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What’s better than a milkshake on a summer’s day?
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A Bhang Cookies and Cream White Chocolate milkshake??
Milkshakes are perhaps one of the most indulgent summertime treats. A perfect blend of ice cream and milk, topped with anything you can imagine, really. Including cannabis-infused chocolate. Bhang THC Cookies and Cream White Chocolate to be exact.
With 10 mg of THC per bar, you can turn your cannabis experience into something a little more decadent (and a lot more chill). All you need is some Bhang Cookies and Cream (or any of our 7 delicious flavours of Bhang), your favourite flavour of ice cream, and some chocolate sauce.
Get the recipe:
https://www.indiva.com/blog/recipes/bhang-cookies-and-cream-milkshake/
Edibles taking bigger share. That good news for INDIVA.--->>>Food industry veteran Stephanie Gorecki, VP of Product Development at Cresco Labs, and Cory Rothschild, SVP of Brand Marketing talk about why edibles are the future of the cannabis business with @CrainsChicago
May 21, 2021 03:10 PM
https://www.chicagobusiness.com/marijuanacannabis/why-edibles-are-future-marijuana-business?fbclid=IwAR0Gjkh7Vi_FuXb3pq_8PTg5EHC94uKPfT96SM4eVcngkifyoXEntrJf8Oc
Why edibles are the future of the marijuana business
Chicago, with its deep roots in the food biz, is well positioned to capitalize on the growing popularity of THC-infused snacks.
By: JOHN PLETZ
Food industry veteran Stephanie Gorecki, head of innovation at Cresco Labs on the West Side, says, “For us, it’s a food-formulation process. It’s identical to any mainstream (consumer packaged goods) company.”
At a small food laboratory on the West Side, Chicago's rich history in candymaking is mingling with its new role as a hub of the burgeoning cannabis industry.
That's where food industry veteran Stephanie Gorecki and her colleagues are cooking up candies for their new employer, marijuana company Cresco Labs.
On a recent afternoon, a machine squirted dark-red liquid into flexible molds, turning out nearly 150 gummies to be dusted with powdered sugar. Nearby is a rainbow-colored assortment of gummies that will hit the shelves in time for next month's Pride celebrations.
Cresco and its rivals are developing more edible pot products as existing customers and newbies look for ways to get high other than smoking. Edibles made up about 21 percent of total weed sales last year, trailing smokable "flower" at 51 percent, according to Chicago-based Brightfield Group. But edibles are growing faster. Brightfield expects them to grow 20 percent annually through 2025, compared with 15 percent for flower.
Edibles, which range from chocolates and gummies to hard candies and mints, are critical to projections that the U.S. marijuana industry will more than double to $41 billion in sales by 2026.
"Who doesn't like gummies and chocolates," asks Tom Adams, CEO of Global Go Analytics, a cannabis data and consulting firm in Carmel Valley, Calif. "The world's not making any more smokers. There's a significant portion of users who are not going to inhale."
It's another step in the evolution of cannabis from an illicit backwater to a mainstream consumer-products business. Weed companies are racing to develop new products and brand names while food, alcohol and other consumer-products giants are on the sidelines. For now, established packaged foods companies like Chicago-based Mondelez International, maker of Oreo cookies, Cadbury chocolates and other treats, are still leery of a business that's been legalized by many states but not the federal government.
That buys pot companies time to figure out how to make edibles tasty enough to compete with the candies consumers are used to. To get the flavors right, they're tapping Chicago's deep pool of expertise in candy, food and consumer products. The city has long been a center of candymaking, with names such as Mars, Wrigley and Brach's. Chicago factories produce such sweets as Tootsie Roll, Lemonheads and Snickers.
Gorecki, who leads Cresco's 10-person R&D staff, came from Chicago food ingredient maker Newly Weds Foods. Megan Coffey, a former pastry chef who runs the Cresco's R&D lab, came from Victus Ars, a boutique candy developer in Chicago. Food scientist Adriana Yepez previously worked at energy-bar maker RxBar and Edlong Flavors, a dairy-flavor specialist in Elk Grove Village.
Their lab is at the Hatchery, which rents space to food companies big and small, in Chicago's East Garfield Park neighborhood. The smell of fruit from a batch of gummies hangs in the air of the small test kitchen.
