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WestLeaf ($WL) is a company that’s flown beneath almost everyone’s radar, despite having some large promise as little as a year ago. As an outfit, they check(ed) alot of boxes.
Vertical? Check. Extraction services & white label? Check. Innovative retail concept and capture? Check. Production facility? Check.
The issue seems to have been getting anything really going.
Thunderchild (grow facility) isn’t yet complete, ThePlant (extraction division) doesn’t seem to have had any sales yet, and Prairie Records has 4 stores in operation (1 in Calgary, 2 Saskatoon, and one in the bustling hamlet of Warman, Sask.). There is a great location they’ve secured in downtown Calgary (Palace Theatre)….but it seems frozen in a state of ‘Coming Soon’.
They recently merged with Qwest (We Grow Ltd.), in what looks like revenue combination. Folks who have followed Westleaf closely will have a better handle on it, this is the Cole’s Notes version. I’ve skimmed a couple of their financials, but there isn’t enough meat on the bone beyond investor presentations to bite into.
With only $250k in the bank (as of last September), and a $1MM/Q operational burn rate, there isn’t much to say.
They lost their CEO and 2 other executives in January – describing the departures as a method of conserving cash. The ‘We Grow’ CEO has stepped into the captain’s chair at Westleaf, and are effecting a rebrand as ‘Decibel’ over the next couple of weeks.
It’s all very reminiscent of ‘right sizing’ to myself. The challenge I see here though is finding a critical mass. They currently have 4 stores in smaller metropolitan centres…or even the couple they have in larger cities is already facing alot of competition. They plan to now open only 11, rather than the 22 initially planned. Westleaf has (what I perceive) as a poor track record in execution, and in their new bedmate – We Grow – a niche über-premium brand that’s has been wearing a straight-jacket in terms of scale.
Unless some catalysts come together for this new outfit – and some sort of revenue focus is found to support the other legs of their business – I think they’ll have a tough go. The rebranding is simple enough given the litany of ‘leaf’s’ out there (Next Leaf, NewLeaf, etc), and Westleaf has shown remarkable restraint in costs of operation. Since $WL has little cash, weiners and beans for the staff Xmas party is a good idea.
Look for more of these sorts of combinations over the next few quarters. This deal looks like it was done pretty late, and sometimes it takes certain motivations to hustle management up and get them to climb off their ego.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $WL