CBD of Denver, Inc. CBDD reported Monday that it is expecting $1.03 million in revenue for the second quarter, compared to $720,000 in the same period of 2023. Revenue from Libra 9 is not included, as the company continues the process of unwinding the transaction.
The Colorado-based cannabis company also shared updates on its plans to get into the German market. Specifically, the company's European subsidiary, Luxora, received positive engagement in Berlin regarding a Near-Infrared (NIR) device used for cannabis testing.
Luxora will be making sales presentations to these potential clients. If proven sustainable, this initiative has the potential to provide higher-margin sales based on a markup on the device as well as recurring revenues based on the software as a service model, which is sold with the hardware device. CBD of Denver, is testing the viability of the business model before deciding on a specific direction.
Following a thorough assessment of its wholesale business unit, the company found it was not meeting its anticipated profit margins. However, the company continues to operate in the wholesale business and is still experiencing growth. The company continues to review new opportunities with the goal of identifying businesses with higher margins to build recurring revenue.
The news follows the company's success at the recent Mary Jane Berlin trade fair, where it offered cannabis samples. The event drew over 40,000 attendees and showcased more than 300 exhibitors, which provided a platform for the CBD of Denver to engage with Germany's evolving cannabis market. The company also announced a revenue projection of about $300,000 for June 2024.
The German market is evolving as all federal states are progressing with their individual application and licensing programs for cannabis clubs. Luxora is in ongoing discussions to explore opportunities for its grow infrastructure solutions though it has not yet received official confirmation for its business model.
So far, only a fraction of applications have been completed and in some parts of Germany, even fewer have been submitted. In Berlin, 14 applications have been submitted. In the first four weeks of the application process, only 43 applications for cannabis cultivation associations have been submitted in North Rhine-Westphalia (NRW), a state in Western Germany. With more than 18 million inhabitants, NRW is the most populous state in Germany. However, nearly all the applications are incomplete.
Lower Saxony is the first and only state in Germany to have decided on applications for the approval of cannabis cultivation clubs, with seven applications approved and five rejected.
The pace of applications illustrates the hurdles clubs need to overcome based on the individual federal state application frameworks and the recent amendments to the cannabis law, which make it much more difficult to start a club. The company continues to explore the opportunity in the German market and is actively engaged with the responsible authorities to achieve legislative clarity.
Price Action
CBD of Denver shares closed the Friday market session 7.14% lower at $0.0007 per share.
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