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Thanks lazur. I know ihub has the coin thing...but a thumbs up option would be nice too.
Does anyone else feel that there is more to the picture regarding the promotion of Nirup Krishnamurthy then just the promotion? The man has no history in the industry...comes in as the Chief Information Officer and then moves to Chief Operating Officer? This suggests to me that primary business focus is streamlining and data integration...so much so that they moved him into a position capable of carrying it out across the company. I know this is speculation...but I kinda feel like there might eventually be an overlap between technology and the consultant side of the business. Like they realize that the issue in the industry is on the operations (not cultivation) tech side and that they are growing and integrating the business while at the same time preparing to take what they develop and, possibly, license it out to others in the industry? Could be far fetched...maybe I am overanalyzing or just trying to find something between the lines that isnt there. I mean if they are just trying to streamline and integrate the company data why the need to move him from CIO to COO? Unless the answer is even more simple, the move was negotiated as part of an investor/money raise.
I agree. I know that they talked about not announcing anything until agreements are signed. I really like how Nancy articulated that message today when questioned.
Plus did we burn our bridge with Bob DeGabrelle?
I dont know how I feel about outdoor grown, especially because Colorado gets come crazy weather swings...like early snow in late October which forces an early harvest. Granted I dont live in Colorado so I am no expert...but it just seems like a liability. Not to mention, outdoor you are susceptible to other environmental factors like bugs, mold, pollens, etc., whereas most of these can be controlled indoors. Did you know that hemp/cannabis is really good at leeching toxic chemicals from the earth? It has the ability to pull radioactive materials and other heavy metals from the soil. I know a lot of companies submit their products for testing. I also assume that once the plant is federally legal this will be standard practice.
The lack of biomass availability was hinted at several times. To me it seems like the future target acquisition area, after Starbuds, is going to be on the cultivation side. Like they realized that they are really good at producing and selling products but do not have enough suppliers to feed the pipeline. Sounds like a good problem to have. Let me know if you guys heard/feel/thought otherwise.
DD, 2019 was $1.75B in cannabis sales? I read in August that they had already hit the $1.2B mark. That is on pace to finish 2020 with over $2B in sales!
What are the chances (and I hate to even say this) that they are diluting the stock a little in order to raise money for an acquisition...or another acquisition. Maybe a 1-2 punch when they announce the Starbuds closure?
Gaffer, I have been looking since you posted but I cant find specifics...I think there are certain times of the year that corporate officers can buy/sell their stock outside of news. He bought around the same time, month/days, as the CEO from TLRY sold 2M of the shares (in five increments of 400K) he owned in his company.
They named it right...DehydraTECH...not because of the method used but because it dehydrates your investment dreams. Still bullish...that was a poor attempt at a joke.
Yes. Thanks for correcting me. I just genericized it because even though a vaccine is not available yet most consider the 5 or so therapeutics (that Fauci talks about) as becoming the potential "vaccine".
Just happened to notice the FINRA Trade Halt -- 8:58am.
The problem with the vaccine is that the medical community seems to think the best form of administration is via inhaler...and not necessarily pill format. If we happen to be in talks with a vaccine company, and exclusivity is part of the terms, it would be nice if they dropped a simple "we are looking into/researching Lexaria Biosciences DehydraTECH as a possible quick absorption pill format".
For real! Even SNDL, the ACB debt wannabe, is climbing. It has to be because it is on a major exchange. It would be nice if this thing starts to take off and get some attention, then Bunka drop news to add fuel to the fire...followed by the news/uplist. Realistically, with it's patent portfolio and low float this should easily be over $1.
Let's hope! The 5K at 0.215 is a start. Nice to see see the day about to start over 0.20.
Definitely...feels like late 2018 all over again except this is over industry excitement in a space that the most major climbers cant operate in.
Thanks Potts. I'll check it out.
DD, do we have a guesstimate of the post Starbuds OS count...even if most are locked up in insider shares?
Too bad it will probably continue to be all the (Canadian major US exchange based) companies that dont operate in the space. Hopefully SHWZ starts getting the recognition that it deserves.
...Because they company has tried so hard to distance themselves from a "cannabis" company.
..but YES, VERY frustrating!
Yesterday's news is an 8K on the SEC website posted today.
