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Author: Debra Borchardt
Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.
Recent Stories by Debra Borchardt
The lawsuit claims investors ponied up more than $1 million for the fraudulent scheme.
1933 Industries Inc. (CSE: TGIF)(OTCQB: TGIFF)started the new year by releasing its unaudited interim consolidated financial statements for the first fiscal 2024 quarter ending October 31, 2023, in Canadian dollars.
1933 reported revenues of $5.5 million, an 11% increase from $5.0 million for the fiscal 2023 first quarter. The company attributed the increase to the improvements to the cultivation facility completed at the end of 2023. The company also delivered a net loss of $0.4 million versus a net loss of $1.2 million for the same period last year.
Despite the improvements in revenue and trimming the losses, expenses rose to $2.1 million versus last year’s $1.2 million. The company attributed the increase in expenses to the prior period receiving payroll tax refunds from the IRS of $0.5 million and recovery of a fair value adjustment related to Infused MFG inventory of $0.4 million.
“We are pleased to report revenues of $5.5 million, as well as operational improvements in gross profit and positive adjusted EBITDA compared to the same period last year. As a non-dispensary house brand, AMA products have strong market presence in several categories and consistently rank among the top 5 brands sold in Nevada. Our ability to offer a large variety of quality cannabis products with assured consistency and that meet changing consumer demands has made AMA a sought-after brand”, said Paul Rosen, Chairman and CEO of the company.
1933 owns 91% of the Alternative Medicine Association (AMA), the company’s cultivation and production subsidiary focused on the medical and adult-use cannabis market, and 100% of consumer-packaged goods manufacturer Infused MFG LLC (Infused). The company’s revenue is derived from wholesale cannabis sales in Nevada (AMA), and the sale of hemp-derived wellness products (Infused) under the Canna Hemp brand.
Debenture Moves
As part of the work to get its financial house in order, 1933 said it would extinguish upon maturity, the principal debt of its 10% Senior Unsecured Convertible Debentures Due December 31, 2023, and then issue a new 10% unsecured convertible debenture. With a two-year maturity, the New Debenture will be convertible into units for $0.05 per unit. Rosen added, “We are encouraged by our steady progress towards profitability and are hopeful and optimistic that over the two years, overall market conditions will improve.”
The accrued and unpaid interest due under the older debentures of approximately $1,294,000 will be paid in common shares of the company, at $0.05 per share which will lead to an issuance of an aggregate of 25,880,000 shares.
The company is a going concern, with a cumulative deficit of $4,132,349 as of August 31.
The dispensary highlighted its charitable mission as a driver of its success.
A look back at the scandals that rocked the cannabis industry in 2023.
Here's a look back at the good news of the past year.
Massachusetts-based and privately-owned Theory Wellness is opening the first-ever beverage dispensary in Medford, MA. Unlike other dispensaries, where beverages are an afterthought, this store will offer the largest assortment of cannabis drinks produced in Massachusetts, at the lowest price points available to adults 21+ years of age.
“The beverage dispensary is a concept that aligns with the future of cannabis use from your home to parties to consumption lounges,” said Theory Chief Marketing Officer Thomas Winstanley. “It’s a new model that the industry hasn’t seen that reflects the growing demographics around these types of products.”
Theory Wellness launched in 2015 and debuted its first cannabis-infused beverage Hi5 in February 2021. It was an immediate hit selling over a million units in the first six months. Consumers were drawn to the product’s fast on-set (five minutes), zero calories, and the bonus that it was gluten-free.
First Location
Building on that success, Theory Wellness will have a dispensary adjacent to the Hi5 Beverage Dispensary located in Medford Massachusetts, which is five miles north of Boston and on a heavily trafficked freeway. The first beverages are a select group from the main beverage manufacturers who will be featured heavily in the marketing with exclusive pricing:
- CANN
- Levia
- Good Feels
Plans for the beverage barn include delivery to the Boston area and consumption lounges. Theory believes that the lounges will become an accelerator for the beverage category.
