Cannabis Professional’s daily roundup of industry news. View archive here.
Breaking news from Tilray this morning, which is spending up to $110-million to acquire Calgary based retailer FOUR20. WeedMD posted impressive results after market on Wednesday, with sales more than doubling and significant improvements in gross margins. Emerald Health, which also reported Wednesday, showed some improvement in sales, though costs remain high. The company’s bottom line was saved by a $14.5-million contribution from its joint venture with Village Farms.
– Mark Rendell
Tilray to buy Alberta retail chain for up to $110-million
Tilray Inc. is getting into the retail game. On Thursday, Tilray announced that it has signed a definitive agreement to acquire Alberta-based 420 Investments Ltd., which owns six stores in Alberta and has “16 additional high-traffic store locations secured in desirable locations in Alberta, including Canmore, Calgary and Edmonton.”
The all-share acquisition will see Tilray issue $70-million worth of class 2 common stock to the owners of FOUR20. Tilray may issue a further $40-million worth of shares “subject to the achievement of certain performance milestones by FOUR20.”
The deal, which is being done through Tilray’s subsidiary of High Park Holdings Ltd, still needs approval from Canadian regulators.
- Mark Rendell
WeedMD sales surge and margins improve, with expansion of production
WeedMD Inc. saw revenues surge and gross margins increase, as the company expanded its facilities in Strathroy, Ont. and improved efficiency in the most recent quarter. WeedMD sold $8-million worth of cannabis, mostly to other licensed producers, up from $3.3-million in the preceding quarter. The gross margin on those sales increased from 15 per cent to 46 per cent, which is “mainly attributable to a significant increase in sales and a decrease in the cost of sales,” the company said.
The weighted average cost of sales per gram dropped 37 per cent to $1.84, compared with $2.90 in the previous quarter.
The company’s adjusted EBITDA loss (a non-IFRS measure) for the quarter was $662,822; the company posted a net income of $12.6-million, although that was largely to do with a change in the fair value of biological assets.
WeedMD focused heavily on the wholesale market in the quarter, with 72 per cent of sales going to other LPs and only 24 per cent going to provincial wholesalers who sell into the recreational retail market. Five per cent of sales were direct-to-patient medical sales.
Emerald sales up, though cost of goods sold remains high
Emerald Health reported an increase in net sales to $4.6-million, although maintained a negative gross margin, as cost of goods sold remained higher than revenues.
“The gross margin was significantly impacted by the amortization of the Health Canada license and increased production costs, as well as increased volume of purchased product sold,” the company said in its MD&A
Losses from its own operations was $13.7-million. This was offset by $14.5-million which was the company’s share of income from its joint venture with Village Farms, leading to a net loss of $452,731.