3 Important Items that Happened in the Cannabis Sector This Week

1. KushCo’s Revenue Increased 240% but Losses Also Increased

The cannabis packaging company that is an ancillary darling for many analysts in the industry set a new revenue record by reaching $35 million and also raised their full year guidance to $150 million from $140 million.

“We continue to invest in the growth of the business by adding new product and service offerings and driving customer development and retention. As the industry further matures and large multi-state operators scale and prepare for additional market legalization, we expect to see demand for our core offerings, including vaping products, packaging, supplies and labeling solutions increase across our most important markets. Our focus remains the build out of a scalable, sustainable business, as we cement our presence as the primary supply chain partner to the cannabis, CBD and related industries,” concluded Nick Kovacevich, Chairman and CEO.

Prior to this good news, KSHB said that it would need to restate financial results from 2017 and 2018 due to accounting errors, something that is becoming common in the cannabis industry. However, the company’s new CFO has uncovered some important errors now that should allow them to stay in compliance with Sarbanes-Oxley down the line for an eventual uplisiting. The company said it expects net losses to rise to $24.3 million in 2018, which is more than double the initial report. In addition, KushCo posted a net loss for the second quarter of $8.9 million, or $0.10 per share, compared to a net loss in the prior-year period of $7.6 million, or $0.12 per share. These net losses were due to higher spending levels due to acquisitions and more administrative costs. It would appear that KushCo just grew too fast and in order to keep up with demand had to use expensive shipping methods and fund new facilities.

2. Trulieve Nets $35.9 Million in Q4

The company saw the full year of 2018 bring in $102.8 million and saw year-over-year growth of 419%. Trulieve TCNNF has grown to 22 dispensaries in Florida and recently opened their 55,000-square-foot, GMP certified facility. Furthermore, Trulieve has really claimed Florida as its territory and the state now allows for flower to be sold, which will only boost profits.

2019 will be a year of execution for us as we leverage our strong revenue growth and positive adjusted EBITDA. We will focus on innovating and delivering new products for our customers, such as smokable flower, edibles and nano-emulsions. We will cultivate new strategic partnerships, as we have recently demonstrated with Slang and Blue River,” said Kim Rivers, CEO of Trulieve.

Furthermore, the company recently won a trial alleging that Florida’s cap on dispensaries was unconstitutional. This essentially means Trulieve will be able to open 14 more dispensaries than its Florida peers. It’s a huge win for the company and essentially cements them as the boss of cannabis in the Sunshine State, where it is enjoying margins of more than 70%.

3. Cresco Labs Adds Three Illinois Dispensaries

The company fresh off a huge acquisition with Origin House added to its already strong footprint in Illinois. Cresco CRLBF announced that it received approval from the Illinois Department of Financial and Professional Regulation for cannabis dispensaries MedMar Rockford and MedMar Lakeview, located in the popular Wrigleyville neighborhood of Chicago. The IDFPR also approved Cresco’s acquisition of PDI Medical, a medical cannabis dispensary located in Buffalo Grove, Illinois, which was purchased by the Company in November 2018. The MedMar dispensaries are Cresco Labs’ fourth and fifth dispensary acquisitions in Illinois bringing the Company’s footprint to five dispensaries in its home state.

”Illinois is at the forefront of our nation’s evolution of the cannabis industry, and with these three dispensary approvals, Cresco has reached the maximum level of dispensaries any single company can own and operate in our home state. We have already achieved the highest market share of any operator in Illinois and our prospects for accelerated growth are promising with the recent implementation of the Alternatives to Opioids program that began on February 1st,” said Charlie Bachtell, CEO & Co-Founder.

A few small odds and ends to note:

• MPX International MPXOF acquired a Swiss CBD company, HolyWeed,
• Eve and Co. EEVVF, a female-focused cannabis brand, raised $10 million
• Wildflower Brands Inc. WLDFF bought City Cannabis Corp., a popular Vancouver dispensary, in an all stock transaction.