"For us, it's a food-formulation process," Gorecki says. "It's identical to any mainstream (consumer packaged goods) company."
It's as if Willy Wonka won a cannabis license—except there's no weed. State regulations require that THC, the chemical that gives weed its high, stays at Cresco's licensed processing facility in Joliet. So the lab uses a synthetic flavoring that mimics the pungent taste and smell of marijuana.
Hiding or offsetting that distinct flavor takes considerable effort. Turmeric and ginger, lemon balm, chocolate, vanilla and a host of other ingredients help food scientists get the desired colors and tastes. "The fat in cocoa butter is wonderful for masking flavors," Gorecki says. Cresco was an early player in edibles, signing on Chicago pastry chef Mindy Segal for a high-profile line of gummies, chocolates and other treats. Now the company is broadening its product lineup to appeal to different types of users, doubling the number of brands in the past year to eight. The strategy is straight out of the consumer packaged-goods playbook.
"People are using (the products) to relax, to sleep, for wellness and focus," says Cory Rothschild, Cresco's head of marketing, who joined the company from Gatorade, another Chicago consumer brand. "You need more than one brand to address all these needs."
One Cresco offering, Wonder, is aimed at attracting new users, who are going to be key to the long-term growth of the industry as recreational-use markets mature.
"New consumers do prefer edibles significantly more than other categories of cannabis products," says Matt Zehner, an analyst at Brightfield.
To win new customers, companies will have to reassure users whose only experience with edible marijuana was of the DIY variety.
Getting the proper dosage of THC is crucial. In the early days of medical and adult-use marijuana sales, companies focused on giving customers the most bang for their buck. Most products had 10 milligrams of THC. Now they're focusing on entry-level amounts of 1, 2 or 3 milligrams, adopting the mantra of "start low and slow."
The holy grail for weed companies is to make the product more like alcohol, which is why companies such as Cresco and others also are looking at cannabis-infused drinks. Chicago-based Green Thumb Industries making and selling drinks in Illinois from Cann, a California-based company. Curaleaf, which recently acquired Chicago-based Grassroots, launched Select Squeeze, a line of flavored THC concentrates that can be added to water.
"It's about expanding the universe," says Matt Darin, regional president for Wakefield, Mass.-based Curaleaf. "There are millions of residents who don't want to smoke products, and maybe vapes and edibles haven't resonated. A beverage, which everyone is accustomed to, (is) a natural fit."
Will Sundial Growers' Wheeling and Dealing Pay Off?
Contributor
David Jagielski The Motley Fool
Published Jun 2, 2021 6:25AM EDT
https://www.nasdaq.com/articles/will-sundial-growers-wheeling-and-dealing-pay-off-2021-06-02
Sundial Growers (NASDAQ: SNDL) owes a lot to retail investors. If not for the stock's sudden and unexpected surge in value earlier this year, the company would not have been able to take advantage of its inflated share price when it decided to undergo not one, but two, offerings shortly afterward. Management's quick actions could pay off for the business in the long haul.
In recent months Sundial has been active on the M&A front, investing in other cannabis businesses. But are those moves good ones, and do they make the pot stock a more attractive buy today?
The company has been busy
The way that Sundial has been wheeling and dealing over the past few months, investors might think it's Black Friday on the markets. Here are all the deals the company has announced since February:
It made a strategic investment of 22 million Canadian dollars in Indiva, which makes edible cannabis products. In addition to buying shares of the company, Sundial will also provide Indiva with a term loan facility.
It created a joint venture, SunStream Bancorp, with SAF Group. The venture, which is split 50-50 between the two entities, will look at potential investment opportunities in the cannabis industry, both globally and within Canada, including possible SPACs. Sundial initially invested CA$100 million in March, and increased that to CA$188 million just a month later.
It acquired shares of Valens for just under CA$2 million. Together with its previous purchases, Sundial now owns more than 10% of the business. Valens is a cannabis extraction company that has generated CA$72 million in revenue over the trailing 12 months.
Its most recent acquisition was on May 5, when Sundial announced it would acquire all of the shares of cannabis retailer Inner Spirit in a cash-and-stock deal worth CA$131 million. Inner Spirit has 86 stores across Canada and plans to hit 100 as early as this summer. Last year the company reported CA$27 million in revenue.
