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SCHWAZZE SIGNS DEFINITIVE DOCUMENTS TO ACQUIRE TWO RETAIL DISPENSARIES FROM SMOKEY'S CANNABIS COMPANY
This acquisition continues Schwazze's deliberate expansion in Colorado and, upon close, will bring the Company's total number of Colorado dispensaries to 27.
The acquisition is expected to close in the second quarter of 2023
Since April 2020, Schwazze has acquired, announced the planned acquisition of, or opened 44 cannabis dispensaries as well as seven cultivation facilities and two manufacturing assets in Colorado and New Mexico. In May 2021, Schwazze announced its BioSciences division and in August 2021 it commenced home delivery services in Colorado.
https://www.prnewswire.com/news-releases/schwazze-signs-definitive-documents-to-acquire-two-retail-dispensaries-from-smokeys-cannabis-company-301751397.html
Here is an R. Greenleaf article that is several years old. I found the most interesting part was right at the beginning, how the company came up with the name.
https://kurplemagazine.com/who-is-reynold-greenleaf/
"Reynold Greenleaf was an alias for Robin Hood and the Merry Men. If any of them ever got caught by the sheriff and were asked who they were – they would say Reynold Greenleaf. It is a nod to the fact that we are all criminals in our efforts to serve the patients of New Mexico.
Founded in 2010, R. Greenleaf began with one goal in mind: to serve as many Medical Cannabis patients in New Mexico as possible. 6 years later, the company cultivates more grams of the medicine than any other Licensed Non-Profit Producer in the state. With its dedication to patients and employees, R. Greenleaf’s does everything in its power to accomplish our mission: to provide New Mexico Medical Cannabis patients safe access to high-quality medicine at fair prices."
Good find! At this point it doesn't shock me. I mean look at all the expert analyst and advisors in this industry. Look at the, supposed, #1 ETF MSOS. They have a history of buying high and selling low. I guess MJUS isn't any different. I think it makes perfect sense to trade out of a company growing margins, adding stores and taking market share, on pace to show a 50% YoY revenue growth and possible FCF...omitting recent acquisitions...for a company with almost 650M shares issued, has 6 stores (3 in MA) with little to no cash on their books and maybe, if they are lucky, will see 25% YoY increase in revenue.
The video is embedded. Not sure why you aren't seeing it. Here is the link:
https:// youtu.be/e_1NuuDr_hE
Just take the spaces out between // and youtu
#17 in NM: SHWZ CONTINUES EXPANSION WITH ADDITIONAL STORE IN ALBUQUERQUE
https://www.newswire.ca/news-releases/multi-state-cannabis-operator-schwazze-continues-expansion-into-new-mexico-with-additional-r-greenleaf-store-opening-in-albuquerque-824312275.html
"We are excited to be a part of the growing cannabis community in New Mexico and to open up an additional R.Greenleaf dispensary in the state. The team has been hard at work realizing our expansion plans throughout New Mexico," said Nirup Krishnamurthy, President of Schwazze. "R.Greenleaf, offering a wide variety of quality products serviced by top-notch, knowledgeable staff, has grown from 10 locations to now 17 within just one year."
I am not able to check the comments...but if someone has a Seeking Alpha account please nip this in the bud!!!
Medicine Man Technologies: Why I Am Buying This Stock
Feb. 16, 2023 6:35 AM
Adrian Nunez
Investment Summary
Medicine Man Technologies (OTCQX:SHWZ) - which I would give the nickname Med-Man
I joined late, but you two summed up exactly what I heard. If I had to add something, I am almost positive that I head Justin say that they ended the year around $7M in free cashflow and the company is trading at a little over 5x EBITDA.
I was wondering if this is a precursor of things to come. Long Play Inc is Colorado cannabis. I know that a PR involving a new hire/position typically includes some back story of the person...but what kind of made me go 'hmmm' was the line:
"Long Play is a vertically integrated cannabis company with cultivation, manufacturing, retail, and a portfolio of brands that includes Willie Nelson and the Grateful Dead."
Why advertise the company? Makes me feel like this is also dropping bread crumbs of something in the works.
