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Awesome! Thanks for the insight. I didn't think about the possibility of any of them being a consumption lounge. Definitely interested to watch this play out. As an additional note, I think July was the first month that the dispensary count decreased: 1047 (I think was June's count) down to 1040.
I am gonna guess that some of the new locations are waiting to be turned on whereas others, that are in close proximity to another R.Greenleaf location, may just be transitional locations. Strange that there are 3 Las Cruces locations within a few buildings of one another (on a map. I am unfamiliar with the area). Per the NM CROP site, the one Las Cruces has no adjustment in sales totals whereas one of the two new locations (with no June sales) posted almost $386K for the month of July. I wonder what the plans is for that third location?
Interesting. I am not trying to dismiss your find, but this lawsuit seems like a copy/paste from others that I have seen filed against other Tier 1 MSOs...like to the word, just <insert name here>.
Pablo Zuanic put out a document with some interesting metrics:
https://zuanic.worldflowconnect.net/opendirect/43521bd8-4cb0-4990-8f72-edd408360cca/230728%20280E%20and%20Rescheduling.pdf?token=600d9386-e2c6-469d-b47d-5cdc5e47a804&extension=.pdf
They did not give me any clarification as to why the NM sites number didnt jive with theirs. They did make mention of the upcoming quiet period. What I noticed when I sent my second follow up, to Joanne, was that I received a no longer valid email for her with direction to contact Forrest. Forrest was very quick to reply, and directed any future inquires to Sean, from Elevate IR (a new third party IR firm). Sean also replied (twice) in a timely manner (both times).
After I was confused with the CROP site results showing 57 R.Greenleaf and Everest locations, I outreached to IR inquiring as to the accuracy. I was told, "We now have 32 locations in New Mexico under the R.Greenleaf and Everest banners." I also questioned last quarters transaction count, and basket size, per state, and was told that the information was not publicly disclosed last quarter...and that the company would be evaluating what metrics to provide on a constant basis moving forward.
I am not necessarily losing faith in the company, and their ability to be a difference-maker in the industry, but the frustration is starting to build. When you provide this information the 3 prior quarters, and then intentionally omit them, raises a red flag with me...and it causes me to have a harder time getting behind any future comment that the company is operating above a state threshold because the quantifiable evidence is missing to support the claim.
I tried to update it based off their investor deck on their website but the changes never saved. IHub kept erroring. Are you suggesting I just delete the entire intro? As for the CO tracking system, Metric. I have heard bad things about that company, the monopoly they have and now this most recent article about them re-invoicing (and a judge siding, kinda/sorta, with the Metric suggesting that one operator pay the invoice...and then sue to recoup damages -- which the suggestion was odd to me unless it had something to do with where the complaint was filed/heard).
Man I was so confused on what I was looking at when I went to the CROP site and searched by "Greenleaf". Some were "R.", others were just "R". The inconsistency in the name was as confusing as the multiple locations in what appeared directly across the street from a location. That is why I started to add part of the address in some of the names. All the 'new' locations were $0 sales, which is also unusual. I personally dont think that they are one location with multiple entrances...but could be for 1 or 2 of the new ones, based on the address. If they are 'entrance' based, and there are multiple pinpoints per location, than the state reported total dispensary count could be inflated. It is also like the state is posting newly licensed, but not yet opened locations, because I have seen situations on that site where a store was open for a day before the month close out and there was still an amount posted (even if it was a couple hundred bucks). Another one that confused me was the 3 Los Cruses locations; 2 new and 1 with a significant (96% MoM decline) all within a stones throw of one another within a mall-like setting (according to the map). As for an updated investor deck and an IR that is capable of providing actual information in responding to inquiries...I couldn't agree more...and is an absolute necessity. I have yet to get an actual (quantifiable) answer to my inquiry...and follow up email...regarding the number of Q1 transactions and avg basket size, per state, when this information is obviously known and previously provided on earnings calls -- with the exception of this past quarter. In general, I have been less active on the board...not just because I have been slammed at work...but also because I am starting to feel like SHWZ is transitioning from the company/mgmt that was easy to get behind...to just another dime-a-dozen cannabis company. We all knew CO is a challenging market and could see a NM inflection point was coming...but IMO now is the time the company needs to increase its communication with shareholders (via PR or updating the investor deck) so investors can treat the decline as 'temporary' and 'lean into' the vision. I also feel like that startup POS system that Justin and Nirup are Board Members for should also be rolled up under the SHWZ umbrella, and shareholders hold some form of ownership in the company since the company used...and are using...SHWZ dispensaries to prove out their technology. Justin and Nirup shouldn't be the only beneficiaries when investors also took part in the risk.
