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Thanks for the well thought out response. Looking forward to tomorrow's report. Hopefully still cash flow positive
This ranking shows that the cream is starting to rise to the top.
GoldRu$$h you have articulated pretty much exactly how I see it as well. Very well said.
I still think the Justin Dye playbook is built for success, but also well suited for hard times. Dye and team's experience is why I decided to remain a shareholder after Andy Williams made too many empty promises.
Dye can't control all variables; he can only apply what he knows and understands. I am not sure if he or anyone at SHWZ, had any idea the explosion of dispensaries in NM would occur. If they did, perhaps they don't fear competition, having confidence not just in the playbook, but the team that executes the Plan is highly skilled.
All politicians, regardless of their stripes, excel at milking cows. Until Federal regulation, such as declassifying from schedule 1, SAFE, interstate commerce, etc., come to fruition, the industry will plod along. Politicians will continue to figure out how to extract as much as they can from this industry. The pols know that with the inundation of NM with dispensary licensing will create a glut and many will eventually close down. They may be able to sleep at night with the notion that the strong will survive. I would guess that the explosion of cannabis dispensary licenses has more to do with the fees these investors have to pay the state for the privilege of losing their ass, when the market bottoms out in NM.
I do believe the strong will survive this planned storm and SHWZ is built for the long haul. The competitive grocery market is something that Justin Dye was born into, it's in his blood, he is not sweating this challenge. Of course, this is just my opinion, but I do plan on buying more whenever I have the opportunity. Best regards.
2022 aEBIDTA to tax-adjusted OCF conversion:
— CannaVestments (@CannaVestments) May 8, 2023
GTI: 52.6%
GRUSF: 39.2%
VEXT: 39.1%
MRMD: 37.9%
SHWZ: 11.7%
CURA: 11.7%
CNTMF: 6.0%
TRUL: 0.8%
VRNO: -0.5%
4Front: -13.9%
CL: -16.2%
AWH: -39.6%
AYR: -59.1%
TER: -93.8%
ACRG: -144.8%
CC: -176.4%
After looking at Starbuds busses in NY...Named brands and Schedule 1. Why do they matter? Bye-bye THAT sort of goodwill? Looks like a State-by-State level issue for any infringement type of remedy for now. According to the USPTO:
“At this point and time, the trademark office is very hesitant to allow registrations for goods that could be considered covering goods (services?) that could be considered drug paraphernalia”
https://www.greenmarketreport.com/trademark-appeals-board-upholds-controlled-substances-act-in-cannabis-trademark/
Been hard to stay positive in the sector lately. Just feels like nothing will ever happen at the federal level. Good to see that they backed research recently, since the old "research" was sponsored by NIDA (National Institute on Drug Abuse)...so obviously their efforts were in proving the "drug abuse" side...but it also seems like a delay tactic to give the pharmaceutical industry a chance to get out ahead in isolating, patenting and generating single molecule based drugs. If the industry has to wait for medical proof on the botanical side...i.e. compound molecules...then that will never happen because the FDA doesnt even have an established pathway for this type development. Also hard to see the analytical firms back off coverage. My frustration is that the industry, while potentially baby-stepping forward continues to shoot itself in the foot by bad actors; whether that be the side that used the farm bill loophole to put psychoactive substances on gas station shelves, and into the hands of kids...or just watching the MSOs in space that continue to prioritize the profit side of the industry (which I get because these are corporations) over best business practices to further the industry. The money spend for constant failure and/or the continue to focus on establishing siloed markets for their own benefit...while constantly complaining about (but shielding their eyes from) the external factors driving cost compression. Between work recently...and the (perceived) never-ending cycle cannabis bullshit...I am just finding it hard to want to pay attention anymore, but I continue to convince myself that if I am feeling this way we must be at the bottom, right? When in reality, I don't think we are...just trying to remain hopeful, while sadly wishing I could fast-forward the consolidation timeline so we could get rid of most of the garbage companies that exist out there today.
Wow, bid whackers loved that bid...
I was just interested in the Starbuds trucks becoming more visible, and wondering if that shoe will fall down the road.
Thanks for the well thought out reply.
Personally, I don think that the playbook is broken. We have seen efficiencies in the business and we have see margins maintained while the industry faces increased cost compression and competition...and while adding acquisitions. I think the 'corporate' industry is broken. I think the issue continues to be that cannabis still remains the wild-wild west. I mean, the annual sales of the industry continue to grow. People enjoy cannabis more than chocolate! There is obviously a market. What there isn't is consistent regulation, national regulation, good legal operators, consistent product and national pricing. The legal hurdles and state-by-state markets cause a level of dissociation. Regardless of the 280E tax burden, the lack of national cannabis reform, in my opinion, is the culprit. If the nation would open to the industry then the industry, as a whole, would right size (over time). Cannabis would commoditize and the price would settle around pricing that is competitive with the (already existing) national illicit market. However, until then, corporate cannabis will continue to see ebbs and flows between cost compression and re-stabilization as new entrepreneurs try their hand at the green rush...and as operators in low (expense) grow locations illegally fuel markets where the pricing is favorable. But then again, maybe that is all a pipedream because one could argue that may never happen due to the way that each state has had to establish/regulate its own market...the capital deployment...the tax revenue...etc. The problem is, there is a national (illegal) market and the corporate cannabis model will always struggle until it can compete...and re-establish itself...on a level playing field.
