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Cannabis Professional’s daily roundup of industry news. View archive here.

It is all about earnings in the early hours of this Wednesday in weed. We’ve got analysis of results from Acreage Holdings, the Green Organic Dutchman, Sundial Growers, MedMen and Neptune Wellness below.

– Jameson Berkow

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Acreage sees Q2 loss widen as revenue grows

Acreage Holdings, Inc. reported second-quarter revenue at $17.7 million, up 37 per cent from the first quarter of 2019, but saw a net loss of $33.9 million, the multi-state cannabis operator said late Tuesday. The loss was larger than Eight Capital analyst Graeme Kreindler was expecting, telling clients early Wednesday morning he intended to review his estimates for the company following its 8:30am ET conference call.

In the first quarter of 2019, Acreage reported a net loss at US$31.2 million.

The New York-headquartered cannabis grower secured shareholder approval during the quarter, to be acquired by Canopy Growth Corp. in the cannabis industry’s first major cross-border deal that will see Canopy pay US$300 million for rights to acquire Acreage should United States federal laws change to allow for such a transaction before 2025.

Acreage shareholders approve sale to Canopy

Prior to the deal getting completed, Acreage indicated in its Q2 results that the company intends on leveraging Canopy’s tech and intellectual property immediately. The first U.S. cannabis retail store with Canopy’s ‘Tweed’ branding is expected to open before the end of this year, with further ‘Tweed’ and ‘Tokyo Smoke’-branded stores expected to open across the United States starting in 2020.

The company’s conference call can be accessed here.

– Jameson Berkow

The Green Organic Dutchman reports Q2 net loss

The Green Organic Dutchman (TGOD) Holdings Ltd. reported a net loss of $16.6 million in the second quarter, with revenue at $2.9 million.

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The organic cannabis and hemp-derived CBD company’s revenue was up 20 per cent over the prior quarter, primarily due to sales in Europe, it said.

TGOD said construction at its Hamilton site was nearing completion with investment at $53.1 million in the second quarter of 2019, bringing “total additions” to $100.9 million year-to-date.

– Marcy Nicholson

Sundial reports Q2 loss days after IPO

Calgary-based licenced cannabis producer Sundial Growers reported higher revenues, narrower losses and a lower average selling price early Wednesday in its first financial results as a public company.

Revenues totaled $20.3-million in its second quarter on 4,741 kilograms of dried cannabis sales. Average selling price per gram was $4.07, down from $4.64 in Q1, which the company attributed to “the sale of lower-priced trim” during Q2.

Adjusted earnings before interest, taxes, depreciation and amortization came in at a loss of $500,000, significantly narrowed from the $5.5-million adjusted EBITDA loss Sundial reported for Q1.

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The financial disclosure comes less than two weeks after Sundial became the second Canadian cannabis producer to launch its first public listing on an American exchange. The company’s Nasdaq-listed stock fell 35 per cent during its first trading session on August 1, closing at US$8.48 per share compared to the IPO price of US$13 per share.

Sundial shares hammered in Nasdaq trading debut

Forgotten, but not gone: Why convertible debentures are a ticking debt bomb for underperforming pot co.'s

Sundial stock has yet to return to its IPO price, closing the Tuesday trading session at US$10.39 per share.

During the quarter, Sundial also took on substantial debt. The company issued $93.2-million worth of convertible debentures in May and in June, Sundial took on an additional $159.6-million in debt.

– Jameson Berkow

MedMen shares pop 20 per cent on strong revenue growth report

MedMen Enterprises Inc. shares jumped 20.4 per cent on Tuesday, after the U.S. pot retailer reported $55.5 million in sales in its most recent quarter, a 15 per cent increase compared with the previous quarter sales.

Gross margin across its dispensaries in California, Nevada, New York, Arizona and Illinois, was 50 per cent, only slightly down from 51 per cent in the preceding quarter. The largest revenue contribution, $36.2 million, came from California, where MedMen now operates 11 stores.

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The company did not release information about net income, EBITDA or cash flows.

MedMen, which is in the process of acquiring additional dispensaries, said its pro forma revenue for the quarter was $81-million, “pending acquisitions of operational retailers in Long Beach, California and Vallejo, California.”

The company said it has been working to bring down Selling, General and Administrative expenses, and will hit an annualized SG&A rate of US$115 million by the end of September, down from the annualized SG&A rate of US$164 million that it reported in December 2018.

The company also announced that it had renegotiated the parameters of the $250 million credit facility it has with Gotham Green Partners, changing the conversion price for the convertible debt notes it issued.

“For Tranche 1, the conversion price per share of the Notes is now US$2.55. For the initial portion of Tranche 2, the conversion price per share of the Notes is now US$2.17,” the company said.

MedMen has still not closed its acquisition of PharmaCann, LLC, which it announced back in December. The transaction is under review by the Antitrust Division of the U.S. Department of Justice. On Tuesday, MedMen said that both PharmaCann and itself were in “substantial compliance” with requests from the DOJ.

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“Assuming that the conditions to close are satisfied or waived, the Transaction is expected to be complete by the end of calendar year 2019,” MedMen said.

– Mark Rendell

Neptune Wellness reports lower Q1 revenues, wider net loss

Quebec-based cannabis processor Neptune Wellness lost more money in the first quarter of its 2020 fiscal year, the company disclosed early Wednesday, as more spending on cannabis capacity outpaced sales.

Revenues for the quarter that ended June 30 totaled $4.4-million, down from $5.2-million during the same period of 2018. Neptune reported a net loss of $6.5-million for Q1, wider than the $4.1-million the company lost a year earlier.

“The decline in total revenues is explained by the timing of contracts in the nutraceutical segment [and] commercial production of cannabis extracts during the quarter was impacted by constrained operations and extraction capacity,” the company said, adding the wider net loss was “due to investments made in support of growing cannabis operations.”

Neptune Wellness appoints Michael Cammarata CEO

Neptune settles former CEO claim, announces U.S. acquisition

Last month, Neptune replaced its CEO with Michael Cammarata, the co-founder of Schmidt’s Naturals, which was sold to Unilever in 2017. In May, the company agreed to pay founding CEO Henri Harland $5.4-million in shares to settle a constructive dismissal lawsuit filed by its former leader after Mr. Harland left the company in 2014. He had been seeking more than $8-million in total compensation.

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Michel Timperio, president of Neptune’s cannabis division, recently told Cannabis Professional that the Quebec government’s plan to place further restrictions on cannabis-infused edibles and vape products would be “quite destabilizing” for the business.

– Jameson Berkow

Recently, around the industry:

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