European patent number 3164141 will be published in the European Patent Bulletin of November 11, 2020 entitled "Food and Beverage Compositions Infused With Lipophilic Active Agents and Methods of Use Thereof" and includes claims for improved oral delivery of cannabinoids, nicotine, non-steroidal anti-inflammatory drugs (NSAIDs) and vitamins.
Let's hope this moves the stock a more than the news released this morning.
4.5 times Sweetwater's 2019 annual revenue. I guess time will tell if that pays off for them.
I am glad that LXRP has more uses than the cannabis industry...and focusing on the bigger picture. I was listening to a podcast the other day and there is a bio company in Canada (Hyasynth Biologicals) that is able to produce endocannabinoids in yeast cultures...similar to how insulin is produced today. They can do this in 1 week...which is at least 1/12th the time as growers. They are also able to produce consistent results as well as have the yeast turn out a larger quantity than what most plant options can provide (especially with THCV). They are a private company but OGI has a large investment...and therefore a certain set of exclusive rights to the tech.
Be happy that LXRP is spending the money to lock in their IP. It's only a matter of time before the world catches up.
I am not saying that there isnt money to be made in the industry. I definitely see more states opening up because they will be faced with COVID19 deficits. I just dont see the federal govt getting involved in the near term...outside of allowing banking. I definitely dont see national legalization within the next 3 years.
I do a combo. I have the shares I plan on keeping long term and I have a smaller amount that I will sell for profit taking. For profit taking, (before) I was playing this between the 0.30-0.75. I have gotten out what I have put in. Right now I am struggling with deciding on where to place a small investment...till next pay. I believe in the long term of LXRP, so these prices are a steal for both adding to long or short term play...but I do want them for a steal (17/18). I see the large volume on the ASK and I think bottom is in at 17/18...there is really no incentive right now to jump and buy. The only LXRP news that we are aware of is the upcoming 11/30 earnings report. So I have a fear of missing out on LXRP but at the same time there is a feeling (because of the election) that the other cannabis plays might offer a quicker turn around. Decisions decisions.
I think that all the time and then I am disappointed. I would admit that starting later in the day, yesterday...and so far today seems a little different. Less willing to give away shares. There are some solid 0.19bids...and no volume...when the stock couldnt get out of 17/18 the last two weeks. I am still a little hesitant on moving my bid up. I typically do and then regret my decision after it goes through because the stock always falls...however I am also struggling from FOMO right now.
https://www.weedweek.net/stories/why-do-schwazzes-deals-keep-collapsing/
“Schwazze is a great example of how to capitalize on this legislation in a fragmented market,” Christian Sederberg, founding partner of cannabis law firm Vicente Sederberg wrote in a statement to WeedWeek. “In addition to top notch operations, they have been methodical and focused when it comes to selecting and moving forward with the right acquisition partners, a critical component to ensure success.”
During the August interview, Dye said deals to close Canyon Cultivation and a $15M bid for retailer Roots RX were “in process.” Both have since fallen through
To close the Star Buds deal, Schwazze needed to produce proof of having a reported $59M by July 30. That deadline has now been extended to October 30, this Friday, according to an SEC filing. Dye didn’t confirm or deny the $59M figure and declined to detail Schwazze’s fundraising efforts, beyond saying the company is exploring debt and equity options.
Can't argue 200K on the bid size...still sucks when you realize the math for it is under $40K in total.
Hill Street posted their year end results. The article also has a blurb in there about their partnerships with Lexaria and Molecule Inc. They also anticipate that their cannabis beverages will be available in Ontario stores Dec 2020...then a national roll out in 2021.
https://investingnews.com/daily/cannabis-investing/hill-street-reports-fy2020-year-end-results-and-provides-update-on-operations/
The stock appears to be agreeing with you.
Could be an interesting day for the industry with HEXO proposing an 8:1 stock consolidation up for shareholder vote in December. If you are SHWZ, and you planned on releasing positive news today, do you hold onto it and release it in the after hours? Let the stock absorb a possible industry hit today (not sure if it will happen...being $0.58 on the NYSE, without news, an RS was just a matter of time) and then kick off next week on the right foot?
