CannabisNewsWire
Editorial Coverage: The cannabis markets have already produced
some amazing financial results, but all indications are the
industry is only at the beginning of an impressive ascent.
Quarter-over-quarter sales growth is one of the indicators used
to indicate upside potential. With that in mind, Wildflower
Brands Inc. (CSE: SUN) (OTCQB: WLDFF) (WLDFF
Profile) revenues have increased 11 consecutive
quarters, quarter on quarter, ever since the company started
selling its hemp-based CBD products. Similar quarterly sales spikes
and strategic acquisitions foreshadowed dramatic price increases in
some of the largest names in the cannabis universe. Green
Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) more than
tripled its revenues from one year ago, both on a year-over-year
and quarter-over-quarter basis, and Scotts Miracle-Gro
Company (NYSE: SMG) announced company-wide sales increased
17% in its fiscal second quarter. Trulieve Cannabis Corp.
(CSE: TRUL) (OTC: TCNNF) grew its first-quarter 2019
revenues by 192% year-over-year to $44.5 million while
Acreage Holdings Inc.’s (CSE: ACRG) (OTCQX: ACRGF)
first-quarter 2019 performance showed revenues up 487% to $12.9
million.
- Cannabis run is far from over, new winners emerging
- Branding, marketing and retail reach signals of success
- Year-over-year and sequential growth helps identify future
potential
To view an infographic of this editorial, click here.
Good Times Have Just Begun
Legal cannabis is a recent worldwide phenomenon, and the
emerging market seems to have almost unlimited potential. The
global legal marijuana market, valued at just $9.3 billion in 2016,
is expected to blow past $146 billion
within the next six years.
According to a United Nations report, cannabis is the most
widely consumed drug on the planet, with approximately 270 million
global consumers using cannabis, equivalent to about 4% of the
world’s population, barely a dent in market penetration. As
marijuana makes its way into the mainstream, usage among all age
groups seems certain to increase. However, among the most coveted
18-to-34-year-old demographic, the acceptance appears to be
increasingly widespread.
Millennials are about three times and Gen Z about four times
more likely to use cannabis than aging Boomers.
Seeing the numbers, savvy cannabis companies are moving forward
full speed in product and brand development to capture this coveted
demographic and market share, now and for decades to come. As
public perceptions change and legalization increases, the number of
users is certain to skyrocket in an essentially untapped market. A
global transition is already underway. Growth trajectory is
virtually vertical, presenting a once-in-a-generation investment
opportunity.
Retail Reach
Founded in 2012 as a private company, Wildflower
Brands Inc. (CSE: SUN) (OTCQB: WLDFF) went public in
2014 and has seen impressive growth since day one. Wildflower is an
integrated health-and-wellness company creating distinct brands
that incorporate the synergistic effects of plants and their
extracts. The company’s latest quarterly sales set records,
up 78% over the previous quarter, validating
corporate strategy, the popularity of its products and the
continued expansion of market share. Intent on boosting revenue and
earnings even further, Wildflower is about to finalize the
acquisition of a preeminent cannabis retailer in Vancouver that
also owns multiple cannabis licenses.
Wildflower’s latest press release is further evidence of the
company’s rapid growth and global reach. The company reported
third-quarter sales were up by 78% over the second quarter, the
11th consecutive quarter of revenue growth, since Wildflower Brands
began selling products. On top of these stellar results the company
is further expanding its retail footprint and product distribution
with the accretive acquisition of Vancouver-based City Cannabis
Corp.
City Cannabis is a premier cannabis retailer holding two of the
three City of Vancouver licenses to sell cannabis and is the only
company with multiple licenses in British Columbia. With margins of
50%, City Cannabis had revenues of $1.8 million for the reporting
period that began with the opening of its two stores in early
January. The combined quarterly revenues of Wildflower Brands and
City Cannabis equates to an impressive $4.3 million. Wildflower
expects to close on the City Cannabis deal before the end of June,
and the acquisition will immediately be accretive to Wildflower’s
earnings upon closing.
Bringing City Cannabis and Wildflower together will result in
revenue operations in three U.S. states and two Canadian provinces
with a combined North American target market of more than 75
million people. The positive net income generated by City Cannabis
comes from just two operating properties, even though the company
holds an additional seven leases at various stages of permitting
approvals.
Commenting on the financials, Wildflower CEO William MacLean
stated, “We are pleased with the financial results of both
Wildflower and City Cannabis. Sales through every Wildflower
distribution channel are up, and sales at City’s licensed retail
outlets continue to grow month over month. The positive net income
is particularly impressive with City Cannabis carrying a total of
nine leases, which are at various stages of the permitting
process.”
Grow, Grow, Grow
Already a solid presence in California, Wildflower owns 14
cannabis licenses for recreational and medical cannabis
cultivation, manufacturing, retail distribution and delivery.
