Cannabis Investors Should really Beware This Red Flag – New Cannabis Ventures


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Close friends,

The “Cannabis Capital Crunch” that we discussed in this newsletter two weeks ago continues to take its toll on the sector, with MedMen and PharmaCann terminating a transaction that was initially announced a year ago, citing the “shifting capital markets”, and Green Organic Dutchman revealing that it has been unable to access debt capital and may possibly have to defer finishing the construct-out of its Quebec facility.

In the case of MedMen, the organization also disclosed Monday that it had replaced its not too long ago hired CFO with somebody on the finance group. Michael Kramer, appointed in December, was extremely touted by the organization for his retail finance practical experience at firms like Apple, Abercrombie &amp Fitch and Forever 21 and was tasked with bringing the excessive expense structure beneath handle. His abrupt departure is however yet another amongst quite a few examples of senior talent exodus at the organization this year, and we feel the 28.two% decline this week, which was considerably worse than the general industry, was due much less to the merger cancellation than the CFO departure just weeks ahead of Q4 monetary reporting.

This is not the only organization to have lost its CFO not too long ago, with HEXO Corp announcing on October 4th that its not too long ago hired CFO was leaving the organization to commit additional time with his family members, once again just ahead of fiscal Q4 financials. Equivalent to Kramer, Michael Monahan was extolled by the organization, so the loss was very a surprise. A week immediately after the revelation of the CFO departure, HEXO dropped a bomb on the industry, missing on its Q4 guidance substantially and walking away from its FY20 guidance.

Harvest Well being and Recreation issued a press release at 9:20 P.M. on a Friday evening in mid-September disclosing that President Steve Gutterman was leaving the organization to return to Denver. Gutterman was a crucial member of the management group who joined in June 2018 and was supposed to be involved in the integration of quite a few pending acquisitions. Like MedMen, Harvest, which had an adjusted operating loss of $26.eight million in Q2, is struggling to access capital. Its debt financing with Torian Capital, which it announced at the finish of July, has however to close in spite of the company’s expectation that the 1st tranche of the $225 million deal would close by the finish of August. Maybe Gutterman’s quietly revealed exit was purely coincidental, but, in this atmosphere, investors are probably to assume the worst.

We feel investors need to spend incredibly close focus to abrupt management adjustments, specifically in the course of these difficult instances. No one knows the inner workings and the accurate outlook of these firms improved than senior management. When senior management hits the road in excellent instances, it is typically a yellow flag. When it occurs in the course of difficult instances, we feel it is a red flag.

Mile Higher Labs, primarily based in Colorado, is a massive-scale CBD ingredient and item manufacturer supplying dependable delivery of bulk CBD and private label solutions to the world’s top customer brands. On the heels of earning the certification for ISO 9001:2015 Requirements and Great Manufacturing Practices, the organization opened an additional 400K sq. ft. production facility final week. The totally operational plant enables the organization to expand into production of capsules, tablets, topicals, and gummies in addition to CBD isolate and distillate components. The facility will also act as a new incubator for investigation and collaboration inside the cannabinoid extraction business.

To study additional about Mile Higher Labs, a client of New Cannabis Ventures, stop by the company’s web page that we keep on its behalf and click Get Extra Information.

New Cannabis Ventures publishes curated articles as properly as exclusive news. Right here is some of the most intriguing small business content material from this week:

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Alan &amp Joel

Alan Brochstein, CFA
Primarily based in Houston, Alan leverages his practical experience as founder of on line communities 420 Investor, the 1st and nonetheless biggest due diligence platform focused on the publicly-traded stocks in the cannabis business. With his comprehensive network in the cannabis neighborhood, Alan continues to come across new methods to connect the business and facilitate its sustainable development. At New Cannabis Ventures, he is accountable for content material improvement and strategic alliances. Just before shifting his concentrate to the cannabis business in early 2013, Alan, who started his profession on Wall Street in 1986, worked as an independent investigation analyst following more than two decades in investigation and portfolio management. A prolific writer, with more than 650 articles published given that 2007 at In search of Alpha, exactly where he has 70,000 followers, Alan is a frequent speaker at business conferences and a frequent supply to the media, such as the NY Occasions, the Wall Street Journal, Fox Enterprise, and Bloomberg Television. Get in touch with Alan: Twitter | Facebook | LinkedIn | E-mail

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