Vancouver, Delta, Kelowna, BC – February 15, 2023 (Investorideas.com Newswire) www.Investorideas.com, a global news source covering leading sectors including marijuana and hemp stocks and its potcast site release today’s podcast edition of cannabis news and stocks to watch plus insight from thought leaders and experts.
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Investor Ideas Potcasts #646, Cannabis News and Stocks on the Move – (NASDAQ: SNDL) and (NASDAQ: OGI)
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Today’s podcast overview/transcript:
In today’s podcast we look at recent news regarding continued layoffs in Canada, cannabis bills being put forward in Texas and California, pre ground bud sales and cannabis in Thailand.
SNDL Inc. (NASDAQ: SNDL) announced changes to its operations through a rightsizing of cannabis cultivation in Olds, Alberta, in an effort to focus the facility on premium products and brands. The Valens Company Inc. transaction has accelerated the need to optimise and rationalise SNDL’s manufacturing and operational footprint to better address market saturation and oversupply.
“We have made the difficult decision to materially reduce staffing and activity levels in Olds, Alberta, in order to improve the efficiency of our operations as one of Canada’s largest adult-use cannabis manufacturers,” said Zach George, Chief Executive Officer of SNDL.
“With the Olds facility already in operation when I joined SNDL, I am proud of the cultivation capabilities and high-quality flower that our teams have developed and produced. We estimate that more than 1 billion grams of flower are sitting in Canadian vaults today. Oversupply and excess capacity have resulted in high-quality flower being widely available and sold well below the marginal cost of production. Using available and existing biomass, we will be better equipped to leverage the current pricing environment to materially improve our cost of goods sold and margins. We are taking a proactive approach with our cultivation and manufacturing strategy to evolve with the market while continuing to deliver exceptional products across a variety of product and price segments.”
SNDL has initiated a headcount reduction of approximately 85 employees at the Olds facility as a part of a larger phased cost savings program that is expected to deliver close to $9 million in savings across labour and operational costs. The cost savings initiatives are expected to position SNDL to exceed its previously announced integration savings target as a result of the acquisition of Valens. SNDL expects to complete most of this transition within the first quarter of 2023, and the cost savings will be immediately accretive to adjusted EBITDA. The Company expects to report record net revenue and net cash provided by operating activities for the fourth quarter of 2022, with the year-end and fourth quarter of 2022 results expected to be announced at the end of March 2023.
The Company’s ongoing focus on high-quality cannabis cultivation operations, combined with Valens’ low-cost biomass procurement capabilities, will enhance SNDL’s ability to offer a wide range of customised, innovative products to meet customer demand and current market conditions. SNDL is confident that consumers will not see changes to the availability and quality of the Company’s brands. Through its integration and rationalisation efforts, the Company is assessing all assets and will continue to make decisions based on sustainable profitability.
This recent string of layoffs that has included other LP’s in Canada is being discussed today as the Cannabis Council of Canada President & CEO, George Smitherman, will be holding a press conference with several cannabis sector CEOs on Parliament Hill to discuss the impact recent layoffs and facility closures are having on producers of all sizes across Canada.
Cannabis legalisation has been a success for Canadians, as well as for federal, provincial and territorial governments, but the industry cannot be sustained without urgent action.
Participation in the question and answer portion of this event is in person or via Zoom, and is for accredited members of the Press Gallery only. Media who are not members of the Press Gallery may contact firstname.lastname@example.org for temporary access. The event takes place at 11:15am EST today.
In recent news, Texas cities and counties could legalise recreational marijuana if a new bill passes the state Legislature. Currently two-thirds of Texans approve of legalising marijuana for recreational use by people ages 21 and older, according to a recent poll by the Hobby School of Public Affairs at the University of Houston.
House Bill 1937, filed by Rep. Jessica Gonzalez, a Democrat from Dallas, would allow counties and municipalities to make their own decisions regarding the recreational use of cannabis for Texans ages 21 and older. This would allow local governments to take action to allow adults to possess and transport up to 2.5 ounces of marijuana as well as the bill would also impose a 10% tax on all cannabis products, which would be directed toward cannabis regulation, cannabis testing, government oversight and funding for schools.
Currently, Republican leaders including Gov. Greg Abbott and Lt. Gov. Dan Patrick have repeatedly said they don’t support legalising recreational cannabis use.
“While Texas has made progress with the Compassionate Use Act, we have been left behind on a potential revenue source that would increase investments in public education, stop unnecessary arrests for cannabis possession, and create jobs in our state,” Gonzalez said in a statement.