I am wondering how Josh Haupt is doing? He was issued 7M in stock (valued at $12.6M, at the time) for Three-A-Light publication and Success Nutrients. According to a 2019 article, which referenced an SEC filing in 2017, Haupt personally owns 4.4M shares. Andy and Brett might have been the face of Medicine Man, but the company was carried by his cultivation process and nutrient line. As cannabis expands across the nation, he could literally go anywhere and have success (just not the nutrient line). Do you not at least wonder, if it is as terrible as you continue to say it is, why he has continued to stick with the company?
From Virtual Strategy Magazine:
Lexaria Bioscience Corp. (OTCQX: LXRP)(CSE: LXX) is enjoying a busy week. After last Tuesday’s announcement that the Company received its first-ever European patent related to its DehydraTECHTM technology, it followed up on Thursday with a significant update notifying the markets that it is exceeding expectations for the volume of servings of its patented DehydraTECHTM enabled CBD powders.
Specifically, the Company is referencing an order announced on September 23, 2020, saying it had received purchase order commitments for the current quarter (September 1 – November 30) for approximately 4.4 million CBD servings of DehydraTECH-enabled CBD powders. The Thursday update noted that processing rates have exceeded expectations, and as of October 21, the Company has already processed approximately 4.2 million servings.
Lexaria also confirmed purchase orders to process a total of over 8.0 million servings during the current quarter, representing an estimated increase of more than over 500% volume growth from the approximately 1.2 million CBD servings processed in the Company’s fiscal Q4, which itself reflected growth of 71% from fiscal Q3, 2020.
Moreover, the Company said that if existing activities and conditions continue, its expectations to produce at least 56 million servings during the calendar year 2021, driven by existing customers’ communications, may prove to be conservative. Also notable is that these indicative orders do not include any additional demand from prospective future clients.
"where was AW going to get the money"
Well you know Hoop, it was a family business...and Sally Vander Veer was on 'Who Wants to be a Millionaire' like 9/10 years ago. She walked away with $16K. If she invested that winnings, and received a 6% avg annual return, she could have like $27K/$28K. Now we just have to hit up Willy "Pete" Wonka and Mom for the difference.
Last time you said this it dropped to $1.05. Thanks for the heads up. I'll prepare.
The link contains the photos and graphs. Here is the contents:
By Jonathan Rose – Associate Editor, Denver Business Journal
Oct 8, 2020, 8:11am MDT Updated Oct 8, 2020, 8:15am MDT
It’s been nearly a year to the day since Colorado House Bill 1090 went into effect, opening up the state’s cannabis market to outside investment and theoretically opening the door to a flood of outside cash that would trigger massive merger and acquisition activity in a state that had — prior to Nov. 1, 2020 — been starved of financial investment.
And while there is a significant amount of M&A activity happening within Colorado’s cannabis industry today, the primary buyers of small mom-and-pop shops haven’t been publicly traded Canadian giants or California-based multistate operators, as predicted.
Instead, the companies going on acquisition sprees are largely local chains that see the opportunity to flex a little muscle and snap up deals.
“The biggest story is the dog that didn’t bark,” Charlie Alovisetti, partner at cannabis-focused law firm Vicente Sederberg, told Denver Business Journal. “We didn’t see the flood of deals we were expecting, but there are still some meaningful transactions.”
At any given time, Alovisetti said he or his team is working on between five and 10 deals in various stages and sizes.
“Some of them are quick,” he said. But he also notes, “If it requires approval, it’s at least two to three months on the short end; and on the long end — I’ve been working on deals that have lasted for years.”
Alovisetti is leading a series of webinars produced by Vicente Sederberg focused on private financing and M&A activity, offering general guidance for businesses looking to get into (or out of) the marijuana game.
How to kill a deal
Some of the biggest hiccups Alovisetti sees that create delays, or sometimes the abandonment of deals all together, include a lack of audited financials or financials that don’t meet big promises made by potential acquisition targets, regulatory issues and “cold feet” from likely investors who didn’t fully understand Colorado’s market.
“With the cannabis industry, you have each of these different states that’s its own universe,” he said.
And inside each universe is a unique set of laws, rules and influencers, all operating within a machinery deemed illegal by federal law. That makes operating, say, a dispensary chain in several different states incredibly complex and arduous.
