Production Constipation from New Formats

As we look at Legal Supply vs Demand and it’s eventual equilibrium, I think it’s important to start thinking about Legal Supply a little differently.A good deal of Joe Retail is looking at 2019 and wondering if Legal Supply will finally match up with Demand. This is usually accompanied by comments that with new formats there will be greater consumer demand, as new consumers (who don’t want to combust) enter the market, and those using illicit market formats migrate to the legal market as formats are introduced.A lot of the new…

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Evergreen Cannabis ~ Vancouver’s first cannabis RETAILER

Mike Babins looks tired.  But in that tiredness there is an unmistakable look of satisfaction. Mike and his wife, Maria Petrucci, are the proud parents of Vancouver’s first legal cannabis RETAILER.  I slipped several times and called it a “dispensary” and Mike politely corrected me.   I started to feel bad for the multiple corrections until Maria got out the sound “Disp…” before correcting herself. Old habits die hard.  But it is because of some of those old habits that Evergreen is Vancouver’s first legal cannabis RETAILER. Mike was kind enough to…

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Organigram Q4 F2018 Rundown – Aug 31, 2018

OK… you may have read my Bah Humbug comment on the Sports Bar last night about Q4’s and how I wished that company’s would lay out the Q4 versus just doing an Annual aggregation.  Here is why…   Organigram 9 mos YTD 12 mos F2018 Delta Reported via MDA 31-May-18 31-Aug-18 Q4 F2018 Q4 F2018 Sales $9,611 $11,936 $2,325 $3,205 Sales returns $489 $493 $4 $8 Net Sales $10,100 $12,429 $2,329 $3,213 Cost of Sales $4,009 $4,659 $650 $1,068 Indirect production costs $1,002 $1,289 $287 $287   $5,011 $5,948 $937 $1,355…

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The Rebuttal – What can we expect from Aphria Wednesday??

I think expectations should be tempered on the Aphria rebuttal.  Why? Whereas there are number of allegations that can likely be proven false with pictures, statements, financial reports… the more damning of the allegations are innuendo and not fact based.  They are statements meant to illicit opinions that the reader can believe, or choose not to believe, impacted the transactions.   So how should an investor look at the short thesis??    Keeping in mind the shorters goal is to make you sell, they may make a “Statement of Fact” that…

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Aphria Q2 F2018 Rundown

Open up the Financial Statements and MDA and follow along. First partial Q of adult rec is on the books. Cannabis sales [net of excise] was $19.5 million while non-cannabis sales were $2.2 million.  The increase in cannabis sales was $6.8 million a 53% increase QoQ, while non-cannabis was $1.6 million up from $0.6 million and attributable to Argentine asset ABP for 2 of 3 months in Q. Cannabis Sales in KGs increased to 3,409 up from 1,778 or 70%.  Rec accounted for 1,946 kgs [57% of total] while Medical was…

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Tilray Q3 F2018 Rundown

USD unless noted. Last Q we noted on the Rundown and on “Inside The Ropes” podcast that Tilray had very little Finished Goods Inventory of Flower $89k and Extracts $361k at the end of the last Q and net decrease in overall cannabis inventory [decreased $913k].  We surmised that this would lead to either constrained sales growth unless they bought from 3rd parties, and if they did buy from third parties… a hit to gross margin. We have also repeatedly noted that NOT ONE financial media company has brought this up.…

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Cronos Q3 F2018 Rundown

Open up the financials and MDA and follow along. Sales Cronos evidenced a $0.4 million or 11% in crease in sales to $3.8 million.  They have some new disclosure that wasn’t available last Q, so I cannot track down the exact location of increase but I believe it to be all oil related.  Oil now constitutes 29% of overall sales. International sales make up $0.6 million of sales or 15% of mix. Again, new disclosure so no comparative. Sale price per gram increased to $7.32 from $7.12 likely due to higher…

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Aurora Cannabis Q1 F2019 Rundown

Open the financial statements and MDA and follow along. I said this last rundown for ACB…. "As a generalization…. If you take two firms with negative Adj EBITDA and you combine them the first Q will never look pretty [See Canopy-Mettrum].  You might get sales boost and other improvements, but to squeeze out synergies takes more than the first Q.  You throw in a huge ramp of Selling expenses and G&A to Day 1 of rec… and these results shouldn’t be too shocking [Illumination series was a cost with future benefit…

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Liberty Health Sciences Q2 F2019

