Vancouver-based cannabis firm 1933 Industries
The deal includes a leaseback agreement for a period of 10 years and it can extend that for another decade if it so desires. That means it could continue cultivating marijuana in Vegas until 2039, but the immediate cash injection should support plans to grow its footprint in the year ahead.
“We funded the purchase of the land and construction of the facility without incurring any debt, so the full sale proceeds are available for working capital and to fund acquisitions in key cannabis markets,” said president, chairman and chief executive Brayden Sutton. He promised that the group is now in a strong financial position from which to launch its next growth phase.
Shoring Up Its Finances
The stock enjoyed a strong start to the year as it increased 93.5% from C$0.31 on Dec. 27, 2018, to C$0.60 by April 1, 2019. However, it has suffered a subsequent slump and it is down to C$0.44 on May 15.
Yet it has had a busy year thus far and it is certainly displaying plenty of ambition in the burgeoning medicinal and adult-use cannabis sectors. It had C$8.8 million in cash as of Jan. 31, 2019, and the agreement to sell its Las Vegas facility and the 1.39 acres of land it sits on has strengthened its balance significantly.
1933 Industries brought in revenue of C$8.3 million in the six months to Jan 31, 2019, but it recorded a net loss of C$6.1 million for the period and it needed to act in order to shore up its finances as it was rapidly burning cash.
Net loss widened 370% from C$1.3 million in the six months to Jan. 31, 2018, due to increases in wages and benefits, consulting fees, share-based compensation, administrative and other expenses as it is expanding.
It also raised C$4.5 million in a private placement in March and Sutton claims its efficient capital allocation and operational practices have left it in a strong financial position right now.
Skating Into New Sectors
The firm takes its name from the Prohibition on alcohol ended in the U.S. It became the first licensed cultivator in Las Vegas and it has been growing medicinal marijuana there for several years, while it also has an adult-use license.
1933 Industries is also broadening out into the CBD wellness industry and last month it teamed up with skateboarding legend Tony Hawk to launch a range of co-branded, hemp-based recovery products.
The pain-relief products will be sold under the Canna Hemp, Canna Hemp X and Birdhouse Skateboards brand names and they will target millions of skateboarders across the globe. House of Hawk has 650 stores worldwide and Hawk himself has more than 14 million social media followers to market the product.
Last month it launched Canna Fused, a line of THC and CBD-based wellness products for the Nevada market. It is also in the process of building out a hemp extraction facility in the Silver State, which will have a maximum monthly throughput of 68,000 kg of hemp biomass, producing around 5,000 kg of full spectrum oils or 4,500 kg of CBD isolate.
1933 Industries is a market awareness client of Capital 10X.
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