'Inflationary Pressures Continue To Impact" Cannabis Industry, Says C21 As It Reports Net Loss And Decline In Nevada Sales

C21 Investments Inc. CXXI CXXIF reported its financial results Friday for its first quarter of June 30, 2023. Revenue amounted to $6.6 million, up 1% compared to the fourth quarter (ended January 31, 2024) despite a 1% decline in Nevada sales over the comparative period. Retail revenues remained relatively stable, with continued robust retail transaction volume at C21’s two legacy dispensaries offset by a decline in basket size as inflationary pressures continue to impact the industry with a “trade down” effect in purchases for lower-priced products.

The vertically integrated cannabis company recently changed its fiscal reporting period to a March 31st year-end (see news release dated August 1, 2024, for audited two-month stub period) and does not have traditional sequential or year-over-year comparable reporting periods.

“Our company reported a slight increase in revenue over Q4 (ended January 31, 2024) despite sales in Nevada declining 1% over the comparative period," stated CEO and president, Sonny Newman. "We are pleased C21 continues to outperform the state of Nevada in terms of run rate and cash flow which includes our flagship Sparks dispensary again generating more than twice the run rate of the average dispensary in the county. Our gross margin in the quarter was impacted by a variety of factors, including one-time internal inventory issues as we prepared for the launch of our new dispensary. We anticipate improved margins in the second half of the year. With the opening of our new dispensary in the last week of June, we are excited by the strong, positive customer reception and momentum that we have experienced since opening and expect continued traction moving forward.”

Read Also: Cannabis Co. C21 Investments Reports Stub Period Revenue Of $4.5M Following $3.5M Deep Roots Harvest Acquisition

First Quarter Highlights (April 1, 2024 to June 30, 2024):

• Gross margin of 31%, impacted by temporary internal inventory supply issues and resulting product mix with the launch of the South Reno dispensary.
• Net loss was $1.4 million or a loss of ($0.01) per share. The company attributes net loss to lower margins, increased SG&A from non-cash share-based compensation granted in the quarter as well as non-capitalized start-up costs for the new dispensary.
• Adjusted EBITDA was $300,000.
• Cash flow from operations of $600.000; positive free cash flow of $400,000.
• Acquisition of the third dispensary closed in the quarter; the new dispensary was rebranded and operational during the final week of the quarter.
• Closed C$4.0 million convertible debenture financing, and principal funding for the acquisition of the new dispensary.

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