Open up the fins and MDA and follow along... A few items I would like to note prior to diving into fins… GMP received in June 2018… this will be important if/when Hemp gets pushed through Farm bill. Those big box stores want GMP. Issued more shares to satisfy a USD 6.0 million bill for work done on the 360 complex by Thermo Energy Systems [Leamington co… I might add.] 4 dispensaries operating for the Q.. 3 more open in Q3 with 4 new leases signed. That gets to 11 vs…

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Aurora Cannabis Q4 F2018 Rundown

Open up the fins and the MDA and follow along.First off.. BIG thanks t Glen their CFO for having the courtesy to provide QoQ narrative on OPEX versus YoY comparisons. You have heard me grumble on how useless YoY comparisons are in a fast growing industry like this, so to provide colour is appreciated. Also… they let TheCannalysts ask a couple of Q’s. How about that!So let’s dig in…As a generalization…. If you take two firms with negative Adj EBITDA and you combine them the first Q will never look pretty…

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Aphria Q1 F19 Aug 31, 2018 Rundown

I do want to add a comment before we get going….  Aphria always had an industry leading MDA in my opinion.  They stepped up their game considerably [as did ACB last Q].  They increased disclosure of Gain on Bios, FVI, QoQ impacts on cost per gram, and their detail on construction cost overruns and plant destruction were [to me] the type of disclosure the industry should strive towards.  They could always make me more happy by: providing kg’s harvested, sold and held in inventory like CGC or providing QoQ expense commentary…

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CannTrust Q3 F2018 Rundown

Well ain’t you a pleasure to review!! Positive EBITDA, FG inv growth, strong sales growth, Nice Production to Sales delta.  Rogers and Ravensdale will be finding work pretty quickly given these results. Open up the Fins and MDA and follow along. Sales An increase of 39% to $12.6 million [comparable to Tilray!!] Grams sold of flower dropped 14% QoQ but price per gram went up 16% to $8.77 = $3.5 million Extract went up to a new record of 699 kgs up 17% with price dropping less than 1% to $8.89…

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Tilray Q2 F2018 Rundown

Open up the fins and MDA and follow along.As this is my first Tilray rundown I trust the Community will be easy on me as I learn more about them. Usually it takes a few rundowns to settle in.SalesTilray increased sales to USD 9.7 million [C$ 12.8] a 25% increase QoQ. This was on 1514 KGs [1299 kgs last q] at a price per gram of C$8.38 vs C$7.55 last Q. A greater mix of higher value extracts – 46% up from 40% - is the reason. Cdn sales were up…

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Canopy Growth Q2 F2019 Rundown

After doing TRST last night, this is a sober reminder of the fact that this industry has a looong way to go.   To be fair to ACB, where I inserted a similar narrative for those that do not read the entire post,.… I will also talk about Net Operating Profit versus Net Income here.   CGC lost $330 million Net Income for the Q, with IFRS voodoo removed it was negative $290 million. Their Net Operating Income with IFRS voodoo backed out was negative $174 million. Net Operating Profit is…

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CannTrust Q2 F2018 Rundown

Open up the fins and the MDA and follow along. TRST evidenced a 15% increase in QoQ revenue of $1.2 million. This on the backs of only an 8% increase in KGs sold, therefore… better pricing. Revenue per gram sold was $8.52 vs $7.98 last Q, an increase of 7%. Flower sales in absolute $ terms increased 11% at $7.59 a gram versus $7.27 last q. Oil sales in absolute $’s increased 20% at $8.95/gram equiv versus $7.89 last Q. Oil is now 59% of sales, an increase on mix of…

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Aphria Q4 F2018 Rundown

Open up the fin statements and the MDA to follow along.Sales:A pretty strong sales increase of 17% or $1.8 m to $12 million QoQ. This was despite an 8% drop in KG sold QoQ.Plus:+BCC for full Q versus 1 month… BCC now accounts for 484 KGs or 37% of sales by weight.+BCC averages over $10/.gram which increased Retail per gram to $9.25/gram from $8.30 an 11% improvement+Existing patients was a record 798 kgs a 49% improvement from last Q and above the 695 kgs record in Q2.Minus - headwinds-Onboarding dropped substantially…

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Cronos Q2 F2018 Rundown

With Cronos changing their accounting presentation to what is becoming industry standard, I thought I’d do a light rundown.Sales increased 15% QoQ to their highest level yet of $3.4 million. This increase was off a drop in KGs sold to 477 kgs from 501 kgs [they have had a change in format of reporting this. I believe it to be correct]. This increase in sales off of lower kgs was a function of an increase in the overall price per gram QoQ to $7.12 from $5.88/gram, likely reflecting a reduction in…

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Liberty Health Sciences Q1 F2019 Rundown

