Decibel Cannabis Co. Flourishes Amid Provincial Supply Reset


Robin Lefferts

May 28th, 2021

App, Exclusive, News, Top Story


With financial results coming in for Q1 2021, there is a pattern emerging among Canadian Licensed Producers of cannabis. With a few exceptions, sales and revenue figures are significantly down across the board. Compared to the prior quarter, many companies are reporting sales decreased anywhere from 10% to upwards of 25% for the period. There are a couple of reasons for the slump which we will discuss below, but the consequences for some companies may not be pretty.

One company bucking that trend is Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF). Decibel reported strong net revenue growth accompanied by its third consecutive quarter of positive adjusted EBITDA amid the general downturn in the industry.

Click here to receive an investor deck and corporate updates

What Happened to LP Revenues?

As with most everything these days, the COVID-19 pandemic is partly to blame for the plunge in revenues. For instance, Ontario went into full lockdown in January, mandating that cannabis outlets close for in-person visits and forcing sales to be conducted via curbside pickup only. The measures certainly dampened sales in Canada’s most populous province. On top of that, all cannabis in the province is wholesaled through the government’s Ontario Cannabis Store (OCS). The OCS was forced to reduce staff and warehouse capacity during the period, further influencing sales in the province.

Of course, the hurdles in Ontario are a factor but don’t completely explain the flagging revenues across the country. The biggest factor is what amounts to a widespread provincial reset of inventory levels and ordering patterns. In essence, several provinces looked at how much cannabis was on hand at the beginning of the year and decided that inventory was too high. To fix the problem, new orders were put on hold until the inventoried product was moved.

The effect was a chill on revenues for many LPs. If a given province had plenty of a given producer’s wares in stock, that producer didn’t receive the order it might have been previously expecting. But if a product/brand was about to sell out, a replenishment order was placed.

There is probably a whole discussion to be had on the wisdom of historical ordering and inventory practices that may have led to the oversupply of on-hand product, but we won’t get into that here. The purpose of this article is to highlight one of the few winners for the quarter, Decibel Cannabis.

Increased and Consistent Demand for Decibel Products

Decibel is one of the few companies able to flourish in the face of the industry-wide headwinds. The company has been increasing production capacity to meet rising demand for its premium products and was able to maintain growth through the difficult Q1 2021. Here is a chart showing results for Decibel and some premium cannabis peers, with the percent increase or decrease in net revenue from Q4 CY20 to Q1 CY21. We threw in Adjusted EBITDA figures for Q1 CY21 as an extra point of comparison. Though they wouldn’t really fit into this chart, a look at the comparative market caps for the companies provides even further information.

Source: Public Company Filings

Lest the reader wonder whether these numbers are cherry-picked to reflect the desired results, here are the figures for some of the larger companies in the industry. All percentages reflect net revenue numbers for the quarter just ended when compared to the prior quarter.

  • Tilray -15.1%
  • Cronos -26%
  • Aurora -18.5%
  • Village Farms -1.9%
  • Zenabis -21.8%
  • Delta 9 -6.5%

The pain is real. So how was Decibel able to sail through the quarter with revenues up 10.5% and adjusted EBITDA (of $2 million) up 82% when compared to the prior quarter? Chalk the revenue numbers up to increased production, consumer demand and loyalty, and consistent high quality in its products. The EBITDA results come from running a tight ship and investing in smart, measured growth, among other factors.

Click here to receive an investor deck and corporate updates

Decibel’s premium Qwest brand consistently commands some of the highest prices in the industry. The company runs its own extraction/production facility (The Plant) to create premium derived products from its craft crops. Decibel is ramping up further production in its Thunderchild Cultivation facility in Ontario. The company utilizes its own retail outlets, under the Prairie Records label, to not only generate high margin revenue but to test and perfect its products with its loyal and growing customer base.

Overall, the Decibel story is compelling. The company didn’t make the biggest initial splash, or come out of the gates trumpeting a million square feet of production capacity. Rather, Decibel Cannabis has been slowly and responsibly growing its business with an eye on high quality and the bottom line. The approach appears to be paying off.

Disclaimer

The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.


Network Partners

Follow Us on Social Media

About CFN Media Group

CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer

loading