Canadian Cannabis Producer C21 Launches Share Buyback, Citing Undervalued Stock Price

Vertically integrated cannabis company C21 Investments Inc. CXXI CXXIF announced on Tuesday its plan to repurchase approximately 5% of its issued and outstanding common shares as part of a share buyback program, with the intention of canceling the repurchased shares to enhance shareholder value.

What Happened

Under the normal course issuer bid (NCIB), C21 may repurchase up to 6,002,390 of its common shares, representing 5% of its total issued and outstanding shares.

The program will run for a year, starting Monday, Dec. 2, 2024, providing the company with the flexibility to make purchases when market conditions are favorable. Purchases will depend on market conditions, and C21 retains the right to suspend or discontinue the program at any time.

The company has appointed Haywood Securities Inc. as its broker to conduct the NCIB transactions on its behalf.

Read Also: ‘Inflationary Pressures Continue To Impact Cannabis Industry, Says C21 As It Reports Net Loss And Decline In Nevada Sales

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Why It Matters

C21 said in a press release it opted for the move as it "believes that the market price of the common shares may not fully reflect the value of its business and prospects," adding that "purchasing its own common shares for cancellation is an appropriate strategy for increasing long-term shareholder value and represents an appropriate use of the company’s financial resources."

According to the company's Nov. 14 earnings report,  its second-quarter revenue totaled $7.5 million, representing a 14% increase from the first quarter.

The company highlighted strong sales growth in its South Reno dispensary, with a 53% increase during the second quarter, reaching $416,000 in September. Sales continued to grow in October, rising another 14% to $475,000. These results underscore the company’s ability to fund the share buyback program while continuing to expand its operations.

CEO and president Sonny Newman said quarterly results “have exceeded our expectations and we continue to see robust sales growth into the new quarter."

The company’s shares traded 4.34% higher at 23 cents per share at the time of writing on Wednesday.

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