It should be noted that Gonzalez filed a similar bill in 2021, but it didn’t get to a vote and there is speculation that even if this bill gets voted on and passes, it’s not likely that Abbott would sign it.
In other news over in California, there is a new proposed bill aimed at changing the landscape of cannabis use in California.
The legislation put forward this month by Assemblyman Matt Haney (D-San Francisco) would legalise the sale of food and nonalcoholic beverages at cannabis retailers and lounges.
“It’s not unlike a neighbourhood bar or cafe where people gather and get a lot of social value [out] of that,” Haney said. “We allow in many places, on-site consumption of cannabis, but they’re pretty sad places right now because you can’t eat or drink.”
Alcohol would not be allowed at the “cannabis cafes” under Assembly Bill 374, Haney noted.
If passed, the bill and its counterpart introduced in the state Senate would allow localities and cities to permit the consumption of food and drink at cannabis retailers. The state would not force the new regulations on municipalities, Haney said. Haney’s bill would also allow cannabis cafes to host live performances and sell tickets to the events.
Haney said he has spoken with marijuana retailers from Los Angeles to the Coachella Valley, all of whom say their businesses must expand to survive.
“If we want this legal industry to survive in California, we have to change these laws. They’re losing to the illegal cannabis industry, and one thing that the legal cannabis small business can offer is an experience,” Haney said. “Cannabis businesses told us that they may have to close their doors unless the laws change. The regulations that prohibit them from offering other products like food are a huge burden.”
In a recent article from MJBiz Daily, a growing number of Canadian cannabis consumers are picking up a trend of buying pre-ground flower that’s ready to roll into a joint or pack into a pipe or vaporizer.
Growth in the ground-cannabis segment appears to be propelled by convenience-seeking, value-conscious consumers, although the Canadian trend hasn’t reached U.S. cannabis markets.
Although ground flower remains a niche, value-oriented segment, its growth in Canada over three years merits attention.
At the beginning of 2020, ground-flower sales were near-zero in the four Canadian provinces tracked by Seattle-based cannabis analytics firm Headset: Ontario, Alberta, British Columbia and Saskatchewan. By December 2022, ground flower comprised 7.3% of all flower sales in the four Headset-monitored provinces, which include Canada’s three biggest provincial cannabis markets.
“That’s very, very much a significant portion of the highest-revenue category,” Headset Analytics Manager Cooper Ashley said.
Organigram Holding Inc. (NASDAQ:OGI) which has their Shred brand, has been leading the ground-cannabis segment in the provincial markets tracked by Headset.
Shred launched in September 2020 as a ground-cannabis offering, but the brand has since been extended to include pre-rolled joints, edibles and vapes.
Organigram Holdings’ CEO Beena Goldenberg said Shred’s core ground-flower product revolves around convenience and consistency.
Unlike the potential stereotype of ground-cannabis flower as an industrial byproduct – shake and trim left over from processing whole cannabis buds – Goldenberg described Shred as deliberate blends of different cannabis cultivars formulated for specific aroma profiles, without using added terpenes.
“We have a team of R&D people making sure that, depending on the input materials, the amount, the mix of the blends is going to be different so that we always get the same output flavor and aroma,” she said.
Goldenberg said Shred consumers tell Organigram they get “the same experience every time – they know what they’re going to get, they know what to expect from it.”
Lastly, in news from Thailand, the country is tightening the country’s marijuana regulations, issuing new guidance and measures intended to curb a rapid rise in recreational use of the drug since its decriminalisation last year.
The topic is likely to be a major issue in general elections scheduled to happen by May.
The government said last month that showing identification will be required when buying cannabis flower buds, which are rich in hallucinogenic compounds. Bangkok aims to incorporate buyer information into a national database to track and analyse cannabis sales and purchases. Businesses that fail to comply risk having their sales licence revoked.
Authorities also have intensified surveillance of dealers, arresting more than 30 people by January in places like Bangkok and the resort city of Pattaya for selling without a licence, local media report.
Efforts to prevent abuse by foreign tourists have also been strengthened. The Public Health Ministry last month released 10 guidelines for travellers on using marijuana in Thailand, including conditions for purchasing and growing. The guidelines also warn that people who smoke marijuana in a public place can be jailed for up to three months or fined 25,000 baht ($740).
The average monthly number of cases involving impaired consciousness and other issues due to marijuana use has quadrupled since the legalisation, the health ministry said.
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