I finally got around to pulling the information. Overall New Mexico sales were down MoM 10%, but as IPS has mentioned, it looks like explosive growth regarding New Mexico Dispensary count (57 total; 41 R.Greenleaf and 16 Everest -- according to NM CROP).
With the NM dispensary count increasing by 24 stores, I am curious to see what their cash position will be sitting at when they release Q2-23 earnings. We can all see the challenges in both the CO and NM markets, so the Q2 ER is setting up to be a let down. I expect the "analysts" to only see/report the combination let down of both revenue and cash decline, without diving any deeper. If this happens, I am thinking that this could present a decent buying opportunity...but will be weighing my decision to add based on whether or not the company manages to find a way to maintain their gross profit and adjusted EBITDA margins.
https://www.devdiscourse.com/article/law-order/2514113-exclusive-altria-backed-cannabis-producer-cronos-explores-sale--sources
Maybe Altria will finally embrace the smokeless segment? Hopefully Altria is just ditching their cannabis investment in CRON...and not totally distancing themselves from cannabis altogether, considering all the research compiled by LEXX is mostly CBD based.
I saw that...IMO, bizarro world!
GreenWave Advisors cannabis stock performance through Q2:
#cannabis stock performance through Q2. pic.twitter.com/tEon1z3PzY
— GreenWave Advisors (@GreenWaveMJ) July 3, 2023
When I have had an active order, it has been slightly under 0.90, just incase...however I would have thought it would have hit already...and I felt like an idiot the last time it dropped and I missed out over pinching pennies. Now with the SAFE talk supposedly once the govt is back in session, it seems I might have to continue practicing patience...which is fine because right now I am looking at a bioscience company, provided dips back near its all-time low.
Been debating on adding. I am comfortable with the number of shares that I have, not sure if I trust where the industry is heading...and these companies still cycle together. I like the price, and buying will cost average me down, but I am looking at another stock...and giving it a little bit more time see if my target hits there. If not, I will add more here.
I agree. They should have sat on the sidelines with this one. Keep your mouth shut and keep executing. Everyone saw it coming, and their efficient, vertically integrated, business will get through it. I guess on the plus side, this being signed by RGreenLeaf and Everest must mean we are officially an industry 'MSO'...since all they do is 'cry wolf'.
We all knew it was coming: https://www.kob.com/new-mexico/cannabis-industry-leaders-ask-state-to-pause-new-licenses/
Signed by Ken Diehl on behalf of both R. Green Leaf and Everest.
(I thought we welcomed competition?)
The letter said, in part:
An unfortunate byproduct of the free-market approach that our state took for licensing new operators is a saturation of regulated and illegal cannabis products in New Mexico. These two factors are resulting in homegrown small and medium-sized cannabis businesses being forced to close their doors or lay off staff. Our local businesses simply cannot compete with the illicit market and the immense oversupply.
Interesting...hopefully just keeping cannabis in the conversation will bring more eyes, and money, back into the industry:
DeSantis' opposition to marijuana decriminalization is wrong. I will decriminalize cannabis at the federal level. Current situation with contradictory state + federal laws is absurd. States should be able to decide without federal interference. #Kennedy24https://t.co/GtFZRJwCAa
— Robert F. Kennedy Jr (@RobertKennedyJr) June 25, 2023
At this point, everyone involved in the industry feels that federal involvement is inevitable (if not long overdue)...the timing is what no one can pinpoint. IMO banking should have already happened...get these companies off of cash-only and onto a paper trail so that the govt can audit them and make sure that they are paying their fair share. The fact that the IRS is not the biggest advocate pushing the banking movement, honestly, has me scratching my head.
In general, it is hard not to become increasingly skeptical that anything will happen. I mean Florida, regardless of the amount of money that was recently invested in the push for adult use, seems like that excitement is waning by the day.
Personally, I could see banking happening...just don't know when...but I am struggling to wrap my head around the rescheduling piece. Sure we all know that it shouldn't be schedule 1 (there is medical value), however, the govt making (recent) moves within the research area has me thinking that this time around they will punt. They will reschedule the reschedule claiming that they want additional, DEA sponsored, medical research to support their decision...and then when that time comes they will decide that the best course of action is to deschedule the drug completely -- leaving the decision up to the states (bypassing the question of interstate commerce) and substitute the current 280E tax with a federal excise tax. Just my thoughts...so I'll guess 2026 before (non-banking) federal movement...and continue to hope that I am wrong and completely overshot it.
While I continue to remain skeptical, I am also hoping that is the case. I too am not sure of the timing...I keep hearing end of June into July. I also heard, even if passed, a House vote isn't expected to come until the end of the year (at the earliest) to as late as February next year.
