The cannabis industry has come along way since Colorado made history in 2012 by legalizing recreational cannabis. New York joined 20 states in legalizing recreational marijuana use in March 2021, but has just began issuing its first 36 cannabis dispensary licences, the majority of the businesses are owned by people who have been disproportionately impacted by the drug war, while others are run by nonprofit organizations. The licences approved by the state’s Cannabis Control Board were the first of 175 that the state intends to issue, with many of the first round reserved for applicants with prior marijuana-related convictions. With recreational marijuana legalization spreading throughout the United States and beyond, cannabis products are becoming more readily available and increasingly varied. Flora Growth Corp. (NASDAQ:FLGC), Organigram Holdings Inc. (TSX:OGI) (NASDAQ:OGI), Cronos Group (NASDAQ:CRON) (TSX:CRON), Canopy Growth Corp. (TSX:WEED) (NASDAQ:CGC), and Village Farms International, Inc. (NASDAQ:VFF) are expanding their product lines.
Flora Growth Corp. (NASDAQ:FLGC) is a leading all-outdoor cultivator, manufacturer and distributor of global cannabis products and brands. Flora operates one of the largest outdoor cannabis cultivation facilities. It relies on natural and cost-effective cultivation practices to supply cannabis derivatives to its various business divisions of cosmetics, hemp and food and beverages.
Flora Growth has continued to achieve positive revenue growth in 2022. On November 28, the company reported Q3 2022 revenue of US$10.8 million, a 414% increase from the previous year and $25.7 million in revenue for the first nine months of 2022, which represents an increase of 510% year-over-year (YoY). The revenue increase is primarily attributed to the acquisitions of JustCBD and Vessel.
Flora Growth also saw gross profit increase by approximately 703% YoY to approximately $5.0 million.
“The third quarter of 2022 was another exciting quarter for Flora as we continued to lay the foundation of our business for the long-term,” said Luis Merchan, Flora Growth Chairman and CEO. “During the quarter, we exported products to several new markets, including distribution of our Colombian grown high-CBD dried cannabis flower to Switzerland and the Czech Republic, as well as CBD isolate to the United States. Our global distribution network, coupled with our high-quality Colombian flower and derivatives, leave Flora well positioned to capitalize on the evolving global cannabis landscape.”
Flora Growth also reaffirmed that it is on track to meet its revenue guidance of $35-45 million for 2022.
Flora Growth Corp. (NASDAQ:FLGC) also recently announced the completion of its new laboratory, which specializes in producing compound formulations based on cannabis derivatives and traditional master formulas. Flora Lab 4 will be located in Bogota, Colombia, and will join Flora’s existing laboratories that produce cosmetics, phytotherapeutic products, dietary supplements, and cannabis extraction and transformation.
The new laboratory will provide prescription based cannabis medications and third-party clients with master formula design, development, and manufacturing services, as well as cannabis knowledge, professional team, and modern facilities to promote industry growth.
The initial prescription formulations of Flora Lab 4 were created to aid in treating specific ailments such as social anxiety and acne. The laboratory is awaiting an INVIMA regulatory inspection to complete certification. Once this step is completed, the new formulations will be available to Colombian prescribing doctors.
Flora Growth‘s Life Sciences division is focused on long-term growth by utilizing raw materials from its cannabis cultivation and processing operations in Colombia for applied research initiatives in medical cannabis around the world. The Lab will be the Company’s focal point for the discovery, development, manufacturing, and commercialization of phytocannabinoid-based prescription medicines and nutraceutical products to treat a wide range of ailments and diseases.
Cannabis Companies Enter Agreements and Report Results
On November 18, Organigram Holdings Inc. (TSX:OGI) (NASDAQ:OGI) and Canndoc Ltd., a subsidiary of InterCure Ltd., Israel’s largest and most established pharmaceutical cannabis producer, announced a new multi-year agreement for Organigram to continue the supply of dried flower to InterCure. Organigram and InterCure previously entered into a strategic supply agreement in June 2020 that called for a minimum supply of 3,000 kg, which has been met. The New Strategic Agreement calls for up to 20,000 kg to be delivered to InterCure’s global supply chain. The New Strategic Agreement, in particular, calls for a 10,000kg commitment, with Canndoc having the option to order up to an additional 10,000kg from Organigram during the three-year term. Since July 2022, approximately 2,800 kg have been delivered to Canndoc by Organigram and credited against the total volume commitment under the New Strategic Agreement.
Cronos Group (NASDAQ:CRON) (TSX:CRON) recently appointed James Holm as Chief Financial Officer. Mr. Holm takes over for Bob Madore, who is retiring from the Company. Mr. Holm brings nearly two decades of finance and accounting experience from leading companies in a variety of industries to Cronos. He was most recently the Global Vice President of Finance Transformation at Vertiv, a global provider of critical digital infrastructure and continuity solutions, where he oversaw the company’s centralization, standardisation, and optimization of finance processes to a Global Shared Service hub. In Q3 2022, Cronos reported net revenue was $20.9 million, up $0.5 million from Q3 2021.
During the second quarter, Canopy Growth Corp. (TSX:WEED) (NASDAQ:CGC) announced a comprehensive plan to accelerate entry into the US cannabis market by forming a new US holding company, which is expected to accelerate growth and market expansion. Despite the continued effects of macroeconomic headwinds and evolving Canadian cannabis market dynamics, net revenue increased by 7% in Q2. BioSteel’s net sales went up 299% from the previous year, thanks to more money being invested. After the end of the quarter, a manufacturing facility was bought, which is expected to help the brand continue to grow quickly in the US and improve its gross margin. The company announced the sale of its Canadian retail operations, ensuring that its cost-cutting plan stays on track to save between $70-$100 million in Selling, General, and Administrative (SG&A) costs. Also, Canopy keeps looking for ways to concentrate its Canadian cannabis operations.
Village Farms International, Inc. (NASDAQ:VFF) reported total cannabis segment net sales went up 14% year over year to $35.5 million in the third quarter, which is 50% of Village Farms‘ total sales. Canadian cannabis net sales went up 15% to a record $30.4 million (C$38.0 million), with a gross margin of 32% and an adjusted EBITDA of $5.4 million (C$6.7 million); and, Canadian cannabis retail branded sales went up 46% year-over-year and 26% sequentially. Net sales for US cannabis were $5.1 million, with a gross margin of 69% and no adjusted EBITDA. This is a big difference from the previous year, when net sales were $3.9 million, with a gross margin of 68% and an adjusted EBITDA of $0.7 million.
In October, Flora Growth signed a binding contract to buy 100% of Franchise Global Health, a global player in the pharmaceutical and medical cannabis sectors with main operations in Germany.
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