Thankfully that number is just a fraction of Fire & Flower's revenues with fewer stores reporting. I have a position there too. Because of the F&F deal with Couche-Tard, Sundial probably couldn't squeeze in there. Just my opinion. - FUNMAN
Today, right now I would rather own Sundial with the Reddit effect.
Shares Outstanding = 1.9B and they are a money losing gusher.
After soaking their shareholders from survival motivated equity raises, Sundial might just be looking at their salvation as investing in other related cannabis companies that are going to be making money.
Their investment in Valens is already paying off.
$5.95akadawson-m Member Level Thursday, 06/03/21 09:12:02 AM
Re: FUNMAN post# 329 0
Post #
330
of 330
You'd rather own Indiva and not Sundial?
You'd rather own Indiva and not Sundial?
Will Sundial Growers' Wheeling and Dealing Pay Off?
There could be plenty of deals still to come.
By: David Jagielski
https://www.fool.com/investing/2021/06/02/will-sundial-growers-wheeling-and-dealing-pay-off/
Jun 2, 2021 at 6:25AM
Sundial Growers (NASDAQ:SNDL) owes a lot to retail investors. If not for the stock's sudden and unexpected surge in value earlier this year, the company would not have been able to take advantage of its inflated share price when it decided to undergo not one, but two, offerings shortly afterward. Management's quick actions could pay off for the business in the long haul.
In recent months Sundial has been active on the M&A front, investing in other cannabis businesses. But are those moves good ones, and do they make the pot stock a more attractive buy today?
The company has been busy
The way that Sundial has been wheeling and dealing over the past few months, investors might think it's Black Friday on the markets. Here are all the deals the company has announced since February:
It made a strategic investment of 22 million Canadian dollars in Indiva, which makes edible cannabis products. In addition to buying shares of the company, Sundial will also provide Indiva with a term loan facility.
It created a joint venture, SunStream Bancorp, with SAF Group. The venture, which is split 50-50 between the two entities, will look at potential investment opportunities in the cannabis industry, both globally and within Canada, including possible SPACs. Sundial initially invested CA$100 million in March, and increased that to CA$188 million just a month later.
It acquired shares of Valens for just under CA$2 million. Together with its previous purchases, Sundial now owns more than 10% of the business. Valens is a cannabis extraction company that has generated CA$72 million in revenue over the trailing 12 months.
Its most recent acquisition was on May 5, when Sundial announced it would acquire all of the shares of cannabis retailer Inner Spirit in a cash-and-stock deal worth CA$131 million. Inner Spirit has 86 stores across Canada and plans to hit 100 as early as this summer. Last year the company reported CA$27 million in revenue.
That's a lot of activity in a short period. The cannabis producer is certainly diversifying its operations, while also making investments in other businesses. For a company that generated just CA$11.7 million in gross revenue in its first-quarter results for the period ending March 31 (for a year-over-year decline of 29%), these additional investments will give Sundial more opportunities to pad its struggling top line.
What I like in particular is its investment in Indiva, which could expand its product offerings. And its acquisition of Inner Spirit should complement its shift in strategy away from wholesale and toward branded sales. Sundial was strategic with its moves, and didn't blow all of its money on one big acquisition, leaving plenty of options on the table moving forward.
Sundial is still sitting on lots of cash
Although the company has been busy investing its money, investors shouldn't be surprised if it continues making more moves. Sundial reported that as of May 7, its unrestricted cash balance totaled CA$752.7 million. That's higher than the CA$719 million it reported on March 15, and more than 12 times the CA$60.4 million it had at the end of 2020.
What's great for investors is that the company isn't burning through all of its cash, so that money can provide stability for the business. In its most recent quarter, Sundial used up CA$34.4 million on its day-to-day operating activities. If it maintains that pace, its cash (assuming there are no other investments or acquisitions) should last for more than 21 quarters.
Should you invest in Sundial Growers?
There are many reasons Sundial looks like it may be a bad buy: The business isn't growing, it has incurred net losses of CA$330 million over the past four quarters, and it is spending most of its money on acquisitions rather than its core operations. But with a stockpile of cash and plenty of opportunities to grow its business through these new deals, none of those reasons should deter investors. I think Sundial is in the midst of a turnaround, and may look drastically different a year from now. And that's what likely has many investors excited about the pot stock, as it is expanding and making strategic moves that could put it in much better shape in the not-too-distant future.
