CannTrust files for CCAA amid ongoing attempts to seek compliance with regulators 

CannTrust Holdings was granted creditor protection on Tuesday as the cannabis producer continues to seek a path forward from the suspension of its licence to sell and produce pot by regulators. The company said it was granted protection under the Companies' Creditors Arrangement Act (CCAA), giving it a stay of proceedings for at least 10 days from creditors and plaintiffs who are looking to enforce their claims in various lawsuits. As a result of filing for CCAA, CannTrust said it expects its shares will soon be delisted from the TSX and New York Stock Exchange. 

COVID-19 cannabis sales rush may have been a one-off event: Analyst

A BMO Capital Markets analyst thinks that the recent rush to buy cannabis ahead of COVID-19 quarantine measures may be shortlived. That's the takeaway from BMO's Tamy Chen who took at look at how inventory levels at the Ontario Cannabis Store's website fared over the past month. Week-over-week inventory levels show signs that cannabis producers were better equipped to replenish their inventory of dried flower and vape products, Chen found. Shares of cannabis companies rose last week after anecdotal reports of customers stocking up on product ahead of shelter-in-place orders to help contain the spread of COVID-19. 

Cronos Group Q4 results disappoint, to pause on distributing CBD products with Altria

Cronos Group said its fourth-quarter revenue came in at US$7.3 million, up 16 per cent from the prior quarter, but reported a writedown of US$24 million in inventory and an adjusted operating loss of US$56.6 million. The company said it's also pausing distribution of its Peace+ CBD line through Altria's distribution arm, while reinstating revenue for its past three quarters due to changing accounting practices. Despite the disappointing quarter, Cronos still has about $1.5 billion in cash to spend. Its management said during a conference call late Monday that it plans to remain patient deploying its capital amid expected industry consolodation later this year.   

Village Farms notches a rarity in the cannabis industry: Five straight positive EBITDA quarters     

Village Farms International said its Pure Sunfarms cannabis joint venture reported fourth-quarter net sales of $12.1 million, up from $4.7 million in the same period a year earlier, while notching $6.9 million in positive adjusted EBITDA. The company beat analyst EBITDA expectations primarily by its industry-leading cost of production, which is currently at US$0.66 per gram. Raymond James analysts said in a report that Pure Sunfarms has reported a record five straight quarters of positive EBITDA as the company focuses on completing its transition from a wholesaler to selling to mainly recreational users. 

Sundial Growers Q4 revenue declines, seeks to restructure $90M credit facility     

Sundial Growers said its fourth-quarter revenue declined by 35 per cent to $21.6 million while booking an adjusted EBITDA loss of $19.7 million. The Calgary-based company also said it had to restructure its $90 million credit facility after it was not compliant with its interest coverage ratio covenant. Sundial also anticipates being out of compliance when it reports its Q1 results in May. The company’s CEO Zach George attributed the weak financial performance to "operational difficulties, excess leverage, poor cost controls, a loss of focus on our core value proposition, regulatory delays, and rapidly evolving industry conditions."  
 

DAILY BUZZ

$7.21 billion

-- The cannabis industry's contribution to Canada's economy in January, it's fifth consecutive monthly decline, according to Statistics Canada on Tuesday​. Canada's licensed cannabis industry edged slightly higher to $3.02 billion in January from the prior month, while the illicit market contributes about $4.15 billion to the country's economy.