PERLMUTTER ANNOUNCES RETIREMENT
We continue to believe that 2022 Cannabis Legalization will take a "dual-track." Track 1 is SAFE and Tracks two is "Social Justice!" More about this theme on the Cannabis themes call in a few weeks!
Say it's not so; SAFE Banking's biggest supporter, Rep. Ed Perlmutter (D-Colo.), announced Monday he will not seek reelection. With 11 months left in his legislative career for SAFE to become reality. Justin Strekal, former political director of NORML told Politico, “It’s a real loss as Rep. Perlmutter is one of our most tenacious allies in Congress, he was exceptionally positioned as a champion of ours.” Cannabis stocks are a free fall as the consensus believes that passing banking in this Congress will be a tall order, which likely means nothing during the Biden Administration. Senate Majority Leader Chuck Schumer holds all the cards and has expressed a desire to hold out for comprehensive reform, which will never happen. With Perlmutter out and if the SAFE doesn’t cross the finish line in this Congress, a new concern will be who might take up the mantle of pushing SAFE. According to Politico, some names floated by advocates and lobbyists on Monday included Democratic Reps. Earl Blumenauer (Ore.), the unofficial cannabis czar on Capitol Hill; Nydia Velázquez (N.Y.), chair of the Small Business Committee, and Joe Neguse (Colo.), but none are Perlmutter who sits on both the Financial Services and Rules committees. Add to that the likelihood that Democrats may not have control of the House anymore.
Trulieve New Product
TCNNF announced the launch of Live Diamonds by Muse™
Live Diamonds are the latest innovation from Trulieve's state-of-the-art hydrocarbon extraction lab, the only one of its kind in the state of Florida. According to the PR, the initial product release of 500 units sold out within 24 hours, and Trulieve anticipates another batch of Live Diamonds to become available for sale in February 2022. The launch strain, White Fire Alien, sold at a retail price of $45 for 0.5 grams.
"Trulieve is excited to be Florida's first and only dispensary to offer patients the benefits of high-quality cannabis concentrates produced through hydrocarbon extraction, especially Live Diamonds by Muse," said Kim Rivers, CEO of Trulieve. "Due to the delicate and complex production process, this product will only be available in limited quantities, however, we look forward to expanding patient access and continuing to deliver innovative products to our valued patient base here in Florida." The LTO strategy will help with margins as the business grows. Live Diamonds are created using a proprietary blend of propane and butane in Trulieve's hydrocarbon extraction lab via TruFlower that has been frozen immediately at the time of harvest. The result of the "diamond mining" and production process locks in volatile terpenes and produces a strain-specific, full-spectrum cannabis concentrate that exhibits subtle, natural flavors. "Live" products are generally described as a truly enhanced experience in terms of flavor and appear to offer a broader set of effects for users.
OGI EARNINGS
OGA has been showing the best top-line rate of growth in Canada
OGI Reports 1Q22 Net revenue C$ 30.4M vs FactSet C$ 29.2M and Net income (C$ 1.3M) vs FactSet (C$ 11.0M), but that includes C$ 10.5M gain on changes in fair value of biological assets. Adjusted gross margin improved significantly at 18% vs year-ago 10%, but there is significant work to be done. Cash and short-term investments balance of C$168M vs C$184M.
1Q22 Outlook:
The company expects FY2Q22 revenue will be significantly higher than FY2Q21, largely due to stronger forecasted market growth and the increasing number of retail stores; the company is better able to fulfill the demand for its revitalized product portfolio with its increased production, and revenue contributions from its newly acquired Laurentian facility. In addition, the resumption of shipments to Canndoc in Israel is expected to generate higher sequential revenue in FY22 as compared to FY21. Expect to see a sequential improvement in adjusted gross margins in 2Q22 and has put in place measures that it expects will further improve margins over time. 2Q22 SG&A is expected to increase slightly from FY 1Q22. The company capital and market position is healthy and that there is sufficient liquidity available for the near to medium term.
