Lowell Farms Inc. (LOWLF)

[kahlua]

Slowly scaling back into Lowell after a long absence. Share structure stinks but George and team are building something special in the California king maker market.

Headwinds:
- ongoing sector illiquidity, general market weakness and possible upcoming consumer recession.
- State regulatory and taxation stranglehold on the industry driving bankruptcies while emboldening/growing the illicit market.
- Federal legislative blockade on industry support and reform along with punitive 280e taxation clause.
- Cali outdoor supply glut hemorrhaging margins and will need a large amount of suppliers to come offline to reach the bottom.

Tailwinds:
- Proposed California cultivation tax moratorium as of July 1. If it passes, that is about $160 a pound or close to $6.4M in annual savings for Lowell.
- Q1 was low water mark for the LFS segment as they shift from outdoor clients to a more consistent supply source of indoor grown product.
- The team has done a remarkable job at reducing opex and managing their very tight cash position and appear on the brink of profitability.
- The Lowell 35 pre roll rollout this summer appears to be an industry disruptor setting a standard of exceptional quality for deep value that could steal significant share at a pricing point that only scaled up highly efficient operations could compete with.
- Continuing licensee success and expansion with very limited costs or marketing.