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Saturday, August 10, 2019 6:00:12 PM
If Derek manages to increase the run rate to 15.7/quarter, maintain or improve margins and stop dilutive financing he will also have to deal with expenses. He's hoping the revenues are high enough to eventually cover the COG and SAG. He's going to need Margins in the 70's or COGS and SAG reductions. The new grow ops should reduce COGS
but it will take hard work to reduce SAG. REducing COGS could be as easy as a phone call. REducing SAG requires changing workplace culture and that is difficult.
Lets say he gets a 16 million dollar quarter and the margin is 50%-60% then SAG needs to come in at the 8 million dollar range or less to break even or make a minuscule profit not counting for wind falls or errant expenses.
Take that same result and put in the context of a federally legal environment and the worm has turned.
Legalization is coming. Since it will be a hot potato at the elections the GOP would be smart to take it off the table and legalize pot in one quick move. I'm counting on it.
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