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...and Plus an TGOD are affiliated. Wonder if that is an early sign for TOGD shareholders that they maybe next.
Thanks you for the invitation to 'rant'. I have been getting crushed at work so I haven't been keeping up as much as I would like...but I should probably consider it a blessing in disguise because this is downward trend is hard to accept.
As for the industry, I have been reflecting and trying to conceptualize a common sense approach to the future of cannabis (I realize that this is essentially useless when the government is involved). While I am bullish on the long term of the industry, sadly, my thoughts have caused me to conclude that I don't see federal legalization happening anytime soon, probably not even in the next decade. I can see the federal government descheduling and decriminalizing...but not legalizing...and leaving the decision to the states. As more and more states establish rules/regulations/taxes they will fight the federal government to not legalize, at the federal level, so as to protect the cash-cow that they worked so hard to establish. Right now the industry is seed to sale in each state. By legalizing federally, companies can cut jobs and state footprints to focus on cultivation, manufacturing and processing in ideal locations pairing output with national distribution. This will not just hurt the economy (per Leafly, the industry added 243,700 FTE jobs in 2020...and we know that will continue to increase as the industry grows daily) but more importantly, state tax revenue.
I expect some form of banking, probably not including uplist (at least at first), to happen. Banking makes sense as the next logical baby step forward. This will allow the industry to get away from 'cash only' and onto a paper trail. This will benefit the IRS, and/or whatever other tax agency, to better understand revenue streams and therefore ensure companies are paying their fair share in taxes. When the tax agencies get a better grasp on money flow, this step could open the door to the federal government deciding to remove 280E tax code, and replacing it with a federal excise tax, along with the possibility of uplisting.
Right now the federal government has its cake, and eat it too, situation. The federal government doesn't need to take an active role in cannabis, they simply need to make it known that they are willing to bend a little bit (decriminalize, deschedule and push states rights) so downstream processes can really get flowing, leaving the states that embrace adult use to untangle the decades long web of social injustice for them...and all while also collecting huge tax revenue as the industry will remain federally illicit.
As for SHWZ, I am gonna treat it like my retirement, add a little every pay regardless of share price. Why? Because they are not only building the company into a fundamentally sound same-state powerhouse, they are also brand building. They aren't just focused on limited licensed states, setting up shop with limited competition, protecting their moats and forcing the consumer into accepting what "brands" are on the shelves. They are focused on getting consumer adoption and building communities while putting up 32.5% margin, and growing, in a highly competitive market more indicative of what the future will look like...and what actual brand building markets look like through typical CPG industries.
Q3 might not be as big a splash. From what I understand, in general, Q3 is tax payment time. Personally I cannot wait for Q4. I too expect huge acquisition news as well as increased margins from the SCG grow.
When it comes to new versus established markets, did you see the difference in average basket size? SHWZ reported putting up 32.5% margin from purchases with an average basket size of $61...and this will only increase with new product margins thanks to acquisition of SCG! Could you imagine the numbers SHWZ would be putting up if the average basket size was equal to the $158 reported by Gage?
Thanks. Those last two are interesting. I wonder if they mean physical/open retail locations or just providing each entities count of retail licenses for each location.
Yes, thanks Chichus. Great find! Thanks for posting.
For me, I have alway been an advocate for the continued SSO route...but I would also be excited if they become an MSO. For an SSO, it is not just a cost savings when it comes to redundancies in the business when the landscape changes...if interstate commerce happens think of all the facilities that will close, and the jobs lost, because it isnt advantageous to grow in some of these states over others. Not to mention they are ahead of the game growing the business in Colorado where the rules/regulations have been established for almost a decade and dont change as frequently as the newer states coming online. Newer states are still trying to figure out what is best for their state and constantly changing things creating endless expenses for operations in those locations, keep up and adhering to, those ever evolving changes.
Yeah he does, cause Dye is no longer following in AWs footsteps and putting food on his table.
My thoughts on the future outlook of this industry...which I figured I was alone in this assessment (and why I wasnt going to bore anyone with my theory) until it was basically articulated for me on the following MJ Tomorrow episode -- segment one 5:25-30:00 -- but really right when the one host expressed his opinion at 15:40. This is why I am fine with Dye staying an SSO, until the (national) legal framework changes (if need be), and also thankful that he, and his team, haven't given investors any 'shadyness' to be concerned with.
https://marijuanatomorrow.podbean.com/e/episode-69-nice-1629454185/
Would have been nice had he went 1 step further to acknowledge that it will be paid for in cash, and not stock.
Welcome!
I like when you are bullish.
Drugdoctor, you are on top of it for sure...and your efforts are greatly appreciated. Knowing that you sniffed this out very early on, compared to the release...I am sure if this was MDCL, the company would have announced the deal after the handshake (then we would have all had to keep our fingers crossed that it closed and didnt term...lol) versus Dye making sure the deal is essentially in the bag before notifying the public. that is probably another reason why they feel like they close quickly.