Mass Market
While some in the industry have dismissed beverages as an important product, Massachusetts has sold more than $50 million since adult-use sales began. Granted that’s only 1% of total sales, but Theory Wellness said it has seen those numbers grow at its dispensaries from 2% to 3% year-over-year. In the state, beverage sales grew 53% YOY from 2021-2022.
Infused beverages are so popular in the state that there are now over 80 cannabis beverage brands with +900 product SKUs in dispensaries across the Commonwealth.
Popularity Grows
There are several reasons why beverages are growing in popularity. First is the improved technology. Early cannabis-infused beverages took as long as two hours to take effect and were difficult to predict the effect on consumers. Faster-acting responses allow for the cannabis drinks to mimic alcohol onsets. The taste has gotten way better. Again, early versions of cannabis drinks tasted like bong water. The cannabis taste was overwhelming and not in a good way. Most cannabis beverages now only have a hint of the cannabis flavor.
Cannabis beverages also satisfy the social aspect of drinking. Consumers can feel included in social drinking with a can in their hands without the problems that come with alcohol.
Theory Wellness has expanded its Hi5 line to include seltzers, sodas, and energy drinks. The brand is currently available in three states that include Massachusetts, Maine, and
New York.
Citing the old classics reminiscent of Reefer Madness, nearly 30 former U.S. Attorneys sent a letter to Attorney General Merrick Garland asking that cannabis not be reclassified as a Schedule III drug. While arguing that for 50 years Republican and Democratic administrations had followed the science and kept cannabis as a Schedule I drug, the group ignored current medical knowledge.
The group stated its main three reasons for keeping cannabis as a Schedule I drug as follows:
- High potential for abuse
- No currently accepted medical treatment
- Marijuana lacks accepted safety for use under medical supervision
Addictive Qualities
The letter stated that since Washington State legalized cannabis, the Drug Enforcement Administration determined that 21% were addicted to the product. The group also said that a report in JAMA found that the most comprehensive study on the addictive potential of different drugs determined that marijuana is more addictive than several other Schedule I drugs, including LSD, GHB, ecstasy, and khat. It’s worth noting that the study surveyed less than 1,500 people. However, there are 7.9 million people in the state and 30% surveyed by the Washington Department of Health stated they had consumed cannabis within 30 days. That means the state has 2.3 million regular cannabis consumers demonstrating that this test did not acknowledge that amount of consumers in the state reporting no cannabis use disorder.
This argument also centered on the increasing level of THC in cannabis products today and that is not disputed.
Medical Qualities
Here the letter cited a National Institute on Drug Abuse factsheet on medical marijuana that wrote, “So far, researchers haven’t conducted enough large-scale clinical trials that show that the benefits of the marijuana plant (as opposed to its cannabinoid ingredients) outweigh its risks in patients it’s meant to treat.”
Yet, it failed to recognize that Jazz Pharmaceuticals (NASDAQ: JAZZ) currently owns the drug Epidiolex which uses cannabis as its main compound for treating pediatric epilepsy conditions known as Lennox Gastaut and Dravet Syndrome. This drug went through the standard U.S. Food and Drug Administration studies and was found to have substantial medical uses and continues to study additional conditions to treat more patients.
Criminal Qualities
The letter also makes a blanket statement that the only people benefiting from legal cannabis are drug cartels. The attorneys neglected to address the positive aspects of the tax revenue in states where it is legal. It didn’t note the number of jobs created or ways cannabis has impacted the real estate landscape in depressed neighborhoods.
It did address the illicit market problem in California, which is true. However, drug cartels have moved on to pushing fentanyl not cannabis. A fractured market of smaller domestic operators produces most illicit cannabis. Larger criminal organizations can make more money with easier-to-move products than cannabis.
Ultimately, the letter rolled out old cannabis myths that have mostly been busted since cannabis was 1777000-1777208-us-attorney-letter-re-marijuana-rescheduling_december2023-1 decriminalized or legalized in many states.
Two-thirds of cannabis consumers said they cut back on drinking.
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