At a time when Canadian LP’s are having issues generating sales, craft cannabis producer GTEC Holdings
They sent out a PR this morning providing investors with an update on the fulfillment of their first purchase orders to British Columbia and Saskatchewan.
Sales went live on Friday and within the day, their first products (retailing under the brand BLK MKT) sold-out on their first day, with a subsequent purchase order being placed by the province.
As expected, GTEC also announced these retail sales are increasing the average sale price for their products. Previously, they had been wholesale pricing at $5.80/gram as of Q3. This should help bolster their gross margins and help the company achieve profitability.
Although this announcement doesn’t provide any definitive numbers around sales volume or selling price, it’s obviously good news for GTEC investors.
It’s also important for investors to remember that GTEC is a small craft producer. While one purchase order would represent a small fraction of Canopy Growth’s quarterly sales, relatively speaking, it’s more substantial for GTEC.
In September we sat down with GTEC’s CEO to review their Q3 performance. He provided some guidance and updates that are worth reviewing for investors:
- Q4 sales should be north of $2 million (~50% QoQ growth)
- 2020 Q1 EBITDA positive
- Debt stress test: sales of 75% of capacity, realized sale price of $4.50/gram results in fulfilled debt obligation and completed greenhouse buildouts
With the positive news released today, it appears the company is at least tracking towards their guidance. At a time when nothing seems to be going right for larger cannabis companies, it suggests some companies are able to find their niche.
GTEC Holdings is a market awareness client of Capital 10X.
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