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And it doesn’t help that the cannabis industry has been beset by challenges — both self-inflicted and outside of its control.
Summer of 2019 saw the industry besieged by reports of consumers — often teenagers — sickened by vaping products. Most of those cases, it turns out, were the result of black-market products in unregulated cannabis markets, but the damage it inflicted on an industry increasingly reliant on the cash flow vaping products rake in is significant if hard to measure.
Then, later that summer, publicly traded cannabis companies took a beating on the stock market as analysts and investors determined many weren’t ready for prime time. And, of course, the Covid-19 crisis has hit every business sector in previously unimaginable ways.
“Coming out of ‘Vapegate’ and into Covid and the market crash in cannabis in particular, and the volatility we’ve seen in all the markets, it’s still very hard to raise money in cannabis because of the [federal] illegality,” Richard Batenburg Jr., CEO of Cliintel Capital Management Group, told DBJ.
His private equity firm, which he runs with his son, operates funds meant to both incubate young cannabis companies while putting high-growth opportunities in front of investors. In 2019, it acquired The Clear, one of the biggest names in cannabis concentrates.
“While it’s a little bit heartbreaking to see the smaller stores being gobbled up, I think it’s just natural selection or evolution or whatever you want to call it,” Batenburg said. “Smaller operators need to pay attention to what’s happening. They need to behave like the big chains and put in systems and processes that mimic those big chains.”
Vicente Sederberg’s Alovisetti also points to the federally illegal status of the plant and the resulting lack of banking resources and loans.
“Money is the fuel that drives M&A,” Alovisetti said. “In the non-cannabis world, a lot of it is driven by the availability of credit. ... Cannabis is a little different because there’s really no credit.”
So a lot of the deals are happening locally, and in old-school style: with cash.
It’s now more about “being a dominant regional player as opposed to being the largest cannabis company in the world,” Alovisetti said.
How to seal the deal
“We’ve been approached many, many times by these publicly traded companies or [special purpose acquisition companies, known as “SPACs”], and they want to purchase Green Dragon or loop us in so we can help run their operations,” Alex Levine, co-owner and co-CEO of Denver-based dispensary chain Green Dragon, told DBJ. “Every single one of these companies I’m very skeptical about.”
Green Dragon is instead focusing on expansion within Colorado’s borders, buying up smaller shops that have a similar vision and the right fundamentals — location, product, demand — but perhaps haven’t leveraged them to their full potential.
The company has opened two new retail outlets in the metro area in 2020 — one in Cherry Creek and one in Boulder — as the result of acquisitions.
“We like to purchase things that are undervalued or underperforming,” Levine said. “We can’t borrow money, we can’t leverage anything, we can’t get mortgages, we can’t get loans … we’re still talking double-digit interest rates on debt. We really don’t want to take any more risk in this industry.”
Other chains, he said, are buying stores that have already maxed out their sales potential. And many investors from outside the state don’t understand Colorado’s fundamentals, or even those surrounding the marijuana market itself.
“Ultimately, these guys never figured out how to operate a cannabis business to begin with — so if you’re going to start adding a lot of states and there are further complexities there, you’re not going to get profitable,” Levine said.
At Lightshade, another Denver-based dispensary chain, the company’s executives are taking a similar view. They too have turned down suitors, Lightshade Chief Operating Officer Mike Leach told DBJ. His company just opened its ninth location through the acquisition of independent retail outlet Sacred Seed in Denver, and has a 10th location in the works through another, as yet unspecified, purchase.
“It’s a good fit — that’s ultimately what you’re looking for,” Leach said.
From a business perspective, he explained, Lightshade is looking for acquisitions that not only complement its existing portfolio, but also don’t cannibalize sales. And they’re also looking to ensure there are “good bones” in the form of good neighborhood relationships, expertise and perhaps experience that will help the business succeed in its new form.
The owners of Sacred Seed, for example, at 5885 E. Evans Ave. in Denver, had the right fundamentals and were looking to sell to the right buyer.
“They were looking for a for a company that wouldn’t make it a corporate cannabis empire,” Leach told DBJ. “… When we met, it was almost love at first sight. We loved their vision, we loved what they did, and they loved what we brought to the table.”