I was going to put this in the Sports Bar... but figured I'd give it her own post given the subs interest.Open up the financials and MDA and follow along…Sales for the Q was $1.1 million up 164% QoQ or $709k. This is largely attributable to sizeable patient capture due to having 4 dispensaries running during the Q rather than one dispensary on the previous Q. Patients were 4,566 versus 1,999 last Q a 228% increase.Price per gram dropped from $19.99/gram to $15.99 gram.Gross Margin before IFRS voodoo [COGS and Dep…

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Organigram Q3 F2018 Rundown

Open up the financials and MDA and let’s take a look.SalesOgi experienced a 15% QoQ increase in Sales to $3.7 million or approximately $0.5 million. This increase results from a 28% increase in flower sales and 39% increase in oil sales. As the sales increase is less than those individual weight increases it means they are selling more weight at less revenue per unit.Some new disclosure: Once they report this for a few more Q’s Ill have a trend line.Sales are split $1,636 flower to patients, $1,363 oil to patients, and…

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Canopy Growth Q1 F2019 Rundown

Open up the fins and MDA and follow along. Before I dive in… congrats to Canopy and their shareholders. The news today was like several hole in ones in a row. I haven’t had time to dig all the way into the costs of the deal. But, damn… credit where credit is due Sales I am hoping CGC starts providing tables and a bridge on where revenue increases are coming from so I can check my spread against their data versus in the future. At $8.94/gram (a 6% QoQ increase) with…

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MedReleaf Q4 F2018 Rundown

This could be the final Leaf Rundown by yours truly if Acb completes the acquisition. So open up the Fin Stmts and MDA and let’s get to it! There is not a lot of narrative that is helpful in MDA explaining QoQ changes [pet peeve]. Sales increase QoQ of 6% and YoY of 8%. The VAC Meteor Strike has impacted Leaf for quite some time, and anyone looking at year over year will notice a substantial deterioration in YoY. Sales: The Sales increase of 6% QoQ was on the back of…

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Aurora Cannabis Q3 F2018 Rundown

Ok… pull up the financial statements and the MDA to follow along.Sales increased $4,400 to $16,100 or 38%$1,072 for Cannabis Sales to a total of $10,813 an 11% increase QoQ$554 Cdn Cannabis up 9% +$670 oil up 44% -$152 European Cannabis Sales down 6% [quite surprised that this dropped given new sales to Italy. I have heard rumours of German product not clearing customs, this net decrease might be an manifestation of that]$2,979 Construction Revenue [Larssen] – New revenue Category +$349 Service Revenue to a total of $2,308 an 18% QoQ…

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Organigram Q2 F2018 Rundown

OGI evidenced a 20% increase in sales or $532k QoQ [net sales including unused sales credit increased $1 million and 37%] driven largely by strong oil sales up 32% by volume and flower up 22% by weight. Oil sales by volume is at a record 552k ML, and flower of 238 kg has not yet reached the peak reached in Q ended Nov/2016 of 260 kg. As both the volume and weight increases are in excess of the Sales increase of 20% then price per volume and/or weight decreased. No revenue…

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Canopy Growth Q4 F2018 Rundown

Ok… time to pull out the financial statements and MDA and follow along. For the Q ended March 31, 2018 CGC evidenced $1.1 million (5.1%) increase in sales over Q3F18. Sales of product of $21,311 [$8.43/gram times grams sold versus total sales of $22.8 million] for Q4 represented an increase from Q3 of $19,339 or close to $2 million a 10% increase. Product sales increase was driven by Germany increase of $1.4 million to $2.3 million, with the balance being increase in Cdn product sales of $619k or only 3% QoQ…

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CannTrust Q1 F2018 Rundown

Open up the financial statements and MDA to follow along.TRST evidenced a 12% increase in sales for the Q, and there were a number of moving parts to this. They did drop in a new Note (#19) with a clean break out of $ sales. Problem is I do not have that note for last Q, so there is a gap in my Oil Sales by $ amount QoQ.Bud sales $3.0 million. Bud weight went up 40% while bud $ went up 35%. As a result Revenue per gram went down…

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Cronos Group – Peace Natural facility tour – April 2018

At the start of the tour Mike told us you couldn’t use traditional production metrics to evaluate Peace Naturals. Those words hold true with writing a summary of the tour. The number of different things going on across the facility are reminiscent of agricultural R&D more than a typical LP. The basic layout of the facility consists of several separate indoor grow facilities, a small greenhouse and an almost complete 286,000 sq foot indoor grow building. The first plants expect to be growing in the new building by June/July. First stop…