It is nice to see that Stanley is coming around...I know that I have been focused on margins, but I also take market of operation into the fold. I don't consider 50% gross margin and 30% EBITDA as a success if your operation is in Florida or some other limited licensed market.
Jeff Bezos famously said, “Your margin is my opportunity.”
The margins that SHWZ is putting up in Colorado and New Mexico, two highly competitive states, should suggest that the 'top-MSOs' should be flocking to those markets of operations, since an existing (smaller) operator is pulling numbers higher than they are. IMO investors need to be asking themselves why aren't they? I mean...we know. We know they they are not nearly as efficient so they have to chase the markets where they are getting a ridiculous return -- while also crying about cost compression and increased competition.
For example: Trulieve recently PRed that it would be closing shop in CA and MA markets. CA was like one location, so I think that made sense. MA, on the other hand, was 3 stores and a large grow. Calling it 'optimization efforts to preserve cash and improve financial performance'...you know...the positive spin investors get behind. Per a local MA article, cost compression is to blame (I dont share this opinion)...but indicated that the market dropped from $400/oz in early 2021 to around $171/oz today.
Looks depressing...THAT IS UNTIL YOU REALIZE...SHWZ is pulling a better gross and EBITDA margins while at the same time the Colorado Dept of Revenue announced average market price for retail bud at $649/lbs -- PER POUND!
There is obviously something to be said about a 'go-deep' strategy!!!
If these operators are bailing from markets where they are getting $2700+/lbs, truly due to 'cost compression'...I don't think that they will EVER reach a point of "optimization efforts" that will make them a profitable operator if the federal govt ever decides to legalize cannabis and cannabis becomes a commodity and normalizes (nationally) around have the current MA value. We just need investors to quit latching onto the #MSOGang teat...to wake up and use their head...and to think further down the line if/when all of these catalysts come to fruition. To see that national square footage (scale) is not necessarily a target for alcohol, tobacco, pharma, etc. The biggest is not necessarily the best. That there are operators capable of producing in (extremely) challenging environments with proof of scalability. IMO, it is this type of company that, if and when the time comes, the larger buyer/industries will focus on. Now the hard part...waiting for proof of concept.
I only picked that comparison stock because it happens to be major exchange listed and approaching an upcoming one-time dividend...timely industry comparison...and no way in heck comparing cannabis operations. A second comparison; there is also an OTC listed (sale leaseback) REIT paying over 12%...and no one seems to care (slumping stock price). Listen, I wouldn't argue a dividend...and if it is going to be annually, that is even better. I enjoy your unconventional idea, and you are right they probably waste that money annually visiting conferences and promoting the stock...to no avail. Sounds great: incentivize shareholders, get the stock price up and use it as leverage to carry out the game plan. IDK, I just don't think that the company is quite there yet. What happens if the idea just doesn't work out, liquidity doesnt increase, nor does the shareholder base?...now the company has another expense to support (or kibosh...how embarassing if they PRed it as annual and it ended up one-time) when that money could have been used for the business (acquisitions, paying down debt, etc).
I am assuming, because we can't afford a continuous cash drain, that this is a one-time thing and not a quarterly or annual dividend? As a one-time thing, theoretically it may generate some excitement...but I am not sure it will. I think any pop would cause selling pressure before, and especially after, the dividend...because of industry sentiment...if it is not paired with federal news. Honestly, I think something similar, a one-time dividend, is supposed to happen with SNDL in regards to their Nova deal...and from what I can tell it really hasn't had any impact on the stock price nor has it garnered the investor, or potential investor, excitement one would have assumed it would have. Props given for outside-of-the-box thinking.
Side note: I saw on Twitter the CEO of Curaleaf advertising their new loyalty points system. I didn't look much into it...you know, to see if the top 'prize' is a Tesla.
You both have better articulated the constant 'tug-o-war' of thoughts going through my head.
Still trying to parse through everything but obviously the underlying business model hasn't changed. Dye has implemented his playbook...now it's really just plug-and-play. That is something Nirup is obviously beyond capable of doing. Hopefully Dye hits the circuit to get the word out...and can start to change the minds of cannabis investors (which is still theory...and debatable). I hate to compare to Curaleaf...but in this case it just might turn out to be a similar scenario: Matt Darrin (the CEO) and Boris Jordan (Chairman...who everyone thinks is the CEO).
What is up with the stock price on the OTC Markets page? SHWZ's share price 0.930025. To the millionths place?
https://www.newswire.ca/news-releases/multi-state-cannabis-operator-schwazze-promotes-nirup-krishnamurthy-to-chief-executive-officer-877268278.html
I really dislike the news...and look8ng for more answers...but did we not feel something like this happening when Justin started letting Nirup lead/control the quarterly earnings calls? The question though still remains, why?