What dies NYC have to do with SHWZ?
did anyone catch this comment in the comments section to the article?
ohm
1 day ago
(Edited)
Marijuana business is booming here in the city. We just had our annual Cannabis Parade and Rally.
https://cannabisparade.org/
A couple months ago I noticed a truck on Park Avenue in mid town that looked like a Starbucks coffee truck. When I looked closer, it turns out is was a Starbuds truck selling weed. Now I see them all the time.
https://starbudsflowers.com/
The question needs to be asked honestly? Is the playbook broken? In N.M. our sales are less than when we bought the first 10 Greenleaf dispensaries. The sales have pretty much went down since N.M. went legal even while adding more dispensaries. Now we have close to 400 more this year. Going legal a year ago in N.M.a year ago and flat to down sales begs for answers. Anyone else 2nd questing the platbook? Whats next?
For what its worth, of course SHWZ not mentioned;
https://www.newcannabisventures.com/cannabis-stocks-are-cheap/
HERE IT IS !!! maybe California won't " infect" the rest of the country with this disease . https://www.zerohedge.com/commodities/californias-cannabis-market-crashes-northern-counties-brace-impact
10. Business Combination Transaction
Is this offering being made in connection with a business combination transaction, such as a merger, acquisition or exchange offer?
X Yes No
Clarification of Response (if Necessary):
The form says for acquisitions.
Trotted out on a Friday after the market close.
In related and less subtle news guess which low hanging fruit biz's they would target first as the run-off pits two Marxist-Democrats both in favor of racist reparations taxes?
https://www.thegatewaypundit.com/2023/05/denver-city-council-member-wants-white-owned-businesses-taxed-extra-and-redistributed-to-black-owned-businesses-video/
Clueless. Anyone shed any light what this is for?
Christine Jones? Chief Legal Officer 2023-05-05
Form D - 16 million stock sale? Again?
In the under $2 basket and a favorable argument to move up. There have been numerous changes since March. With the current and anticipated added growth the investor deck is incredibly dated. In sum, there is no current roadmap.
A flash of potential macro news (SAFE in the Senate) and then the talking heads look at the company and see nothing new to expound upon? Even Beeken missed the '23 Fort Collins, Standing Akimbo, NM organic growth, and Everest stories and a upping of the company size by a third. Number 1 on the list but little as updated from Big Tomato and 3-A-Light? It's not a there's no love, situation, but the most current ready reference isn't --and it shows as it reads here and there:
https://ir.schwazze.com/static-files/a6b813ad-1c03-4a7b-be60-e3bf7b789546
https://twitter.com/Beeken_health/status/1654471527373619200
Not holding my breath on anything big happening but it's nice to see legislation being worked and gaining visibility again.
All the best,
Knife
That's exactly right
Old fart McConnell has kept quiet. The regional banks, including the ones in KY are desperately begging for cash.
Well that's a bit of a good news. We'll see how it pans out
It would be nice.but can't get to hopeful. It sure would be nice and helpful.Refince some high interest debt!
From the Reddit board...
While Everest will add between $6MM to $7MM in revenues per quarter to the top line (see prior reddit post), it's important to note that the addition of Everest will:
More than double the New Mexico Manufacturing Facility Area (going from 6k to 14.5k sqft)
Add 16k sqft in Indoor Cultivation area to the New Mexico Operations (>20% increase going from 70k sqft to 86k sqft)
Add 34k sqft of Outdoor Cultivation area (Note: this was accidently left out of the press release and amended in the regulatory filings under Full Disclosure guidelines)
Triple the Plants in New Mexico for Mexico (going from over 4k plants to over 12.5k plants). To put that in perspective, Ultra, the #1 leader in New Mexico with 38 dispensaries has only 10.7k plants in total plants covering 38 dispensaries. The addition of Everest's plants gives SHWZ 33% more growth potential at 370 plants/dispensary vs. Ultra at 281 plants/dispensary .
https://www.reddit.com/r/SHWZ/comments/137bimf/looking_past_everests_dispensaries_towards_the/
I argue the banking crisis puts more importance on getting the safe banking bill passed so banks have a newly added revenue source to help prevent them from going under.