And like Green Dragon, Lightshade still has no intention of selling to a multinational giant or investment fund.
“The outside money [we’ve been offered] was often predicated on an equity position, so Lightshade has made a commitment to stay privately held if for no reason other than our model has been successful,” Leach said.
Or, as Green Dragon’s Levine told DBJ: “To this day, we’ve never raised any money. We’ve not tried to sell out because we don’t need to. We’re a profitable business.”
Investment, three ways
That doesn’t mean, of course, that all Colorado companies are turning their noses up to outside investment.
Denver-headquartered The Green Solution, which operates 21 retail outlets in Colorado, was purchased in a deal reportedly worth $140 million by medical-marijuana-focused Columbia Care.
Columbia Care, which is headquartered in New York and publicly traded on U.S. OTC markets, the Canadian Securities Exchange and the Frankfurt Stock Exchange, among others, saw its purchase of TGS as an opportunity to not only enter the recreational cannabis marketplace, but also to get a strong foothold in Colorado.
“We view TGS as ‘It’s not just that TGS is the largest [player] in Colorado, which is the second-largest market in the world,’” Columbia Care CEO Nick Vita told DBJ, explaining that his company is in about 18 states, and somewhere between eight and 11 of those states are pivoting from medical only to adult use within the next 24 months.
“I think it’s important to remember that Colorado has actually grown beyond expectations — it’s also one of the most fragmented markets in the U.S.,” Vita said. “I think it’s important to have a position in a market that’s going to consolidate in the next few years.”
Publicly traded Schwazze, meanwhile, formerly known as Medicine Man Technologies, has had to rethink some of its intended targets in the wake of a shifting cannabis investment landscape.
“We entered into 11 term sheets over the course of about three months in 2019 in an effort to build a vertically integrated, publicly traded cannabis company,” Schwazze General Counsel and Chief Government Affairs Officer Dan Pabon told DBJ. “We did that with vim and vigor because we are very interested in using and leveraging HB 1090 to become one of the first pioneers. … After our due diligence on our side we found that some of these deals did not fit our sort of high-growth, high-probability model.”
In all, about half of the deals Schwazze announced with much fanfare in 2019 have been officially canceled. Still, the company, which is traded on the OTC markets, is putting on an optimistic face.
“We’re very bullish on the growth opportunity in Colorado,” Pabon said, pointing to recent projections from the state that show tax revenue from cannabis sales could jump nearly 2% in the current fiscal year.
And, Pabon said, public companies often have different priorities — and obligations — than privately held businesses.
“On these private-company transactions, you don’t have as much view or transparency into the financials as you do when you have auditors going through and looking at invoices and receipts and making sure it all adds up,” he said. “ … Because we have such a commitment to profitability, we want to make sure we show our shareholders immediate profitability on acquisition.”
At Natty Rems, a wholesale grower and manufacturer, investment backing has meant a tripled operating budget leading to a 150% year-over-year increase in sales, according to the company’s founder.
“We’ve been able to expand into more operation and really dig into these scalable processes and make them sustainable at any scale,” Andrew Boyens told DBJ.
His role, he said, is best described as vice president of business development as he manages new product development and launches.
“I was a solo man for 10-plus years, doing all the business operations myself,” he explained.
That all changed in 2019 when he met a group of business developers and investors he declines to name.
“I needed a CEO, I needed a CFO — I needed these things,” he said. “I found a group that was forming and they liked what Natty Rems had to offer.”
Simply put, he said, it allowed him to cancel some business trips, get comfortable and get focused on growing his business. Now the company’s looking to venture into third-party processing of cannabis products and packaging other companies’ products in addition to its current roster of cannabis concentrates and its wholesale business.
“Natty Rems is ready for what’s coming,” Boyens said
It linked to a 10/8 article and displayed for me. Let me know if you need me to copy/paste its contents.
https://www.bizjournals.com/denver/news/2020/10/08/cannabis-house-bill-1090-investment-activity.html
Your last part is interesting. I wonder if someone will be a Beyer, I mean investor, if that turns out.
I agree. Remember the days where the $9.4M in revenue, as a consultant company alone, had a market cap of $100M? Now we are easy double that revenue and have the valuation. No sense.