Christine Jones joins the Company as Chief Legal Officer. Jones replaces Dan Pabon who in late 2022 moved into a newly created role at Schwazze as Chief Policy and Regulatory Affairs Officer.
https://www.prnewswire.com/news-releases/multi-state-cannabis-operator-schwazze-announces-christine-jones-as-chief-legal-officer-301748426.html
Schwazze has acquired, opened or announced the planned acquisition of 43 cannabis retail dispensaries (Star Buds, Emerald Fields and R,Greenleaf) as well as five cultivation facilities and two manufacturing plants in Colorado and New Mexico.
LOL! Been one of those days!
I know AFP, I guess those Robinhooders are getting smarter. I didnt think that was possible...but apparently I wasnt giving them enough credit.
Add another tick to the 'wrong' category (for me). I thought the people invested in the big board named cannabis stocks, the Robinhooders, would have shown a little more excitement over the news...probably because they didnt see it since they predominantly use StockTwits. Just thought that excitement might have carried over into the OTC listed names. Seems there is no excitement to be had today.
I believe that you may be able to advertise cannabis on Roku too, because they supposedly have cannabis specific channels...and they have 60M users. I think it is great industry news...and I think that you are right...over the course of time it will have a waterfall effect. I think that I am most frustrated at the idea that this type of 'advertising' news can move the industry...but business acumen, like SHWZ seeing margins in unlimited licensed states, does not...which is why I consider it hype.
The industry could see a pop tomorrow...based solely on hype...because Twitter has allowed cannabis to advertise on their platform. Sounds stupid, I know, but yes, that's what it has come to.
Good catch and call out. I didnt read the disclosure...and actually found it shocking when you posted it given the article Sean posted about the company. Glad he seemed to clear it up on Twitter.
Regardless of basket size...the foot traffic has been increasing QoQ in both states:
Q1-22-CO Visits: 415,308
Q1-22-CO Basket: $59.21
Q1-22-NM Visits: 122,913
Q1-22-NM Basket: $59.94
Q2-22-CO Visits: 444,771
Q2-22-CO Basket: $59.98
Q2-22-NM Visits: 209,591
Q2-22-NM Basket: $54.56
Q3-22-CO Visits: 452,220
Q3-22-CO Basket: $60.96
Q3-22-NM Visits: 231,137
Q3-22-NM Basket: $52.67
LOL! Yeah the table was confusing. I also read it differently than the intention of the pump-piece. In my own head I was like...judging by these number...SHWZ seems to be one, if not, the safest plays on this list because it has held its valuation the best.
Sharing because SHWZ was included in the list...although I am still trying to figure out what it is trying to convey:
"There's a sale at Penny's!" ✈️
— Todd Harrison (@todd_harrison) February 8, 2023
🇺🇸 #cannabis 🌿 🙏 BTIG pic.twitter.com/JQtC2v4tQg
They bailed to protect margins. On a Twitter spaces Boris made it sound like they were profitable in those states...just not as much as the limited licensed locations. Said something like, those three states (CA, OR and CA) only combine for $45M in revenue and cost $40 to keep going. (I think everyone could smell the BS in that statement....minus the Curaloafers.) I imagine that the company intends on selling the assets, and recouping some expense, however nothing was said...and even in the PR they made it sound like they were just closing the doors and walking away, like they were just planning on taking a full write down.
Good point, thanks StevenRisk. The $300M appears to be adult-use sales only. With medical sales added in, total cannabis sales will be around $500M. Even at $500M in total state sales, SHWZ numbers are still extremely impressive. It moves their share from 14% down to 8%...out of 16 stores.
Thanks for the article. What is crazy...
...is the breakdown (and someone please check me because this doesnt seem real...so I feel I went wrong somewhere). The state believes that they will see $300M in sales the first year. I know this isnt exact...because store count has been increasing monthly...but $300M/585 stores is almost $513,000/store/year....broken down monthly...that is $42,750/store/month.
SHWZ is seeing an average of $3.5M in sales/month (guess)...broken down (and I know the sales at each location is different) $3.5M/16 = $218,750/store/month...which is almost 5x the store/month sales?
I mean goodness. If the state expecting to see $300M in sales their first year....and SHWZ is averaging $3.5M in sales per month...that will be $42M for 12 months! With 16 out of the total, 585 stores, SHWZ only owns 2.7% of the total stores that are operational...BUT is seeing 14% of the states total annual sales...IN JUST 16 STORES!