I've been adding too, and I haven't sold a single share. My time horizon is 2028 and I am not worried about the short term because Justin Dye has assembled a fantastic management team, and he has the chops/past experience for successfully rolling up low-margin stores (albeit in groceries).
The way things are looking though, I have paused to wait for (potentially) some more sweet sub $1 shares. It's looking like we might be headed that direction in the short term.
I think Schumer's idiotic announcement that he'll be slapping on some more of the same bunch of crap that killed the last version of SAFE to this NEW version, let the sails out of everyone's hopes. As soon as Schumer uttered those words, it became clear to me that version 7 (or is it 8 now? I've lost track) will never make to the Senate floor.
Also, all this regional banking crisis stuff is keeping any cannabis banking bills tabled from the high priority list for now.
For me this is 18-24 months and an investment with no separate trading account. Competition will be fierce with lots of roadkill. I will continue to add as everything happening will make SHWZ stronger.
No can do to fix what isn't broken here. In six-days we'll have Q1 results. Enjoy!
Total NM sales for April was $46Mil vrs $47.7 for March. Not sure exactly what SHWZ dispensaries did individually but sales went down close to 4% with 1 less day. Now understanding why the last new hire was hired to increase wholesale revenues from this large increase in dispensaries. IMO, lots of red hitting the bottom line for q2. 340 new dispensaries in one month and sales down not going to fly very well. Since this news has been out for 2 days and no one has posted it makes me think some l-termers here are quietly selling and mum is the word.
In the Ruff Q1'23 Forecasts for Schwazze (5/3/23)
In anticipation of the Q1'23 Earnings Call scheduled for May 10th at 5pm EST, we are providing our own forecast estimates:
SHWZ revenue forecast breakdown for Q1'23:
Retail - New Mexico: ~$11.2MM
Retail - Colorado: ~$23.8MM
Wholesale: ~$3.15MM
Other: ~$0.1MM
Total Q1'23 : ~$38MM
Observations:
While New Mexico is seeing a growth in overall sales. Schwazze's developed R.Greenleaf stores are mostly only witnessing a shift in mix from Medical to Recreational sales which having risen from 48.9% of total Schwazze/R.Greenleaf New Mexico Sales to 60% in March (note: this is similar to what happened with Colorado when it underwent it's Adult Rec opening period). The lack of significant growth in the developed stores is likely a function of competition with the large number of dispensary openings that New Mexico witnessed in the past 12 months.
Newer recently developed/launched Schwazze/R.Greenleaf dispensaries in New Mexico are ramping up steadily and we anticipate seeing this as a primary driver for growth in same-store sales for the coming over the next two quarters (Q2'23 and Q3'23).
As foreshadowing of this impending ramp-up, it is important to note that March witnessed a significant bump in Schwazze New Mexico recreational sales to a record high of $2.4MM sales and overall Schwazze NM sales (i.e., both Rec and Med) hitting a record high of $4.1MM sales.
While overall Q1'23's quarterly sales reflect ~5% lower than Q4'22, we expect to see an uptick in both Q2'23 and Q3'23 as:
Seasonal demand picks up again and
As "new" developed stores start to gain further traction and economies of scale resulting in overall margin improvement
Margins
Gross Profit Margins will likely shrink to a range in the low 50% due to:
Newly established New Mexico dispensaries brought online which are slowly ramping
Price compression from the overall market in both CO and NM
As a result of all of this we should expect further deterioration of Adjusted EBITDA Margin for Q1'23 of a few million dollars (dropping down to between $10MM and $11MM)
We expect these margins to recover by Q3'23 with seasonal demand increases and ramp up of newly developed stores in New Mexico.
Everest Acquisition Impact
Expectations are for the Everest Acquisition to close sometime in Q2'23.
Our expectations on revenue contribution are as follows:
~$1.4MM / month Recreational
~ $500k / month Medicinal
In total, for Q3'23, we expect close to $7MM in Everest retail revenue contributions.
I Hope that helps, and if anyone has any other thoughts (even if it conflicts with my own estimates, feel free to share).
IRR
https://www.reddit.com/r/SHWZ/comments/136jmjf/in_the_ruff_q123_forecasts_for_schwazze_5323/
Funny…..the more news we put out the lower the PPS drops……I guess the storefront count in New Mexico is causing some sales outlook jitters?
First Quarter Earnings -- May 10, 2023, at 5:00 pm ET --
https://www.prnewswire.com/news-releases/schwazze-announces-first-quarter-earnings-call-301814233.html
With NM reporting very soon it will be very interesting and revealing to see revenues reported with all these extra dispensaries for April. With almost 50% more dispensaries than the prior month I would think even with 10% total state sales growth we would be doing great to just maintain March sales reported for SHWZ. Would appreciate any thoughts from anyone on this subject. This does not in any way change my accumulate mode presently for me as I believe the SHWZ playbook is very positive even when a speed bump arises now and then.
https://pbs.twimg.com/media/FjQ9gSXXwAEtt6T?format=jpg&name=large
Have the Gods fallen? Where was when and now. A current markup of this chart would be amazing, but the market killed the messenger.