However, I wouldn't invest in the company just yet -- I am curious what it will do with all these moving pieces and how well they fit into its overall strategy. While at first glance the business looks like it may be on the right path, it's far too early to tell right now. I'd definitely keep a close eye on Sundial, but I wouldn't pull the trigger and buy its stock just yet.
NEW Indiva Flower Coming Soon
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Did someone say donuts? ??
No, we didn’t get into the baking business. Well, maybe we sorta did...but not in the traditional sense. Introducing Powdered Donuts, the newest strain from Indiva.
Powdered Donuts is a sativa-dominant hybrid strain with sweet, doughy flavours finished off with a hint of citrus. Featuring a unique terpene profile led by caryophyllene, limonene, and myrcene, this strain has a THC potential of 20-26%.
Powdered Donuts will be available as 3.5 g jars, which are coming soon to Ontario. Keep an eye out for Powdered Donuts in your area, and get ready to enjoy some “baked” goods without the dusty fingers.
Earnings Call Transcript--->>>Indiva Limited (NDVAF) CEO Niel Marotta on Q1 2021 Results - Earnings Call Transcript
Jun. 01, 2021 6:45 PM ETIndiva Limited (NDVAF)
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Indiva Limited (OTCQX:NDVAF) Q1 2021 Earnings Conference Call June 1, 2021 2:00 PM ET
Company Participants
Neil Lock - IR, Lock Consulting
Niel Marotta - President and CEO
Conference Call Participants
Neil Lock
Welcome everyone. Thanks for joining us. I hope you're having a great Tuesday. It is my pleasure to welcome Niel Marotta, President and CEO on Indiva. Niel, it's all yours.
Niel Marotta
Thanks Neil. Thanks for the introduction. I'm Niel Marotta, I'm the President and CEO of Indiva Limited. Thanks for joining us today and taking time out of your busy days. We're doing this in the middle of the day for a change, I think to accommodate everybody across all the time zones. So, this time works, I always appreciate feedback.
I'm going to launch right into it, I'll try not to -- going on 30 or 40 minutes, I'll try to keep it to a tight 15 minutes or so on the presentation, maybe a little longer, we've added some slides and then we'll open it up to Q&A, which is always fun for everybody I hope.
So, this is first slide that you see here, this shows a variety of our products, we reported our Q1 financial results today and the real takeaway there 89% of our revenue is from edible products. And so you can see Wana, Wana Quick, and Bhang Chocolate, along with some Ruby Sugar, which we have not launched yet on the title page. I'm going to go and review this forward-looking statements.
So, a quick overview, we are the number one edible company in Canada. We started -- we have 48% market share as at April according to Hifyre data that's across the entire edible category. We're very happy with that. The numbers continue to trend higher in Q2 and I'll break down some of that more specifically, we'll get into it. We're nine provinces in two territories, including the medical channel where we sell through medical cannabis by shoppers, whilst can markdown with medics.
And right now our current market cap is around $60 million. So, well below our peers. And I'll discuss that a little bit later on some of the slides that I have.
Cash balance at the end of the quarter were $7 million, our long-term debt is $14 million, none of which is due for another three years or so. And the convertible debentures make up $3 million of that and they are all well into money being priced at $0.20 and $0.25.
Here's a few pictures from our facility. We're in London, Ontario 40,000 square foot facility that we own, it's fully built and fully licensed. This is where we make all the gummies, the chocolates, the pruvals, and the capsules.
This is a little summary of the last few quarters. So, you can see on the revenue side, we did dip a little bit versus Q4, we got into that on the conference call, but short story is number one, very difficult comp, we had a big sell in in Q4 of new products we've want to seasonality-wise December is always a little stronger than January and February. And then of course biggest impact that we felt was the lockdown of the stores in Ontario, this makes a big a big difference.
We expect growth to -- sequential growth to resume in Q2, we made that public in our press release letter call and we would expect record revenue in Q2 based on the purchase orders that we've received. In terms of the gross margins. I see we've got a question here already about what do we expect our margins to be?
We're not going to give you an absolute margin guidance number, I think somewhere around double this would be great. Maybe even a little bit better. I'm going to talk -- I might as well do it now, but I think we've gotten into the distillate costs on our call, and I think it is worth unpacking. So in Q1, our gross margin was 19%, that's definitely better than 12 at Q4, but not good enough, in our opinion.
