Denver-based cannabis firm MJardin Group Inc. (
The Ontario Securities Commission and the British Columbia Securities Commission both halted MJAR following the CSE’s announcement. It comes after MJardin reported that net income swung from C$1.5 million in 2017 to a loss of C$84.3 million last year.
Founder Rishi Gautam has resigned from the firm’s board of directors effective immediately, as have chief strategy officer Francis Knuettel II and chief operating officer Jorge Boone. Gautum stepped down as chief executive in Feb. 2019, but remained on the board.
James Lowe has been added to the board to replace him, while Pat Witcher – a former DEA and Kansas City Police Department officer who was president at Buddy Brands before taking on a senior role at MJardin when it purchased the firm – has been installed as the new chief operating officer.
The company saw revenue increase 38% year-on-year to C$27.5 million in 2018, but operating expenses widened to C$58.3 million, of which C$1.7 million came from bad debts. Total net loss on continuing operations was C$46.6 million, an increase of more than 2800% on the previous year.
A Tumultuous Year
Other expenses also went from C$100,000 in 2017 to $37.7 million in 2018, with C$1.1 million lost on foreign exchange and C$2.8 million going towards listing costs. Adjusted EBITDA was negative $12.2 million for the 52 weeks ended Dec. 31, 2018.
It was a tumultuous year for the group, but chairman and interim chief executive Adrian Montgomery said MJardin has now laid the groundwork for future growth. “2018 was a year of significant change in the company as we expanded in to another US state, entered the Canadian market via acquisition, and became a publicly traded company on both the CSE and OTC,” he said. “We have restructured our corporate size and organization to better integrate and align with our core business goals in both countries. We are in a healthy position moving into 2019 and are proud to focus on what we do best: deliver high yield premium cannabis that the market will appreciate.”
Increasing Cannabis Production
MJardin has been in operation since 2014 and it has built up its reputation as an agile turnkey service provider for the cannabis industry. It invests in promising young companies and acquires those it really likes, including Denver-based Buddy Brands and Nevada-based GreenMart. Last month it purchased another firm in Nevada, the Carson City edibles producer Cannabella, which makes lozenges, gummies, dried fruits, honey, ghee, and olive oil infused with THC or CBD.
It manages 36 facilities and produces 65,000 kilos of cannabis flower per year, with offices in Toronto and Barcelona and 450 staff worldwide. As of Dec. 31, 2018, it was producing 20,300kg of its own cannabis on an annualized basis, and the plan is to increase that to 31,000kg by next year.
MJAR Underperforms Sector
MJardin attributed its losses to “an acquisitive 2018” and said it has now streamlined operations in a bid to move towards a brighter future.
The firm began trading at C$6.30 on the CSE on Nov. 16, 2018, following the reverse takeover of Sumtra Holdings. However, its price decreased by 66% to C$2.14 by Dec. 21 and since then the stock has underperformed the flourishing cannabis sector.
It managed to increase its price to C$5.25 as pot stocks soared at the start of 2019, but it has since decreased steadily once more and it was back at C$2.06 this week before it was halted.
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