In my initial column for Leafly last September, I suggested that revenue is a key metric to track when considering cannabis investments. At the time, I noted that there were a dozen companies that qualified for inclusion in the New Cannabis Ventures Public Company Revenue Tracker.
Despite the acquisition of one of those companies by another member, the list has now expanded to 16, broken down by the currency in which each company reports its financials. As a reminder, inclusion in this list is not a stock recommendation.
Six Companies in the USA
In the United States, six companies currently make the cut, producing a minimum of $2.5 million in quarterly revenue. Note that the list includes only companies that file with the SEC.
Looking at the names ranked by size of their quarterly revenue, Kush Bottles (OTC: KSHB), which will soon become KushCo Holdings, leads the way. The company, focused on providing packaging and other goods and services, has grown both organically and through acquisition. Cowen and Company projects that the growth will continue, forecasting sales for the fiscal year ending in August of approximately $49 million. Note that Kush Bottles is a client of New Cannabis Ventures.
CV Sciences (OTC: CVSI) is riding the demand for CBD from industrial hemp, and its sales have been expanding rapidly. The company is also pursuing a chewing gum through the FDA process that combines nicotine and synthetic CBD to combat oral tobacco addiction.
Terra Tech (OTC: TRTC) operates cultivation, production and dispensing facilities in California and has operations in Nevada as well. Growth slowed in Q1 as the California market downshifted to adjust to the implementation of the state’s new regulatory system.
GrowGeneration (OTC: GRWG) has seen substantial organic growth, but the chain of hydroponics stores saw a slowdown in Q1, with most of its growth coming from acquisitions. The company has issued guidance for 2018 that suggests it can generate sales of $37 million.
Golden Leaf Holdings (CSE: GLH) OTC: GLDFF) is based in Canada but has Oregon as its primary focus after the company’s acquisition of Chalice Farms. The growth has been due to acquisition, as its core business has been in a downturn.
GW Pharma (NASDAQ: GWPH) will hopefully be generating substantially higher sales assuming that Epidiolex, its developmental drug that treats seizures, receives FDA approval later this year. The current sales are derived from Sativex, which is approved for treatment of MS spasticity in many markets outside of the United States.
North of the Border
In Canada, ten companies now qualify for the Revenue Tracker based on the equivalent of US$2.5 million in quarterly sales.
While Canopy Growth (TSX: WEED) (NYSE: CGC) leads the way, Aurora Cannabis (TSX: ACB) (OTC: ACBFF) recently acquired CanniMed and is in the process of acquiring MedReleaf (TSX: LEAF) (OTC: MEDFF), which could put it ahead of the leader in coming quarters.
Aphria (TSX: APH) (OTC: APHQF) and CannTrust (TSX: TRST) (OTC: CNTTF), also licensed producers, are quite behind Canopy Growth and Aurora Cannabis. Analysts project rapid growth in sales for all of these companies following legalization for adult consumers in Canada later this year. Note that both Canopy Growth and Aurora Cannabis are clients of New Cannabis Ventures.
Isodiol International (CSE: ISOL) (OTC: ISOLF) derives most of its revenue from the sale of CBD derived from industrial hemp.
Sunniva (CSE: SNN) (OTC: SNNVF) is developing large-scale production facilities in both California and Canada, and generates its revenue from its clinic operations in Canada.
Namaste Technologies (TSXV: N) (OTC: NXTTF) is a licensed cannabis company in Canada not yet authorized to sell. The company’s current revenue is generated through the sale of ancillary products like vape pens, with Australia and the UK as its largest markets.
MPX Bioceutical (CSE: MPX) (OTC: MPXEF), which is a client of New Cannabis Ventures, has historically generated its revenue exclusively from its operations in Arizona, but this will change in the next financial report, when the company includes sales from Nevada as well. It has operations in Massachusetts and Maryland as well as Canada.
Organigram (TSXV: OGI) (OTC: OGRMF) reported record sales in its most recent quarter, and has now fully recovered from a pesticide-related recall a year ago. Analysts project the company can generate sales of $110 million in its fiscal year ending August 31, 2019.
One Metric Among Many
Generating sales is an important milestone for a public company, and most cannabis stocks have little or none. With that said, revenue is just one metric. It’s not the only one upon which investors should make decisions. A company that manufactures a product for $1.50 and sells it for $1, for example, will likely not prove to be a good investment. With that said, I believe over time that this universe of companies will be growing rapidly. It will be important to measure other financial metrics—like profitability—as well.
Bottom line: Unlike several years ago, those who want to invest in the cannabis industry can now buy into companies that are generating substantial sales and that are representative of the industry. This rather small subset of the broader universe of stocks is growing rapidly.
Next up: I discuss a few new publicly-traded cannabis companies recently debuting or expected to debut shortly.[“Source-leafly”]