But our distantly costs are still quite elevated. So, average cost per milligram of distillate was about $0.05 in Q4. That dropped to $0.035 to $0.04 cents in Q1. Current COGS in Q2 would be going through in about a $0.015 and spot prices for distillate today are under a $0.01. So, what does that all mean?
In Q1, we sold 30 million milligrams and so if you were to duck to deduct say $0.03 or a little bit over $0.03 per milligram to get to where pricing is today, that would have added roughly a $1 million of profit to our EBITDA and we would have been EBITDA positive.
So, we reported minus $0.5 million, a loss of $0.5 million on the EBITDA line and had we got into the cheaper distillate sooner than I think we -- the bath would say all things being equal, we would have been even positive. So, this this has a big impact.
It will benefit Q2 and Q3. Just to give you some idea, I mean, we reported $6.2 million of net revenue and had we saved a $1 million of display costs in the quarter would have added, again, apples-to-apples, all things being equal would have added about 15 points to our gross margin, we would have been in the low to mid 30s. With still room to improve. So, I hope that answers the margin question, that's more detail than we've ever given. And I hope it doesn't hurt our pricing.
This, this is a look here at Canadian store growth. I mean, obviously, we've seen this isn't the growth in the number of stores, but we're at about 1,800 plus stores now. Ontario is over 700 stores and on track to be over 1,000 by the summer. So, let's hope that we open up soon and people can actually go in those stores.
With respect to Edibles directly, when we look at mature markets, the Edible category is typically sort of 15% to 20% of the total pie, sometimes a little bit lower, sometimes a little bit higher, depending on the market and season. So, in Canada and we'll get into these numbers shortly, but we think the Edible category itself has a lot of growth left ahead of it.
People need to remember, remember that Edibles weren't even illegal until December of 2019 and really didn't start getting into the market until January 2020. So, the entire Canadian edibles market is not even a year and a half old. We began shipping Bhang Chocolate in February of 2020 and we began shipping Wana Gummies, which is the number one edible in the country with over a third of the total category, not just the gummy category, it's more than half the gummy category. But when you look at Edibles, it's about 36% of the total. And we only began selling those in September. So, we've come a long way pretty quickly.
And just to back up real fast here to our revenue chart. This is why you see that jump in Q4 and Q1 that reflects launching gummies in late September and so we got the real full benefit in Q4.
I'm going to take you through a little bit of a walk on the Canadian market and what it all means to Indiva. So, right now we're at about $300 million a month in terms of the total market size, $3.6 billion annualize that continues to grow. And you can see that in the chart here.
And then on Edible sales, we hit about $13 million in the month of April. These are retail numbers from Hifyre. And so this next slide here that we've added shows how the category itself has grown. And what I point out is two things. One, it's always nice to see charts that go from the bottom left to the top right.
Secondly, there's a bit of an acceleration in the chart in September, because that's when we launched Wana Gummies. So, I would say we're contributing a good amount of this growth, I don't have the number off the top of my head of how much incremental growth in a category was driven by Wana and by Indiva, but a good a good part of it for sure.
This is the number that in U.S. markets is closer to 15%. So, I mean, I don't think it's unreasonable to expect this category to double in terms of its relative size or in size relative to the total pie. In fact, it probably should triple or more and that's going to be driven by new product introduction and innovation and education, all of which we plan to keep investing.
Inside the Edible category, this is really a breakdown. So, Gummies and Chocolates make up 95% of the category itself and what you can tell I think from this chart is the chocolate market is not expanding dramatically, it's really being driven by sales in Gummies and in terms of absolute dollars. So, we're the -- as you said, the category leader and the subcategory leader with over half the gummy market nationally. So, we're very proud of that.
Those of you that think that the Edible category is a small category, I guess 4% might sound small of a pie that's growing as quickly as it is. But again, I think we've -- you've heard me make the case for why we think the category will grow, but more importantly, having that category captaincy that we do have that's been powerful enough for us to be the 12th ranked LP in the country according to Hifyre data. That's for April.