Thanks for the link,
All the best,
Knife
Reposting. Someone posted this on StockTwits: https://www.reddit.com/r/SHWZ/comments/135uans/schwazze_updated_share_holdings_waterfall/
Yes, as you note and thank you, lazur.
On another note, I spoke with Schwazze IR today and confirmed that a Star*Buds in Hobbs NM isn't Schwazze's, rather it's an independent Star*Buds in Hobbs, NM as of moments ago. Previously, I had received a reply from Star*Buds.US that it was a Schwazze's last month and which I set aside as actually confidential and of a significant nature --as it would have created a new license agreement for a new state and cross-branding of banners as well between the two companies. Well, too bad I thought as IR dashed this thinking and Star*Buds prior reply. I would now like share with you as no longer relevant as restricted information...as published on the internet and not by me, rather crexi.com:
https://www.crexi.com/properties/1011003/new-mexico-fully-leased-3-tenant-strip
Do the images appear manipulated to you as I see them now appearing as such? No problem, Houston. Go to the link. Flip through the pictures? Hmm. All's well that ends well?
Three down.
There are restrictions - all noted in the ARS from yesterday (easiest way to review the various debt offerings in one fell swoop).
Maybe I'm missing something really, really basic...but aren't there covenants and restrictions in place by the debt-to-equity holders preventing any basic dilution before their shares are scheduled when payment is due or if they convert? Sort of like guarantees that their shares when converted won't have already been diluted? I thought I read that on the large convertible agreement as part of the $98MM loan that was used in part for funding R. Greenleaf's purchase for example. The company has some room to make an approach to renegotiate of course, but I think the lender holds some important safeguards for the time being. Likewise, I also thought there are limits as to any new debt without all the party's concurrence? As a for instance, $SHWZ must maintain $10MM in cash at the end of each quarter to satisfy the loan requirements on an on-going basis. This discussion of added equity all seems a bit out of place and premature and well, for what it's worth, a distant worry about an event in an out-year with a stock price in a market none of us, themselves nor others can control. Influence greatly, by good or bad deeds/events, but likely never control.
That said, I do I like what they do control at the present and the deliberate execution of a retail heavy strategy going forward that is driving the repayment vehicle. Speaking of, things (sales) getting a boost potentially in CO and the expansion of their B2B supply chain and B2C (AND would really take off if SAFE passes with credit cards for B2C) for on-line and store pick up --and of course, delivery where offered, such as Aurora.
https://www.marijuanamoment.net/colorado-lawmakers-approve-bills-to-allow-online-marijuana-sales-and-bolster-professional-protections-sending-them-to-governor/
Not disappointed that they are not increasing the share count...actually ecstatic that they arent (shareholder value). Really just going off of conversations made across the industry, and from JD as well. Most of the consolidation/acquisitions want a combination of cash and shares. They recognize that they are undervalued, combining forces, and wanting a bird in both hands; cash in their pocket while also a stake in the future. My surprise was more so in accepting this while knowing how deep JD wanted to go in each market...and also seeing that the company was nearing the 250M (when looking at fully diluted). Just assumed it was inevitable in preparation of upcoming market conditions...and taking advantage. Apparently I was wrong...and excitedly accepting of that.
My thought was with all the convertibles factered in plus options etc. the total possible O/S was well over 200Mil. With A/S at 250Mil and my expectations of continued aggressive expansion and using cash, notes, and stock it was a reasonable expectation. With that said and a new CFO obviously with a few positive law changes anything can happen over the next 18-24 months. Surely our ace management is much more in the know than my limited knowledge on where this is going. My slogan is"follow the money."
in other news.......... living legend continues to prove cannabis obviously destroys lives and shortens the life span . NOT !!!
https://abcnews.go.com/Entertainment/wireStory/willie-nelson-inhales-love-90th-birthday-concert-98967122
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Meet the "Steve Jobs of Cannabis" and Schwazze's Chief Cultivation Officer, Josh Haupt:
https://www.youtube.com/watch?v=s36OIBT4XiQ&t=1s
Star Buds is one of the Most Recognized and Successful Retail Cannabis Operators in North America
Company Projects Pro Forma Revenue for Schwazze and its Two Acquisitions (Mesa Organics and Star Buds) of $95 Million in 2020
Company Expects to Be Cash Flow Positive Beginning in January 2021
Company Anticipates Acquiring Remaining Seven Star Buds Retail Dispensaries in Colorado during the First Quarter 2021
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