CRON | Q2 2020 Earnings
Cronos Group (CRON) reported Q2 2020 net revenue of $9.9M vs FactSet Consensus of $12.7M – a 29% YoY increase, but short of estimates. The company primarily attributed the topline improvement to the continued growth of the adult-use Canadian cannabis market and the inclusion of Redwood’s results, their recently acquired US hemp-derived CBD business. The quarter’s ROW net revenues were stagnant with 0.73% growth YoY. The company also posted -$0.31 EPS vs FactSet Consensus of $0.07 EPS. The operating loss was due to an increase in cost of sales driven by a higher volume of adult-use sales, higher G&A and R&D expenses, and an inventory write-down.
Indicative of the inventory and price compression issues plaguing Canadian LPs, the company incurred an inventory write-down of $3.1M on dried cannabis and cannabis extracts. Management anticipates further inventory write-downs due to pricing pressures in the Canadian marketplace.
IIPR | Q2 2020 Conference Call
As more states legalize marijuana, cannabis operators continue to face capital raising challenges due to federal prohibition – a positive outlook for IIPR as it maintains its unique role in the cannabis industry by bridging the capital gap via sale-leasebacks. As of 8/6, IIPR owns 61 properties across 16 states, representing approximately 4.5 million square feet, including approximately 1.5 million square feet under development or redevelopment. In Q2 alone, the cannabis REIT acquired three properties in NJ, suggestive of their hopes on the prospects of adult-use legalization.
The Q2 2020 revenue increase of 183% YoY was driven primarily by the acquisition and leasing of new properties, additional tenant improvement allowances provided to tenants at certain properties that resulted in base rent adjustments and contractual rent escalations at certain properties offset by temporary rent deferrals.
In 1H20, IIPR capitalized costs of approximately $158.4 million and funded approximately $161 million relating to tenant improvements and construction activity. At the close of Q2, the company’s total capital raised is approximately $1.4 billion from IPO follow-on common stock offerings, Series A preferred stock, exchangeable senior notes, and their ATM program. To-date, approximately 77% or $1.1 billion of raised capital is committed in the aggregate under the company’s leases.
Management sees federal decriminalization/rescheduling as a net positive – decriminalization would open states up to medical cannabis without a vote and descheduling would not open up interstate commerce.
Curaleaf (CURLF) launches product line in Florida
Yesterday, Curaleaf (CURLF) announced that it would launch its line of Select brand products into Florida, starting with its Select Elite Live cartridges.
Select, known as America's #1 Cannabis Oil Brand, has been on a path of rapid expansion since Curaleaf acquired it in February 2020. Select products are now available at over 950 independent dispensaries across 12 states, including AZ, CA, CO, CT, FL, MD, MI, NV, OK, OR, MA, and ME. The Select brand will continue to expand across the U.S., with its launch into Ohio's medical market later this month.
Select products will be sold exclusively at Curaleaf's 28 dispensary locations in Florida to comply with the Medical Use of Medical Marijuana. Last month, the company launched its new Sublingual Tablets – a first-to-market product solely available to Florida patients. Sold in 30-piece jars, Curaleaf Sublingual Tablets contain 5mg of high-quality cannabis oil per piece and are berry-flavored, sugar-free tablets.
In the Florida market, Curaleaf has lagged in grabbing market share – despite holding 11.6% share of dispensing units, the company only holds 9.4% share of mgs THC sold, 6.4% share of mgs CBD sold, and 5.9% share of flower (oz) sold, on a 4-week moving average basis. While Trulieve (TCNNF) sells ~1.2 million mgs THC/unit and ~26.5 thousand mgs CBD/unit on a 12-week moving avg. basis, Curaleaf sells just ~354.8 thousand mgs THC/unit and ~7.5 thousand mgs CBD/unit.