Wildflower’s expansion into Canada with the acquisition of City
Cannabis strengthens the company’s global growth strategy, which
includes strategic distribution deals already in place in the
European Union and South Africa. In addition to capturing revenues from
retail operations, the City acquisition gives Wildflower another
channel to market its enormously popular products and launch into
the over-the-counter market with its CBD formulations and
accessories.
Wildflower continues to capture ever-greater market share with
innovation, retail expansion and a growing family of popular
brands. The company’s strategic partnerships, acquisitions and
organic growth are all bolstered by its marketing genius to lock in
more loyal consumers. Grabbing national and celebrity attention,
Wildflower used ingenious product placement during the 2019 Oscars
by including its CBD+ Healing Stick in each of the gift bags of the
stars.
The company has also employed an innovative pop-up store
approach in SoHo, New York, to introduce Wildflower Wellness
products. Wildflower identified a compatible high-profile retail
venue and struck a deal with the outlet, then marketed its products
in the upscale establishment for a limited time period, raising
market uptake and visibility.
Big Names
In addition to fourth-quarter growth, Green Thumb
Industries Inc. (CSE: GTII) (OTCQX: GTBIF) reported
increased revenue generation from two states to five states by
operationalizing both consumer packaged goods and retail business
units, including strong branded products distribution and the
opening of seven new Rise™ stores nationwide. “In just six months
following our RTO in June and in the beginning of 2019, we have
expanded the infrastructure for our consumer products and retail
businesses to now include 13 production facilities and the ability
to open 88 retail locations across 12 states including pending
acquisitions,” said GTI founder and
COE Ben Kovler. “At the same time, we have built an incredible
team that is over 500 strong to support our strategy to distribute
brands at scale. With the growth of our branded product
distribution, new store openings and adult-use markets coming on
line, we are very pleased to have more than tripled our revenues
from one year ago both year-over-year and
quarter-over-quarter.”
Scotts Miracle-Gro Company (NYSE: SMG) earns
its spot as a marijuana stock thanks to the company's Hawthorne
Gardening subsidiary, which ranks as the top supplier of hydroponic
gardening products to the U.S. cannabis industry. In Scotts' fiscal
2019 first quarter, this business contributed 47%
of the company's total revenue. SMG notes
that each state’s cannabis industry and regulatory system are
still in the process of maturing and says that “our experience
growing an expansive, thriving business enterprise, and the
company’s history of collaborating with government entities and
other stakeholders to address difficult regulatory issues can
provide invaluable insight and expertise to officials grappling
with the challenges inherent in building comprehensive regulation
for the cannabis industry. We are committed to working with
regulatory bodies at all levels of government to help achieve these
goals.”
Trulieve Cannabis Corp. (CSE: TRUL) (OTC:
TCNNF), a vertically integrated "seed-to-sale" company and
the first and largest fully licensed medical cannabis company in
the State of Florida, achieved its goal of reaching 30 stores by
end of Q2 with 28 Trulieve dispensary locations operating in
Florida, one in California, and one added through its Connecticut
acquisition. As noted in announcing its
first-quarter results, Trulieve estimates that its expansion
into Massachusetts, along with its continued growth in Florida,
Connecticut and California, will push 2020 revenues in the range of
$380 million-to $400 million, generating $140 million-$160 million
in adjusted EBITDA. "Our first quarter results reflect our ability
to deliver on our strategic initiatives, translating into continued
strong financial performance," said CEO Kim Rivers. "In addition to
delivering on strong financial results we also achieved many
significant milestones in the first quarter of the year. Growth
continued in Florida with the opening of four new dispensaries,
completing the first sale of smokable flower in Florida, and
settling with the Florida Department of Health, allowing us an
additional 14 stores above the state cap..."
Acreage Holdings Inc. (CSE: ACRG) (OTCQX:
ACRGF) is gaining ground as it works toward increasing its
national footprint and expanding in the western United States.
Despite delayed dispensary openings caused by local regulators in
both Massachusetts and Ohio, the company grew its Q1 revenues by
487%. The company is also on the fringe of an acquisition by Canopy
Growth (TSX: WEED) (NYSE: CGC), a move Acreage founder, CEO and
Chairman Kevin Murphy said “will provide us the ability to rapidly
accelerate our growth plan as the transaction makes us the most
attractive partner in U.S. cannabis.” Shareholders from both
companies are voting on
Canopy Growth’s potential acquisition of Acreage expected to
“create greater shareholder value than as competitors in the
U.S.”
Skepticism about the cannabis has disappeared; there’s little
question about either the viability or the profitability of the
newly respected cannabis sector. Significant money has already been
made in the nascent industry, and it appears that a plethora of new
winners will be created in the burgeoning sector.
For more information on Wildflower Brands, visit Wildflower
Brands Inc. (CSE: SUN) (OTCQB: WLDFF)
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