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CannTrust Q4 F2017 Rundown

Open up the financials and MDA to follow along.   TRST recorded sales of $7.0 million for a 14% QoQ increase. Grams of flower sales increased 5% but were offset by a decline in price per gram to $8.14 from $8.81 sequentially, resulting in a 2.6% decrease in dollar sales.  Oil sales increased 24% in dollar sales with sales by ML growing at a like rate. Average revenue per ML decreased slightly from $2.04 to $1.97 but revenue per gram equivalent of Oil went up to $9.34/gram equiv from $9.27/gram equiv.   So…

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Aurora Cannabis Q2 F2018 Rundown

I don’t know how many of you folks actually spread quarterly financial statements. I do both the income statement and balance sheet, and then make a bunch of dives into the notes and the MDA to round out numbers with data I find interesting and pertinent to the analysis. And when it comes to the income statement, I do what is called “common sizing”. This is where I take all the expense items and measure it as a percentage in sales. By doing this the trends pop out more. Highly recommend…

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Organigram Q1 F2018 Rundown

Given how much I liked the OGI disclosure in their MDA, I decided to do my first rundown on them. Sales finally exceeded the previous record quarter [Q2-17 of $2.2 million] with $2.7 million, up 25% from the last Q. The sales increase was largely a result of a very impressive growth in Oil sales up 134% QoQ to 418,600 ml. Flower sales had a small bump of 4% to 195,075 grams, which is well off the record Q2-17 of 260,291 grams. [I couldn’t find sales price per gram for flower…

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Canopy Growth Q3 F2018 Rundown

Before I get into the rundown… I posted this last night in the "Big 5 Martini Bar".Feb 2018Maruoka thinks Canopy will generate EBITDA of $7.1-million on revenue of $116.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of $139.9-million [28%] on a topline of $497.0-million the following year.Feb 2018Stanley thinks Canopy will generate EBITDA of negative $17.6-million on revenue of $87.1-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $19.5-million [7%] on a topline of $278.7-million the following year.I bring it up as…

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MedReleaf Q3 F2018 Rundown

Before I get to the rundown… MDA announces they have a Letter of Intent with SAQ for a minimum 8,000 kg a year for three years. And one of 6 LP’s to get a Letter of Intent. Happened in Feb/18… So where are the other LP announcements???Also, the conference call had technical difficulties and I hung up after a dead line occurred during Q’s.Sales increase QoQ to $11,850 a 15.6% increase. This was the first Q without any VAC changes from Nov/16 and May/17 muddying the trends. The bridge$880 in dry…

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Canopy Growth Q2 F2018 Rundown

I originally posted this on r/weedstocks. As we have a BUNCH of new eyeballs on the sub, and I was messaged by a number of people asking if I do what I did yesterday on Aphria for other LP's [yes, TRST and LEAF are in the wiki]... I thought i'd re-post.I plan in doing ACB and Cronos after their next Q release. I spread their historics over Christmas [Elves were busy with Molly, so Blue ground these out on his own].BEFORE asking any Q's check and see if it was asked…

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MedReleaf Q2 F2018 Rundown

I imagine quite a few readers (new ones mostly) when they first hear u/mollytime rambling on about “regulatory meteor strikes” that will impact the cannabis sector in Canada ... likely roll their eyes and consider him a Chicken Little. Someone just raining on the parade. Well this review will remind a few readers (and be news to many folks who just got into cannabis investing in 2017) about a “regulatory meteor strike”. Welcome to my review of Medreleaf. You should probably start by reading thishttp://www.cbc.ca/news/politics/veterans-hehr-pot-policy-1.3861534 Actually you should also pull up…

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Canntrust Q3 F2017 Rundown

So I am looking for LPs that I want to hold long term. Aphria has been on a tear and is now over my PIII valuation [doesn’t mean I will not accumulate but I’d like a floor to establish as I still think they are $20 by early 2019 on low P/E of 20 .. + 53% by 2019], LHS puked on lack of Ohio license [but again I am looking for floor as I want to accumulate as I see it at $3.23 in 2020 .. +115% but by 2020]….So…

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Aphria Q2 F 2018 Rundown

Well I had a chance to look foolish with a 38% sales increase and $2.5 million EBITDA, and I look half foolish. Instead of doing an MDA rundown I am going to analyze this in my more traditional fashion… like when I write credit… Income Stmt, cash flow/EBITDA and then balance sheet items of note. I’ll draw from MDA for colour. They did beat the street EPS of 0.00 at 0.04. Sales: Up 39%... [not 38%... but I missed by 2% last Q so I am trending favourably] to $8.5 million.…

