U.S. pot companies left with tough decisions if bankruptcy looms

What happens when an embattled U.S. pot company needs to declare bankruptcy? Thanks to U.S. federal laws that still place cannabis as an illegal drug, firms there are blocked from seeking protection in bankruptcy court, according to Bloomberg News. That means that the firms won’t be able to seek Chapter 11 protection from creditors or a centralized sale process, leaving the bankruptcy process for state-specific receivership or wind down proceedings entirely. Some U.S. companies may also utilize their listing on Canadian exchanges to file for bankruptcy in Canada, according to one bankruptcy lawyer.

Canadians bought nearly 100 tonnes of legal pot, well below expected demand

Canadians bought nearly 100 tonnes of legal recreational cannabis in its first year of availability, while inventory levels continued to rise, according to new Health Canada data. Health Canada said 88,676 kilograms of dried flower cannabis was sold in Canada in the first year of legalization, while a total of 46,056 litres of cannabis oil was sold in the recreational market during that same period – the equivalent of 9,211 kilograms of dried flower. That total amount of dried flower - 97,887 kilograms – was far below what analysts projected Canadian demand would be, a sign that the illicit market continues to weigh upon legal sales.

Trulieve responds to short-seller allegations after report sends shares plunging

Florida-based cannabis operator Trulieve responded to a short-seller report on Tuesday, saying it contains “several false, slanderous and misleading statements” about the company. Shares of Trulieve fell as much as 20 per cent on Tuesday after short-selling research firm Grizzly Reports called the company a “fraud,” alleging that Trulieve conducted several transactions involving the husband of the company’s CEO who is also under investigation by the FBI. Trulieve said in a statement its business model is supported by several respected and reputable analyst firms, and that the quality of its products has “never been in question.” Trulieve stated that it intends to pursue legal action against the short-seller.

Fire & Flower posts $13.7M in Q3 revenue, eyes nationwide expansion

Canadian cannabis retailer Fire & Flower Holdings reported third-quarter results on Tuesday, posting $13.7 million in revenue while recording a net profit of $10.2 million. Fire & Flower’s Q3 revenue increased from the $11.1 million it reported in the prior quarter, while its quarter-over-quarter gross margins declined to 34.7 per cent from 36.5 per cent. The retailer expects to meet its goal of opening 45 cannabis stores by the end of the year and forecasts 85 outlets by the end of 2020, it said in a statement. Fire & Flower currently operates 33 stores across Canada. Stifel analyst Justin Keywood said the company will likely be a large beneficiary of rule changes to Ontario’s retail licensing program, where the retailer already has 14 lease locations ready to go.

Daily Buzz:

$1.27 billion
– The amount of Canadian household spending on cannabis in the third quarter of the year, according to Statistics Canada.

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