IPS, I agree with you, great company news...but reality is, and continues to be, 3 things: (1) the industry still cycles together...and seems dependent on federal level news for actual stock movement, or increase in (new) investors. (2) This company is still considered an MSO Gang outlier (and thankfully so because I personally dont want to be a part of that) but therefore lacking in PR and any real 'top-tier' attention. And (3), the company operates in probably 2 of the least flashy, already established, states, and regardless of proof through margins/operations, the current retail investor base just doesn't have the foresight to comprehend or differentiate based on company's ability and area of operation (like we, collectively, do).
I am trying not to be a pessimist, but I agree, I don't see an industry catalyst...at least in the near term. There is really no incentive to buy into any company in the industry right now...and it is just tough to watch.
Gald it resonated with you as well. It was the piece of the puzzle that was missing, but right in front of my face, the entire time. They have 60 cannabis clients...and do their job really well, so much so that they have a cult-like following --> #MSOgang. As for IR, I think you are right. They must use a third party. My last correspondence implied that they were also "waiting"...or in the middle.
I read a LinkedIn post that seemed to be my missing link, pr eye opener, as to why certain MSOs are always front and center and negative news is swept under the rug. It also makes sense as to why others, regardless of their performance compared to peers, continue to get little to no attention:
https://www.linkedin.com/pulse/cannabis-public-relations-scares-me-should-scare-you-too-mundell?utm_source=share&utm_medium=guest_mobile_web&utm_campaign=copy
On an additional note, I am also frustrated with the company because I emailed (May 12th) asking for the number of transactions, for each state, as well as the average basket size...values that have been previously given on the last few quarterly earnings...and, even though I received a reply (after following up), I still haven't been provided the amounts. This is information that I know is readily available to them...because it is critical to CPG...and I just don't understand why they decided not to provide it on the call nor the the delay in providing it to me via email.
It's like every tier 2 and tier 3 reported today. I dont understand how Twitter seems so bullish. I have seen the reports. All these companies posting positive PRs spins when in reality they arent even close to operational profitability. In addition, their margins are terrible...and they operate in limited licensed states. Sad when you find yourself rooting for no federal movement hoping that as a result most of these companies just disappear...and with that, the (pumper) advisor/analysts.
Sorry IPS. I took the new presentation and updated the intro however after putting in about an hour iHub failed when trying to save my updates.
Funny, I hide the into and forget about it until someone comments.
When I saw their margins increase...it drives me nuts that they dont get any of the lime light. I mean:
"Gross profit margin of 58%
Adjusted EBITDA of $14.5 million was 36.3% of revenue"
This is on Colorado and New Mexico...two locations that are suffering cost compression worse than almost EVERYWHERE ELSE! "Oh...<<<insert Top MSO here>>> is "the best" ...like really? Their game plan is specific to limited licensed markets where they can be a first mover to take advantage of the lack of competition and higher flower prices. Then they have falling, or stagnant, margins while complaining about cost compression. LIKE FOR REAL!?!? Your states of operation have flower prices 2x-5x the price of Colorado or New Mexico....and the best you can pull is 50% profit margin and around 30% aEBITDA? How are they going to 'maintain' similar margins if the end result of every state market flower price ultimately settles around the current price of Colorado?
Meanwhile Analyst and Individual Investors keep talking about how operators need to slow cap ex and focus on efficiencies...wanting operators to prove themselves through their efficiency...when they fail to take into consideration the landscape of operation. SHWZ is literally operating in the foxhole pulling margins higher than the other companies, while also growing -- and doing so accretively (not this "immediately accretive to the bottom line", but 2 years later still writing off goodwill -- Trulieve). The analyst and investors in this space apparently don't truly appreciate/recognize 'operator efficiency'.
Not so bullish post on Twitter. Posting for transparency:
Team at schwazze just out here making up new definitions for free cash flow by removing interest expense from the equation... Good quarter but lets be real. https://t.co/llhLxYlAJ9 pic.twitter.com/k7ptsKavnT
— CannaVestments (@CannaVestments) May 11, 2023
Agreed. Retail revenue down a tick, wholesale up a tick. All-in-all essentially flat...but let's say 'maintained'...which in itself is impressive because Q4 has Christmas sales. Really I am impressed with margins -- no slip there. Small gain on the gross profit margin (0.003%); larger gain on adjusted EBITDA as a percentage of revenue (+3.2% QoQ). Add in the icing on the cake of $2.75M in FCF and a decreasing accumulated deficit. I am pleasantly surprised by the numbers.