And honestly, this is even more impressive when you look at the states average monthly transaction (basket) size and see that it is only $50.80 for a medical transaction and $45 for an adult-use transaction.
Future, the way that NM displays the data, is total sales by location since conception...meaning every month the sales total will increase. So since the existence of the 16 stores SHWZ has seen $37M...and that was $34M last month. In order to get the monthly sales you need the difference between the current monthly information and the previous month information. Unfortunately, since sales started in April of 2022, I can only display month over month...so we will see volatility (the same can be said when you look at MoM sales for Illinois). Hopefully by the end of this year, we will have monthly YoY to compare and some consistency will develop, although adding new stores could skew the data.
IPS, what are the chances that they have just decided limit PR's (to only the necessities -- like mgmt changes) since releasing them havent really had an impact on the stock price? I mean how much does it cost to PR something? At this point the company hasnt gotten any of the respect that it deserves, so say it is $50K per release, why not just file the 8K, and post it on your website...hold onto that cash and show less marketing expense on a future ER?
All of his calls revolve around the theory that ALL cannabis stocks raise and fall together. So for his virtual portfolio he selects the stocks that he perceives as being 'hit' the hardest because he anticipates that if/when they will bounce back harder than the others in the event the tide rises.
Side note: Anyone see BGXX today? The govt cannabis research approved company/stock. A company with literally NOTHING and needing to raise money ($500M) so they can start building out and getting started. Well they announced the raise via an EB-5 program (an immigrant investor program). Basically making a minimum investment of $880,000 in the company essentially guarantees the individual a green card.
Wow! The PR that Curaleaf posted today:
https://www.prnewswire.com/news-releases/curaleaf-announces-closure-of-operations-in-california-colorado-and-oregon-301731334.html
"The Company will exit production and cultivation facilities in California, Colorado and Oregon."
"Curaleaf expects to record non-cash restructuring and impairment charges that it will detail on its fourth quarter earnings call in March. "
I went to Google, typed Los Suenos Farms, and selected what appeared to be the official link for the company that were returned in the search results....and they page is no longer available.
$67M down the drain on that transaction alone!
My previous estimates for SHWZ, at $162M, was as accurate as I could possibly estimate the annual revenue. For the sake of the numbers I just posted, I took the 9mo value divided by 9 and then multiplied by 12. We all know SHWZ has been growing revenue QoQ. For the 20 companies on the list, I was trying to quickly get to some annual revenue value in order to compare each companies existing accumulated deficit against.
In one of my previous comments I mentioned that US players seem to be following the Canadian LP playbook, and stated that I could see several companies using the downturn in the market as an opportunity to write off good will -- without raising investor red flags since the market, as a whole, is down. This would then allow them to essentially sweep past (poor) business decisions under the rug, making future earnings reports appear better, while hiding the write off in their accumulated deficit (not sure of all the technicals...just observations that I have seen used by the Canadian LPs). Well it got me interested in pulling some information across the 'top 20' companies in the industry (based on the layout from Free CashFlow on Twitter). I pulled the information from SEDAR and EDGAR documents....Take the below simply as informational (I am not an accountant, nor do I play one on TV). Don't trust the MEDMEN values since theirs is complicated because they have a different annual earnings period. Also know that the 12MO REV ESTIMATE was calculated by taking the current 9MO revenue value, dividing by 9 and then multiplying by 12.
You are right. Thanks! I remember the announcement saying first quarter of 2023...but a Google search found this....which I missed:
On December 15th, Schwazze closed the transaction to acquire certain assets of Lightshade Labs LLC ("Lightshade").
I wonder if today's movement is due to the 'technical issue' that caused a large amount of trade halting today....or if we will find out after hours that the Lightshade transaction closed. I am thinking Lightshade.
I too expect some M&A in 2023, but really only from the competitive markets...and (as they mentioned) for cheap as some of the smaller companies finally throw in the towel because there is little to no margin between cost to produce versus cost to sell. I personally think that the current political landscape, and the negative sentiment surrounding the industry, has been intentionally orchestrated so that the larger companies, that have access to capital and capital markets, can continue to struggle to get by...but at a significant less struggle than private or mom&pop companies...as a way to convert the existing industry into an oligopoly.
