1933 Industries Inc (CSE:TGIF) (OTCMKTS:TGIFF) CEO Chris Rebentisch said Monday that the company anticipates a recovery in vape sales as it reported first quarter financial results for fiscal year 2020.
In a statement accompanying the Vancouver, British Columbia company’s latest numbers, Rebentisch said: “Company revenues for first quarter 2020 were impacted by lower than expected sales from vape products, largely attributed to the rampant use of vitamin E acetate in black market products.”
“Despite weakness in this segment, we anticipate a recovery in vape sales across both our Alternative Medicine Association (AMA) and Infused MFG subsidiaries as well as the demand in the supply chain for distillate normalizing in Nevada in early 2020.”
The 1933 Industries boss said that with over “100+ SKUs across 5 product lines,” and 8 licensing partners, the company’s “diversified product portfolio and product mix” will help to boost future growth.
“Over the last two years of operations we have built AMA and Canna Hemp into valuable and respected brands,” said Rebentisch.
“We have attracted the top brand names in the industry as our partners in Nevada, and we are expanding our physical footprint to build a sustainable foundation for growth,” he added.
The company’s cultivation arm, Alternative Medicine Association, recently received the exclusive rights to cultivate flower, manufacture pre-rolls, live resin vape pens and cartridges under the Blonde brand for distribution to licensed dispensaries in Nevada. The subsidiary has another licensing agreement with California-based PLUGplay which allows AMA to make distillate and vape pens under the PLUGplay brand for dispensaries across Nevada.
Rebentisch said that cannabis sales continue to remain “strong” in Nevada, touching $639 million in the fiscal year ended June 30. Interestingly, 80% of the sales came from Clark County, according to Nevada tax numbers.
For the fiscal first quarter 2020 period which ended on October 31, the company posted revenue of $3.9 million, down 26% from the previous quarter, mainly due to the decline in market share for vape and distillate sales in the recreational market in Nevada.
Vaping accounts for 25% of cannabis sales in Nevada, and according to economic analysis firm New Frontier while the nationwide decline was 15% during the first week of September, at the state level, Nevada saw a drop of 32% in vape sales.
CBD wellness products shine
Meanwhile, the company’s CBD wellness products made through its subsidiary Infused MFG continued to gain traction and contributed $2.1 million in revenue during the quarter. The rest of the $1.8 million in revenue came from Alternative Medicine Association.
The company’s cash position in the fiscal first quarter stood at $14.9 million, compared to $17.6 million on July 31. The company had $21.4 million in working capital during the quarter.
1993 Industries has total assets estimated at $61.4 million during the fiscal first quarter, compared to $56 million in the same quarter in fiscal year 2019.
“Our current cash position allows us to continue our operations, service debenture interest obligations and fund our capital needs,” said Rebentisch.
“We are confident that we will achieve significant growth in 2020, driven by our expanded cannabis production in Nevada, our near-term entry into the California market, increased distribution into new markets for our Canna Hemp line and the development of products in support of our licensing agreements,” he added.
1993 Industries completed the first harvest at its new facility in Las Vegas, Nevada. Two zones were harvested yielding 450 pounds of flower and trim, as well as 250 pounds of fresh frozen flower, which will be used to produce oils, bulk distillate, and live resin for its premium products. The next growth cycle will start in mid-January and be harvested in March. At full production, the company expects to harvest every 10 to 14 days. AMA is growing 26 strain varieties as well as 12 Cannabis Cup winning strains from the company's licensing partner, OG DNA Genetics.
Rebentisch noted: "We learned a lot from our first harvest in the new facility, taking the time to adjust and perfect our automated systems, calibrating the optimal water and nutrient distribution to our plants, and ensuring the ideal drying process in order to promote the genetic potential of the flowers."
"Our craft cannabis processes of hand trimming and curing, with no chemical protection utilized in our indoor grow, differentiates our products in the market and provides our consumers with premium quality, safe cannabis products," he added.
1933 Industries, based in Chilliwack, British Columbia, owns licensed medical and adult-use cannabis cultivation and production assets, proprietary hemp-based, CBD-infused branded products, CBD extraction services and a specialized cannabis advisory firm.
— Updates with harvest details —
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive