Watch the interview below, or by following this link.
The company's subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer (LP) of medical and recreational cannabis and operates an 80-thousand square foot cultivation, processing, and wholesale operations facility in Winnipeg.
Stockhouse Media’s Dave Jackson was joined, once again, by Delta 9’s President and CEO John Arbuthnot to get our investor audience up-to-date on all things Delta 9 Cannabis.
Click here to read the article and watch the video interview.
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Delta 9 Cannabis (DN) has acquired seventeen Uncle Sam’s Cannabis stores in Alberta for $12.5 million.
The acquisition of Uncle Sam’s Cannabis stores was completed through Delta 9 Cannabis Store Inc., a wholly-owned subsidiary of Delta 9 Cannabis Inc.
“We are pleased to have finalized this transaction to grow our market share in the Canadian retail cannabis market with an additional seventeen-store presence,” said John Arbuthnot, CEO of Delta 9. “Delta 9 now has 34 retail cannabis stores in operation across Canada and is positioning as one of the countries largest vertically integrated cannabis retailers. The company has an aggressive growth strategy to actively acquire cannabis retail stores that will provide meaningful revenue growth and positive adjusted EBITDA.”
The company will also complete a $10,000,000 private placement with Sundial Growers Inc.
“Delta 9 is excited to announce this strategic investment from Sundial which allows us to significantly expand our retail network to 34 operating stores across Canada and position Delta 9 as one of Canada’s leading vertically integrated cannabis retailers,” said Arbuthnot. “We also look forward to expanding our long-standing commercial partnership with Sundial as we position our respective brands for long-term success in the Canadian market.”
Delta 9 Cannabis is a vertically integrated cannabis company.
Delta 9 Cannabis Inc. (DN) opened trading at C$0.30 per share.
]]>By: Martin Cash, The Free Press
Posted: 11:25 PM CDT Thursday, Mar. 31, 2022
John Arbuthnot, CEO of Delta 9 Cannabis, expects the Uncle Sam’s Alberta stores to add $21 million annually to Delta 9’s bottom line. (Mikaela MacKenzie / Winnipeg Free Press files)
Delta 9 Cannabis has doubled the size of its retail chain by acquiring 17 Uncle Sam’s Cannabis stores in the Edmonton area.
The company announced that deal on Thursday along with a $10 million cash injection from Calgary-based Sundial Growers Inc. and its 2021 year end results featuring a 20 per cent increase in revenue to $62.3 million and its ninth consecutive profitable quarter.
The company paid about $14.3 million for the Uncle Sam’s stores (including the issuance of Delta 9 shares worth $1.8 million). John Arbuthnot, CEO of Delta 9 estimates that those stores should generate about $21 million to Delta 9’s revenue over a 12 month period.
The company is going to continue to operate the stores under the Uncle Sam’s brand for the time being.
"It was a matter of much discussion in our marketing department," Arbuthnot said regarding the branding of the new stores. "But we are curious if the customer demographics in these stores are wildly different than our current stores."
The company has made it clear for some time that it was intent on growing out a vertically integrated cannabis company where increasing its retail footprint has a substantial impact on its wholesale business.
Zach George, the CEO of Sundial, has a similar approach to the industry.
"In the mature cannabis markets in the U.S. the only profitable models that exist are actually vertically integrated," he said. "The parties that control everything from the seed to the point of sale to the consumer."
Delta 9 was the 13th cannabis producer licensed by Health Canada. But there are now about 700 and there are also hundreds of stores and so there is aggressive competition for shelf space.
Delta 9’s cannabis products make up about 25 per cent of sales at Delta 9-owned stores, which now total 34. The more stores it owns, the better chance it has to get more of its own product on store shelves.
Uncle Sam’s Cannabis shop in Edmonton.
In a report to his clients on Thursday, Venkata Velagapudi, an analyst with Research Capital Corp., said the deal was a good one for Delta 9 for a number of reasons, from the price paid for the stores, the importance of expansion outside Manitoba and the boost to the company’s wholesale business.
"Delta 9 may be able to increase its wholesale sales in the newly acquired stores gradually over the long-term," Velagapudi said. "This improves its growth outlook for the wholesale segment. We believe that this acquisition results in a higher revenue base for Delta 9, which is critical in improving its valuation multiples over the long-term."
While the company seems to continue to perform well, meeting its guidance benchmarks and making acquisitions, its stock continues to languish at 27 cents, near its 52-week low.
As a small cap cannabis company it has to fight to get noticed on Bay Street. Research Capital, for one, believes the shares should get to $1.00 in the next 12 months.
Arbuthnot is no longer too concerned about the share price. The entire industry has been in the capital markets dog house for more than a year with the main cannabis stock index down about 50 per cent over that time.
"We have slightly out-performed the index but that still means our stock is down about 50 per cent and that is nothing to hang our hat on," he said. "We focus on execution and as with numerous capital market tales before, you go out and execute and that unlocks value for shareholders."
Velagapudi said, "Based on our estimates after factoring the acquisition, we expect Delta 9 to achieve an annualized revenue base of $100 million by the end of 2022."
There is already plenty of consolidation going in the cannabis sector. Sundial — which benefited from being part of the meme stock craze and saw its share prices spike by more than 300 per cent a year ago — recently acquired about 200 stores with acquisitions of Spiritleaf and Nova Cannabis (the latter was included in its $346 million purchase of the large Alberta liquor store chain Alcanna, that just closed yesterday).
In discussing Delta 9’s strategy to increase its retail footprint, Arbuthnot referenced the successful consolidation of the collision repair business that Winnipeg-based Boyd Group has accomplished.
"Ultimately investors took notice of Boyd but it took years to get appreciated by Bay Street and Wall Street." Arbuthnot said. "Our thought is, why can’t Delta 9 act as the consolidator in the cannabis industry?"
The company also just finalized its new banking arrangement with Alberta-based connectFirst Credit Union, allowing it to pay off its long term debt with Canadian Western Bank as well as an $11.8 million convertible debenture that comes due in July.
The $10 million investment from Sundial is also in the form of a convertible debenture.
martin.cash@freepress.mb.ca
Martin Cash
Reporter
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
]]>See Proactive's article on Delta 9 by clicking HERE.
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Business Focus Magazine has written an article talking about Delta 9 Cannabis's business model.
Please Click Here to read the article.
]]>Delta 9 Cannabis CEO John Arbuthnot joined Steve Darling from Proactive to share news the company finished 7th in the Globe and Mail’s 3rd Annual Top Company growth survey with 448 entrants based on 3-year growth. Delta 9 saw an increase of revenue over 3 years of 5,413 percent.
Please Click Here to watch the interview.
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Please Click Here to read the article.
]]>Delta 9 Cannabis Inc. announced that it has completed its final services milestone under an agreement with Alberta-based cultivation and processing partner, Element GP Inc. Element is an arm’s length third party in which the company has no ownership control or interest.
Please click here to read the rest on their site.
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Click Here to read it on their website.
https://ca.proactiveinvestors.com/companies/news/959302/delta-9-cannabis-drives-high-octane-growth-by-bringing-quality-cannabis-products-to-market-959302.html
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Click here to read the article.
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by Silvia Muñoz-Campo
April 27, 2021 10:05 am
Many of the Canadian cannabis companies are focused on expanding into the US cannabis market in 2021. The one remaining obstacle is that if they grow cannabis or own retail stores in Canada, they are prohibited from entering the US market until cannabis is legal at the federal level.
Without federal legalization and safe banking in the US market, however, navigating through the hurdles of the cannabis space is limited and can add many extra costs to a company’s capital structure.
For many Canadian cannabis companies, M&As activities are one of the only ways to enter the US market place. There are many cannabis companies that either grow cannabis or own retail stores but there are very few picks and shovels companies that supply the equipment to grow cannabis. There are only a small few that actually sell a turn key growing platform like Delta 9’s Grow Pods. For example, there was one US company that did an IPO in February 2021 and raised $150 million. They now have an attractive market Cap of $240 million.