As more and more cultivators go out of business, in the competitive markets, the price of flower should restore since there is less glut...and those competitive markets will hit some new normalization (just a guess - around the $1200-$1500/pound).
With that being said --
Viridian Capital Advisors: “We expect the capital market slowdown … to result in an upswing in M&A activity. MSOs will find buying distressed companies to be a more cost-efficient method of expanding capacity or entering new markets.”
"MSOs"...used pretty generically in this article...as if the "MSO" title automatically gives an operator a leg-up...and should be created equal.
I think I would sub "MSO" for 'public company'.
None the less, I dont see most of the MSOs interested in getting back in the competitive markets in 2023. Why would they? They spent most of 2022 running from them...and will probably continue to until wholesale pricing is favorable (to them) once again. I fully expect 'top-MSOs' to continue to focus on newer markets because they have the resources...and because those new markets command a higher ROI.
Side Note: I actually expect a lot of the MSOs to use the current climate of the market to write off poor decisions, in the form of goodwill, on their Q4 earnings (like Terrascend did in Q3...essentially doubling their accumulated deficit). I think investors, also feeling the depressed market, will just accept goodwill as a market condition. They won't see it as a red flag. Also, in doing so, it will allow these MSOs to report better earnings(at least in appearance) in future reports.
...and the parallels of the US MSO to Canadian LP continue...while investors keep their blinders on.
Interesting point that I didnt consider...thanks. I agree. Be a leader. Set the benchmark. Set the tone.
The mgmt moves prove to me that the company is not interested in being acquired by a larger MSO. They are building to be that large MSO that everyone wants acquired by.
Even though I still dont think that SHWZ will add a new state in the next 6 months (at least), what if, hypothetically speaking, they are working on a deal with Apothecary Extracts? This would give them 3 more dispensaries in Colorado...one of which is in Colorado Springs (medical only). It would also give them three dispensaries in Oklahoma. While I am still against a move into Oklahoma, the company has proven that they can handle challenges...they have proven that they recognize Texas resident cannabis use...and Oklahoma has a special election coming up where the only question on the ballot is whether or not they allow adult use. They might want to get out ahead of the adult use again, like they did in New Mexico. Plus one of the locations is in direct shot of Dallas (1hr 30min).
In addition: Columbia Care closed four unprofitable dispensaries in California (1) and Colorado (3) and consolidated cultivation operations in California, Colorado and Pennsylvania to improve their Adjusted EBITDA contribution.
New CA and CO dispensary count is at 5 dispensaries in California and 23 in Colorado.
We have now leapfrogged the company in Colorado dispensary count.
Columbia Care PRed an efficiency initiative that indicated that they reduced their workforce by 25%!!!
I cant seem to find their exact employee count (I checked a few investor presentations as well as a few SEDAR documents) but two 3rd party websites claim the number was close to 2600 employees. A 25% reduction would be 650 people!
And this is BEFORE the merge with Cresco Labs.
I hope that you are right...but, I honestly do not think a new state is coming. I think that they continue to grow out the markets that they know best...and that are going to be up for grabs as most operators in the competitive markets look to sell or close up shop. I also, think that they want to continue to grow, but will do so responsibly to make sure that they stretch their cash position out to make it through 2024. The growth that I can see is something that will grow the company's Colorado presence by 2x...and come at a discount.
I would agree. I think most states saw a good December in sales.
Side note: I also realized my previous YoY growth percentage calculation was off. Looking at the last Q the company put up $119M in revenue. The company has already surpassed last years total annual revenue by about 10%. I estimated this years revenue to be around $162M, but where I screwed up is using the $162 as the denominator...and got 33% increase YoY....when I should have years last years total revenue.
With that being said, the annual YoY growth should be somewhere around 50%!
(162 - 108) / 108 which is 54 / 108 or 0.5 = 50%
I am hoping that the company finally gets the recognition that it deserves because it is showing growth at the right time, in challenging market conditions...and in challenging markets...while growing margins without the need to trim assets and/or reduce their labor force. I anticipate most of the other 'Top Tier' candidates will probably show revenue growth, from new state sales like NJ, but their growth wont appear as eye opening. I just hope that I am finally right this time...because I honestly thought industry recognition should have come last year.