And again, this is also against companies that sell product into Quebec, where we are not yet able to sell Edibles through the recreational channel. If you were to exclude Quebec from the data, our rank would rise to 10th. So, little odd thinking about our market cap and the success we've had and how well our products are liked by our customers, and the great feedback we get from the stores and the bud tenders, the provincial wholesalers. And you look at some of the names, some of which have been acquired in the last six months that are ahead of us on this list and it's a little bit puzzling.
I mean, looking down the list, I mean Ruby Cannabis just acquired for $935 million, I believe and $925 million I think, and Supreme 7ACRES was acquired not too long ago by Canopy for over $400 million. So, if you were to look at their respective market share, let's say on a per market share point basis, which is a bit of a goofy analysis, but, you'd probably -- it would work out to about 150 million of market cap per share of market share -- per point market share.
If given were attributed that kind of valuation, we'd be, probably a $3 stock at this point $2 or $3 stock, I'll call it 2% to 2.5% of the overall market, not just not just edibles, but the overall market. That kind of number would be a 300 million plus market cap, not 60 million. I can answer more questions about that, if that wasn't clear.
This actually shows our improvement. We chose January 20, because that is when edibles became legal. And that is our core business with close to 90% of our revenue coming from edibles. And you can see, according to Hifyre, we've gone from 23rd in the country to 12th.
And in on the OCS, side of things, OCS data, we've gone from 30th to 9th, and very happy that we've cracked the top 10 in terms of again, this is overall market share across all categories. Obviously, our sales are driven primarily by edibles, but this is against all categories.
On more slide here again, this is -- this is our market share. So you can see the edible share on the left at 48% there's the orange bars, and then our overall market share. I think that's around 2.2% as of April. And you can see the big increases we've had in the overall market share. I mean, we were well under 1% market share before we launched Wana. And so it's had a very positive and powerful impact on our company.
And this is the subcategory share, so the black line is Gummies, the orange line is chocolate. You can see the sharing Chocolate has been essentially flat. But our sharing Gummies is going up dramatically and still rising. So we're very pleased with that.
Back to Indiva specifically, I joke all the time I did a presentation in Vancouver before the pandemic started about a year and a half ago. And we had one lonely checkmark on this slide in the top left corner selling pre-rolls Ontario and now you can see we've dramatically expanded the breadth of our offering across the country as well as the depth of the product lineup. And you know, once again, obviously the Chocolate the one that Gummies they want to quick, I've had a huge, huge impact.
I'll let you look at this team on your own and happy to answer questions about it. But everybody in this team now is very, very familiar with the Cannabis industry. Most of these good folks here worked in the CPG industries elsewhere and brought that great knowledge to Cannabis. And we've got a great team, very happy to work with them every day.
These are our brands, so you all probably know Bhang and Wana, Artisan Batch is dedicated to craft cannabis. We can talk a little bit about that and we'll be launching our line of infused sugar salts and sweet tarts shortly.
On top of the page, we do use the corporate brand and even on some of our products namely a bit of Flower and Pre-rolls and Capsules, which sell well in Ontario. Artisan Batch, as I mentioned briefly, this is a brand dedicated to high premium, high quality craft cannabis, high potency, strong terpene profile usually typically over 3%, and so we were constantly looking to partner with more micro cultivators and bring the best flower product to market across the country. We're up to 10 SKUs now with Wana, you can see them there including the three Wana Quick SKUs that launched unfortunately in the -- in the middle of another lockdown in Ontario.
And so tough to quantify, but I'll tell you that that sales of Wana Quick are going better in the West where stores stayed open versus Ontario where they were closed, and I think that relates to helping educate customers about the differences between the products and Wana Quick is a fast onset product with a slightly higher price point, and I'm very hopeful that once the store is open again more customers become aware of the product and also aware of the different features and benefits and we hope that will drive sales in Wana Quick in Ontario.
We're up to seven Chocolate SKUs through Bhang. And the last two were that we've just launched on the bottom, the Caramel Mocha and the Cookies & Cream. The Cookies & Cream is sold very, very well. I would say probably ahead of our expectations, in the Mocha side of things, I would say, meeting expectations very well.
And then at the bottom there, you've got some more products that -- that will be launching in the second half of the year, there will be sugar, which is infused Cannabis Sugar, Sapphire, Infused Salt, and the Jewels that you see in the middle will probably launch those first.