The acquisition is expected to close in the third quarter of 2021 after the Colorado Marijuana Enforcement Division and local licensing approval.
He surprised us with a 2 month close of SCG...and is trying to beat his own record by closing Brow2 in a month.
Exactly! SHWZ is honing their skills. They are in a highly competitive market, making a profit and not sitting back...they are optimizing operations. Colorado is their foundation. If their foundation is right then they can go anywhere and Colorado will be their lifeboat during the time it takes to get operations up and running in the new location(s). If SHWZ can make a profit on $20 eights and $60 basket sizes in Colorado...then they wont have an issue making a profit on $60 eights and $100+ basket sizes in some of the other locations. For the other companies, I doubt the same could be said if you flip that equation -- and that is where money comes in to buy the operators capable of doing it.
In general the 'top-MSOs' will face cost compression some time in the future...and that is when SHWZ (operations) will really shine! IMO most of them are only doing as well as they are because they have the money to continue to focus their business on the underdeveloped states...locations where they can sell schwag and people will pay an arm and a leg for it. There is a reason why most of those companies arent focused on Colorado or California...or any other unlimited licensed state. They cant compete! They need to hide behind, and protect, the limited license in order for them to be successful. There is a reason Trulieve has 80%+ of the market in Florida (insert husbands lawsuit <here>) but some of the others are entering the market and undercutting the cost of flower (Cresco). It will be interesting to see how it play out, but most have buffered themselves with other (underdeveloped) states to help. I wish MSOs were required to report earnings/operations by state. There is a reason that they dont...and it's because each has one or two locations where they thrive and it is what is keeping (most of) their businesses afloat.
He just doesnt know the industry...or if he does he keeps those cards close. One of his criteria is that he wont recommend an OTC stock. Problem is all the 'real' companies in the space are OTC stocks. That makes him picky when it comes to operators. He only seems to back Canopy because of their $4B from Constellation. He knows Constellation wont let them fail (and even though the companies books suck...they are well positioned to enter the US in the event regulations change).
If cannabis stocks moved down on scandals then there wouldnt be any companies left to invest in. The Marijuana Tomorrow podcast does a segment at the end of each podcast called shady businesses...and they are never at a loss for news. Typically the summer is a slow period...just like the end of the year is tax loss selling. Jim Cramer doesnt know cannabis. He wont even acknowledge the US industry and will only support Canopy because they are backed by Constellation. I would bet the current downward pressure has everything to do with people finally coming to the realization that federal legalization is not around the corner. The market has done nothing but go down since the Schumer cannabis bill announcement. The most recent earnings announcements should have reversed this trend but people also know cannabis political change/talk is off the table until the fall (at the earliest).
Anyone else notice the 2 Acres of growth on SCG since the acquisition?
From the PR:
"The proposed transaction includes 34 acres of land with outdoor cultivation capacity, as well as indoor, greenhouse, and hoop house cultivation facilities and equipment."
From the Conference Call:
"The SCG acquisition includes 36 acres of land with outdoor cultivation capacity as well as indoor greenhouse and hoop house cultivation facilities and equipment."
Must be the 20 new hoop houses indicated in your post:
o To the extent the Closing occurs after July 15, 2021, Seller’s facilities containing at least twenty (20) new hoop houses, with each new hoop house containing at least one-hundred and twenty (120) plants
So my thought...If AW is divesting, it has been a little over 2 months and a week since Columbia Care announced MM as an acquisition. We have seen how quickly Justin has closed on SCG...that was 2 months. What if Colorado has become more efficient in transferring/closing deals. Could todays morning dump be the final push to get rid of his shares so CC can announce the closure? I tried to use that site you post, but searching via AW did not reveal any recent transfers.
Nice! Get the story out! I see MJBizCon is on the list...maybe they will walk across the street to the JageMedia event and gain some insight from Andy Williams and his hosting the "integration and best practices for merging your company" panel. LOL!
I am not from Colorado but extra appreciate the boots on the ground/hometown insight. I am from PA, and waiting for adult use, especially homegrow, to be legal. Right now the only legal psychedelic cannabis (here) is delta-8.
They say hindsight is 20/20...
They say history doesnt repeat itself, but it rhymes...
Everyone is so focused on MSOs...and they value Trulieve as one of the top tier players. Now I have my own thoughts on everyones current ranking...based on my industry projections...but I wont bore you with that theory.
I would just ask this.
If you had the opportunity, would you buy Trulieve if it dropped to $2.20?
Up until recently (not too long before the Harvest acquisition), Trulieve was essentially a beloved SSO and their MSO reach was inactive licenses outside of Florida (until the industry pushed Kim outside of Florida and into Massachusetts and Pennsylvania). Now I dug into some of the numbers for Trulieve. With the exception of the stock price, I thought I saw similarities between two companies; past Trulieve and current/future SHWZ.
