during the second fiscal quarter of 2019. On a Non-GAAP basis, excluding the impact of certain non-recurring charges and gains, net loss during the third quarter was $8.6 million and net loss per share was negative $0.10.
Cash was approximately $12.2 million as of May 31, 2019, compared to approximately $13.5 million as of August 31, 2018.
"Revenue for the third fiscal quarter of 2019 saw strong growth of 221% year-over-year, reaching a record $41.5 million, compared with $12.9 million in the third fiscal quarter of 2018 and $35.2 million in the second fiscal quarter of 2019."
– CEO of KushCo Holdings, Nick Kovacevich
MediPharm Labs Corp (TSXV: LABS)—a global leader in specialized, research-driven cannabis extraction, distillation, purification and cannabinoid isolation—provided an update to investors on the significant strategic progress it is making, including with its successful ramp up of production capacity to supply its growing customer base.
By end of Q2 2019, the company increased production to an average of 75 million milligrams of active cannabinoid component concentrate on a weekly basis that will support significant, large-scale white label contracts.
MediPharm Labs also increased annual dried cannabis processing capacity to 300,000 KG and with a new customized, large-scale extraction line set to open in 2019, annual capacity is expected to increase to over 500,000 KG.
Watch this space for future updates.
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