And those are very much like a sweet tart or rocket it, it takes the Ruby Sugar, and it's pressed into a tablet with powderized fruit. And so it's an interesting product and very different from anything that's on the market currently. We're always looking for new partnerships. And I would say to everybody, please stay tuned.
I won't bore you with slide here, going through our corporate history since going public at the end of 2017. But what I would say is, since we did get our license to sell edibles, a little over a year ago, we said January -- end of January 2020. Obviously, the business is accelerated a lot. In many ways it's a completely different company. And so I would encourage you to look closely at the changes between 2019 and 2020, and even into 2021.
Question-and-Answer Session
A - Niel Marotta
First one was about margins. What do we anticipate for the rest of the year? I'm not really comfortable giving you an exact number. I think that's where the kind of environment where anything could happen. So I think it's difficult to say, but I would point back to, let's say, the mathematical guidance on the impact of distillate, and so certainly we expect to get to north of 30%, just based on those cost savings. The question is, how quickly do we get there?
When we get there in Q2, or Q3, that sort of being north of 30%. I guess you'll just have to stay tuned. But I'd like to think we could get to 40% gross margins, between the savings and distillate and some other improvements in efficiencies. But, certainly the big change, and the faster change will come from lower a distillate costs sort of filtering through.
Next question, here. I think this is kind of on the same line of things here that the mathematically packed to the distillate. Basically, the question boils down to would we have been EBITDA positive if just flip were costed at $0.15?
The answer is yes. Yes, we were.
With me here, next question. Okay. Question is regarding Sundial question is how did they $22 million investment from Sundial benefiting Indiva and how is the cash use?
Well, I think it certainly improved our balance sheet. I mean, at the end of Q4, we had about 300,000 of cash left and at the end of Q1 on the balance sheet anyway, and at the end of Q1 we had over 7 million. So certainly provided, let's say a lower risk balance sheet for our shareholders and provided more financial strength and better working capital. How are the funds used? I would say 60% plus were used to refinance all of our debt short term and long term. And so now we've got cheaper debt, less onerous and with a three year due date its interest only. So that was a big benefit.
And the balance is still with us, or went out the door and fees is, you know, probably all aware of -- that fees doesn't mean the management fees means to outside players. Didn't even retire all its debt, we did not retire all our debt, we refinanced our debt with a Sundial deal. So we -- still do have 11 million of long term debt plus 3 million a convertible debt. As I mentioned, that's all in the money. And the 11 million loan from Sundial, this is interest only.
Do I have an EBITDA positive timeline? Well, I mean, I could give you a date and maybe I'd be right maybe I'd be wrong. I think what we've done is probably more powerful I’m giving you the math on what the impact would have been had we had lower distillate costs in the quarter.
It's a process from buying the distillate, having a raw materials, putting it into finished goods, and finished goods going through the supply chain out the door, and obviously hitting a shelf and then someone buying it.
And so we've gone from $0.05 to $0.035 to $0.04. We think we'll be substantially lower in Q2, probably somewhere between $0.015 and $0.02. So you can kind of do the math and tell me when you think we're going to be EBITDA positive.
Next question. when you look at edible sales slide, as progressed over the last months, help us understand how much of that is online in-store? How do you expect to be able lock down and drive store sales?
Thanks, David. Look, online is a pretty small part of the business. So in a province like Alberta, it's maybe only 2% of all the sales in terms of people ordering right from provincial wholesaler. In Ontario, it's about 10%. So 90% of all the transactions happen in-store. During the pandemic and during the lockdowns that might typically rise to about 15%. So it's -- let's say, that the small majority is of all sales are happening online.
So that I mean, look, I mean, I think that ties into the second part of the question, once the lockdown ends, I absolutely expect people to go back to stores and I would expect the percentage of online sales to drop accordingly. And I think it will grow the whole pie. I mean, this might sound odd to folks that are cannabis enthusiasts, but there's a lot of people that still don't want to buy cannabis with a credit card. They want to go to a store, and they want to pay cash and leave with their product. So I think that combined with hopefully, just a sense of relief, and people are socializing again outside of their home, whether it's concerts or movies or restaurants, I think that will help drive growth.
And then the last piece is education. So when people go to a store and speak with a budtender, and edibles is a bit of a different category, right? I mean, people have sort of -- I think on balance people have worse, I would say, worse stories about edibles that they've heard secondhand, and other cannabis products, maybe with the exception of some of the stuff that was happening with vapes a year or two ago, but that seems to have corrected itself.