Delta 9 Cannabis Inc. (OTCQX:DLTNF) (TSX:DN), a Canadian-based vertically-integrated cannabis company, was one of the first LPs licensed in Canada. In addition to cultivation, wholesale sales cross Canada and eleven retail stores and the company has sold “Turn Key Grow Pod Platforms” into Michigan, Maine and Arizona. The reason they can sell their Grow Pods in the US is that they can grow any crop.
Here’s what you need to know.
Delta 9 Growing Platforms – Grow Pods
Delta 9 is changing the way cannabis is grown and sold. The company’s grow pods are premium cannabis growing platforms with hardware and software solutions for the indoor agriculture marketplace.
Grow pods are 40-foot cube shipping containers retrofitted to be able to cultivate cannabis hydroponically and provide a high level of control over the crop. These pods are modular, scalable, stackable and designed to mitigate the risk of significant crop loss.
The company’s ultimate goal is to continue to grow premium cannabis products more efficiently and productively, all at the lowest cost. In fact, Delta 9’s production cost per gram is estimated at $0.67.
The Grow Pod business division allows the company to expand into the U.S. cannabis market as the industry begins to develop there. The Grow Pod division provides the company with additional revenues and high margins at 65%, as well as valuable partnerships with licensed cannabis producers with supply agreements.
The Advantages of Grow Pods
With a low conversion and installation cost, Delta 9 can expand for less than $100 per square foot making incremental expansion very economical.
Grow Pods are constructed on-site using retrofitted shipping containers installed with customized wall panels, electrical, lighting, HVAC and security. They are modular, scalable and stackable.
Delta 9 cultivation system ensures consistently high yields and quality. In fact, production in small modular areas helps prevent the risk of contamination and disease and compartmentalizes the risk of crop loss.
Corporate Highlights
Delta 9’s Grow Pod division contributed over $8 million in revenue over the last 4 quarters and the company expects to continue to expand its Grow Pod division into emerging markets in the U.S. in 2021.
Summary of 2020 year-end results:
Delta 9 recorded a 64 percent increase in revenue in 2020 to $52 million, increased its workforce by 50 percent to about 300 people and generated $3.8 million of operating profit.
And this was done while dealing with all of the complicated adjustments an essential service was required to undertake during the pandemic.
In addition to the dramatic revenue growth, the company doubled its retail revenue and number of stores, continued to grow its wholesale and grow pod business — Delta 9’s proprietary shipping container cultivation systems were sold to operations in Maine and Michigan last year — and the company is in very good shape to continue to grow.
“There are lots of positive takeaways,” Arbuthnot said. “It’s a major milestone for any company to produce positive cash flow and positive EBITDA.”
Considering that many others in the industry were shedding assets, shuttering facilities and laying off thousands of workers, it is a major accomplishment that Delta 9 is now one of only a few Canadian cannabis companies that are profitable.
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]]>The company - one of Canada’s original cannabis companies – sells products through its wholesale and retail sales channels and markets its cannabis ‘Grow Pods’ to other businesses
This week's Expert Guests:
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The Delta 9 presentation starts HERE and the panel discussion starts HERE.
The full video is found below.
]]>Click here to watch the interview with CEO John Arbuthnot on the Follow The Money Investor's Group Facebook Page.
]]>The producer, retailer and business-to-business services provider posted its Q4 2019 and year-end financial results yesterday evening.
A profitable quarter is a milestone for Delta 9, who operates in Manitoba where the impact of the novel coronavirus has been much lower than other, more metropolitan provinces. As of publication time, the province had reported only 17 out of Canada’s 1,077 confirmed cases.
From our interview with CEO John Arbuthnot below, you’ll get a sense of just how different things can be in areas less affected by international travel.
Among the company’s financial highlights are revenues of $10.6 million for the fourth quarter of 2019, up 59 per cent from $6.7 million in the previous quarter and up 101 per cent from $5.3 million in the same quarter last year."
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