Also, based on the information pulled, this shows just how much of an impact a depressed market plays on the stock price of the industry/company:
2018 Annual -- reported 4/10/2019:
Revenue: 103M
Net Income: 43M
Cash: 24.4M
Total Shares: 110M
Stock Price Avg: $15
2019 Annual -- reported 4/8/2020
Revenue: 253M
Net Income: 178M
Cash: 91.8M
Total Shares: 110M
Stock Price Avg: $10
It is obvious that SHWZ is a company just waiting for a catalyst to cause the stock to explode.
And it's only going to get better when they provide material and dont have to source it!
So far top 5 from Q2 EBITDA to revenue from some of the companies that reported:
Trulieve 44.1%
Verano 40.7%
Marimed 37.7%
Green Thumb 35.7%
Schwazze 32.5%
AYR Wellness 30.0%
4Front 21.8%
Cresco Lab 21.6%
Columbia Care 14.9%
Jushi 9.6%
I guess it could bring some excitement to those that dont follow Medmen. Obviously it's a warrant position that would require regulation changes to exercise...but what a day when a foreign cannabis company, listed on a major US stock exchange, is able to use a loophole to 'purchase' US (distressed) assets while the rest of the US space waits for our politicians to implement rules/regulations allowing them to access the behemoth that is corporate America.
The industry as a whole is just not moving. I guess it will take some sort of govt recognition to get the wind back in its sails.
Noble Financial analyst Joe Gomes maintained a Buy rating on Medicine Man Technologies (SHWZ – Research Report) today and set a price target of $4.00. The company’s shares closed last Monday at $2.20.
According to TipRanks.com, Gomes is a 5-star analyst with an average return of 29.3% and a 61.9% success rate. Gomes covers the Technology sector, focusing on stocks such as Comtech Telecommunications, Voyager Digital (Canada), and One Stop Systems.
Medicine Man Technologies has an analyst consensus of Moderate Buy, with a price target consensus of $4.00.
https://www.tipranks.com/news/blurbs/medicine-man-technologies-shwz-gets-a-buy-rating-from-noble-financial?mod=mw_quote_news
Exactly. And there was a question about liquidity on the call. Sure they will be issuing shares as part of upcoming deal...but before they add liquidity in the form of an equity raise they are gonna need buyers first.
Same store sales of the seventeen Star Buds dispensaries when compared to last year were $21.5M up 16%.
Average basket size was $61.04 up 6.4%
Recorded customer visits were 357,056 up 8.9%
.......
Proud that SHWZ is excited for a $60 basket size (which is average for Colorado)...and that it is a revenue increase for them. I heard on a podcast some of the MSOs are upset their baskets have been dropping from $100+ because it is significantly hampering their margins (shows just how inefficient they are). Also, once delivery is fully up and running the company can control basket size, setting minimum delivery at $60+.
I am thankful for their patience with addressing and answering all the questions presented...including mine...their openness with their answers and for the personal touches to conclude the call. It reinforced my investment in the company.
The way Nancy brought up the 19/20M...the first time within the earnings report and not in the Q&A...she made it sound like it was locked, loaded and spent before the end of the year.
LOL! I miss those days. Hindsight is 20/20.
I was about to as well...just what I was able to scrounge up...but seeing 41K between 2.20-2.25 I am wondering if it is too soon.
36,900 on the ASK at $2.20?
Exactly...but I also wonder if we will fall victim to another growth by 500%+ yet "missed analyst expectations"...which apparently means more to the novice investors in this space. That is why I was happy seeing DD's post on that analyst estimating 30.18M but also cringed. It would have been nice had they just picked the 26.8M Q1 should have been and let the company "beat expectations".
"Really good single state operators...Single state operators are really the next wave of great opportunities, if you find the right ones who have the right base." -- Mitch Kahn of Koach Capital on last weeks Benzinga Cannabis Hour.
Anxious and excited for today and the future.
Testing stop losses today?
Billy, that made me laugh...especially coming from you.
I saw 1906 has agreed to a partnership with TILT to be offered in 3 more states: PA, OH and MA. This should increase the revenue coming from Hill Street.
Take it with a grain of salt, but Todd Harrison just posted this tweet:
"i gotta pal who's a size hitter and he tried to move his personal account to a top-five money center bank; he asked if he could buy ???? canna, was told no but [the bank] hopes to be in a position to do so by Q4??"
I referenced Curaleaf because, while it contained an overall net loss, it put the 'golden children' Canadian LPs to shame. Plus it was the only one out of the Top 5 MSOs to report. Green Thumbs was very impressive especially to pull positive net income of 22M, with all the taxes and regulations the US industry faces...plus the companies multi-state presence (challenges). The sad thing is, even with their earnings, the industry as a whole seems out of favor right now.