So education is important. People don't know how many milligrams to take. They want to have some guidance on what to take and what to expect. And that's very, very tough to do, if not impossible to do online. And we can read as much as you want. But nothing replaces speaking with another human being that has experienced with edibles and can help guide somebody. So we're very bullish on the impact once doors are open again, and hopefully they stay open.
Next question was about previous revenue guidance of $30 million to $35 million for the year?
Yes, I mean, I think we try and stay away from giving specific numbers. But look, we did a little over $6 million of net revenue in Q1. If all we did was annualized that number, we'd be at $25 million versus $15 million in 2020. And certainly, we expect and we've actually put in our press release that we expect record revenue in Q2, meaning, we would be above the $7 million in net revenue that we reported in Q4. So I have no problems with that range. But I think we're going to sort of stay away from giving specific numerical guidance.
Next question, what factors are bringing the cost of distillate down? And will there be further fluctuations in the price in the future?
It's basically just too much supply. There's -- and we started from a very, very high price point. So I mean, if you look at mature markets, probably somewhere between half a penny and a $0.01 a milligram is the right range, probably closer to half a penny. We're not quite there yet in Canada, although, we're getting close.
And really, there's -- the best analogy I can give you is, think of it like a toll booth where you don't have to use that road and you don't have to go to that toll booth. So there's a number of extractors in the country, public and private that have started up operations in the last three or four years or five years. That list is still growing.
There's a lot of biomass in the country. There's probably too much supply and far too much supply of low potency flower, which is ideal for extraction. So too much supply of flower means that the extractors can buy cheaper and then ultimately, we're getting -- they're seeing price pressure, and we're benefiting from this price pressure and price competition. Most of these extractors that again in my analogy of the toll booth, the reason you would choose toll booth A over B, it's just because of price. Once you get down to a very pure distillate really is commodity like and it's not exactly a completely a commodity, but very close to it. And so when you bet too much supply, prices come down.
In the future I don't expect huge amount of fluctuation, I don't think anything's going to slow down, let's say, all the grow operations in Canada, I don't think -- I would find it highly doubtful that there's some kind of newfound discipline on the supply chain in Canada. So I would expect still to see a good amount of supply distillate in prices, well, under a $0.01 for the foreseeable future. That's on a per milligram basis.
Next question is bubble hash is going to be the only hash that we’ll be selling?
This is a good question. We're starting with that. We're about to ship some product to Quebec. And so keep your eyes peeled for that if you're in Quebec. It's a two gram of brick of bubble hash that we've processed and we're sending off to Quebec.
I think we're -- in the background, we're speaking with different processors about products they can offer, and looking at that category and the different subcategories within extracts to see where we can be competitive and what makes sense and what's missing.
So the best answer I can give you really is stay tuned. But certainly, that's an interesting area. When you look at mature markets, flower tends to be sort of between 40% and 60% of the total, and then vapes are kind of 10% to 15% along with edibles and pre-rolls and these are broad numbers because they do fluctuate. But concentrates is a growing and interesting part of the pie. So we're taking a look.
Next question is on edibles, being number one for edibles, are there regulatory or other changes that you'd like to see or lobby for?
Good question. I think, certainly, there's a section of our customer base that is very vocal that they need -- well, they want to call it cheaper edibles, but I think what they really mean is more potent edibles. So maybe more bang for your buck, no pun intended.
So look, certainly, we're pushing for that. We'll see how it goes. I would not be surprised if at some point you are, or were allowed to make and consumers allowed to buy edibles that have more than 10 milligrams per package. It is a little bit strange that we sell a 30 count capsules that contain over 200 milligrams in that bottle, but when it comes to gummies, you can't have more than 10 milligrams in a package. So, maybe that relates to consumer behavior, and people are more likely to eat multiple gummies rather than take five or 10 capsules. But edibles are never the cheapest way to consume cannabis in any market.
The flip side of that is that I've got lots of customers that tell me regularly that 5 milligrams is too much for them. So I think it proves, again, everybody's different. And when regulations change to allow us to add more potency, we'll absolutely do it. But I don't think that the all, I should say, all the existing SKUs that have been in market for less than a year will go away.
Look, I think $8 is a fantas