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Aphria MDA Q1 F2018

Q1 F2018 MDA Review… “Setting the table” [Best to have MDA to page flip with.] Recently I was chided by a CGC investor about “finally” recognizing the need for Operating Expenses (Opex) to sometimes lead sales. I referred to it as a “sales lag”. I do recognize the need, as I have built my own biz from scratch. And when you are in the early days there is a lot of hand to mouth and sleepless nights. But if luck, good fortune, understanding your market and your value proposal, and planning…

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Every Long in Cannabis should thank Canopy… but let’s look at the deal shall we

I wasn’t going to post this, as there is a party going on. But a discussion emerged in the daily thread and I thought a more thought out post would be better.Monday’s announcement was a great day for the cannabis sector. A long term hope that many of us investors held that big alcohol, tobacco, pharma and/or other would come play HAPPENED!! I think it was earlier than most thought, but it happened. The sector owes a big thanks to Canopy. The impact of this on other possible takeover targets is…

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How much extra capital will LP’s need to raise to float payment terms for Rec and Pharmacy?

Click edit button to change Now hanging hat at r/TheCannalysts As we approach day 1 of rec we also approach non cash payment terms for sales. LCBO isn't paying cash at delivery like current patients do. The provinces will be getting approximately 90 days from receipt of goods or invoice from LP's to pay for their mj. Private rec models for distribution certainly won't get 90 days to pay like a province owned would. Many dispensaries might be on cash terms. You may think, my LP doesn't have to worry about…

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When will the Canadian Commercial Banks start lending to the cannabis sector?

There is this general assumption that once rec happens the Canadian chartered banks are going to be falling all over themselves to lend to this sector.That could be one of the dominos that MAY need to fall. But there are bigger ones than day 1 of rec that need to be tipped.Commercial lending for Canadian banks is very homogeneous. They are subject to similar risk rating methodologies (Basel II when I was last inside), similar return requirements (RAROC: Risk Adjusted Return on Credit) they pretty well all use the same financial…

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Gain on Bios for the layman/laywoman: Lemonade Stand posts: CGC Q3 and Q4 F2017

Ok... these are two satirical posts trying to explain GoB. [To CGC Investors: These are historic looking numbers. I fully recognize that you are investing with forward looking view. So if you laughed at u/Monteviale ACB using shares to Buy Itself post, I’d hope this gives you a chuckle and some learnin’. ] Before you look down your nose at Stockhouse (where I originally posted these) I have heard from multiple sources that these stories have made the rounds of a number of I Banks. Q3 https://www.stockhouse.com/companies/bullboard/t.cgc/capital-gold-corporation?threadid=25856421 Q4 http://www.stockhouse.com/companies/bullboard/t.aph/aphria-inc?threadid=26416116 GoBlue

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Demystifying Gain on Biologicals

This is a post I did 5 months ago and was posted on r/weedstocks. Before you ask a Q see if it was already asked and answered. It is looong. https://www.reddit.com/r/weedstocks/comments/6k7qnt/demystifying_gain_on_biologicals_gob/ Given the live example CGC provided, and I get a ton of Q's on GoB, I thought I'd put up a post that may serve as a reference going forward. It is very difficult to analyze an LPs financial statements without understanding GoB. It is an International Financial Reporting Standard (IFRS) that impacts when profit from harvests is taken into…

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CannTrust Niagara Greenhouse Tour – January 2018

I have been touring businesses for 30 plus years. I have been through several very advanced vehicle assembly facilities. Dr. Michael Ravensdale, VP of Operations and Quality, took Cyto and myself on a 3.5 hour tour. I have never had a 3.5 hour plant tour, EVER! And it flew by.Michael is a rare dude. PhD in Plant Pathology from University of Dundee who also spent a couple of years options trading. To have financial chops in the space he fills can only be seen as a benefit. TRST is about halfway…

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EBITDA… What it means in the long term for LPs and their investors…

Yesterday I was asked to repost this educational piece on EBITDA.I have provided a cross post below so folks can scan the Q’s asked and answered before they re-ask something that an answer was already provided. I also provide a cross post as r/TheCannalysts encourage our subscribers to benefit from other reddit resources.We are here to learn and share, and we should make the experience as beneficial to subscribers as possible.This is LOOONG and graduate level stuff.https://www.reddit.com/r/weedstocks/comments/6rsk1f/what_ebitda_means_in_the_long_term_for_lps_and/A slow Saturday so I figured I would post this.I admit it. I am fixated…

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