Supreme Cannabis Continues to Put Points on the Board: Delivers Record Year
Ryan Allway
September 26th, 2018
News, Top News
The Canadian recreational cannabis industry is set to launch shortly on October 17, and investors are eagerly waiting to see how the market will unfold. There are more than a hundred licensed producers (“LPs”) in the market in various stages of build out – from securing cultivation or sales licenses to building production facilities – big promises have been made to investors.
It should be no surprise that only a few LPs have actually generated any revenues to-date and even fewer have demonstrated a clear ability to scale effectively. Producers who are already growing at scale and putting up sales numbers will have a major head start when the recreational markets kick off. Others will find it challenging to catch up given the limited shelf recreational space, a tall task that could become insurmountable if the market starts to identify the early-movers as the “winners” in the space and access to capital dries up.
The Supreme Cannabis Company Inc. (TSX-V: FIRE) (OTCQX: SPRWF) (FRA: 53S1) is a licensed producer that has been working diligently behind the scenes to build a strong core business focused exclusively on premium brands and products at scale. Supreme has secured coast-to-coast distribution agreements in the Canadian recreational cannabis market and its products will be listed exclusively in the premium category. At the same time, the company has been securing wholesale agreements with other LPs to sell its premium product into medical channels, including a $2 million supply agreement with Tilray Inc. (NASDAQ: TLRY).
The ability to provide product for two channels, at a time when many other LPs are struggling to show revenue, is a strong positive sign that Supreme is successfully executing on its business plan.
Financial performance suggest Supreme is punching in the heavyweight class
Supreme Cannabis recently announced its year-end and fourth quarter fiscal 2018 financial results (Supreme has a June 30 fiscal year end). Revenues for fiscal 2018 were $8.85M, which is one of the best first four quarters of revenue among all licensed producers including market leaders like Canopy Growth (TSX:WEED)(NYSE:CGC) and Tilray Inc. (NASDAQ:TRLY), who recorded revenues of $1.9M and $6.9M, respectively, in their first four quarters of sale.
Exhibit A. Select Licensed Producers: First Four Quarters of Revenue
Supreme Cannabis’ fourth quarter revenues were $3.55M, 71% greater than its third quarter of $2.07M. The fourth quarter represents an annualized revenue run rate of $14.2M which trails the industry leaders for now, but is already greater than other notable industry names such as Cronos Group (NASDAQ: CRON)(TSX: CRON) and The Green Organic Dutchman (TSX:TGOD).
Supreme Cannabis’ financial results demonstrate once again that the company is a player in the cannabis space and punches at the same level as many of the industry heavyweights. Yet, despite its financial strength, the company trades at a significant discount to others.
For example (note: market capitalization figures as at Sept 21, 2018):
- Tilray’s (NASDAQ:TLRY) revenue run rate for the most recently disclosed quarter was approximately C$51M, which is slightly over 2.5x Supreme Cannabis ($14.2M) – however, Tilray’s market capitalization ($14.8B) is more than 26x Supreme Cannabis ($0.56B)
- Cronos Group revenue run rate of $13.6M is approximately 5% less than Supreme Cannabis, yet its market capitalization ($2.8B) is more than 5x Supreme Cannabis
- The Green Organic Dutchman has yet to report any revenues, yet its market capitalization ($2.1B) is 3.7x Supreme Cannabis
Exhibit B. Select Licensed Producers: Revenue Run Rate and Market Capitalization
Looking Ahead
The Supreme Cannabis Company Inc. (TSX-V: FIRE) (OTCQX: SPRWF) (FRA: 53S1) presents investors with an opportunity to acquire a stake in a licensed producer who aims to have a distinct proprietary advantage in the market with its focus on premium brands and products, tangible revenue and a track record of rapid growth for a significantly reduced valuation compared to many of its peers.
For more information, visit the company’s website or download their investor presentation.
Disclaimer
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has 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 Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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