iAnthus Capital Holdings (CSE:IAN)(OTC:ITHUF)(FRA:21A) is an owner, operator and partner of many licensed cannabis operations across the United States. After the close of trading on August 28th, the company filed their financial statements for the second quarter ended June 30, 2017 and provided an update on their existing operations and well as new developments.
iAnthus' Chief Executive Officer, Mr. Hadley Ford had this to say about iAnthus and its second quarter:
"This was a strategically important quarter for iAnthus as we announced our entry into the 20 million-person New York market and continued to expand upon our established operations in four other states," said Hadley Ford, Chief Executive Officer of iAnthus. "The United States cannabis industry is a US$7 billion legal market growing at 30%+ per year. iAnthus is leveraging its extensive expertise in operations, capital markets, real estate and government relations to become the pre-eminent cannabis operator in the country. We are pleased with our progress in the first half of 2017 in building our capacity in key states across the U.S. and continue to offer public investors a unique way to participate in the growth of the U.S. cannabis market."
Now, without further ado, here are nine key points from iAnthus' release tailored to current and prospective investors (as well as to anyone interested in how U.S. cannabis businesses operate):
iAnthus' revenues in Q2'17 of $555,467 CAD, were up 68.15% quarter-over-quarter, and were up 665% from the second quarter of 2016. These revenue increases can be attributed to higher interest income from an expanded portfolio of investment and from higher management fees relating to increased sales at partner companies.
Operating expenses rose 151% from the second quarter of 2016 on higher costs associated with their expanded portfolio of investments and their continued search for additional investment opportunities. In Q2'17 iAnthus reported $2,304,122 CAD in operating expenses.
Net losses also rose 185% compared to the second quarter of 2016 on higher operating expenses related to the reasons noted above as well as a foreign exchange loss. In Q2'17 iAnthus reported net losses of $(2,551,622) CAD or $(0.10) CAD per basic and diluted share.
As of June 30, 2017, iAnthus had $8,464,606 CAD in cash.
In regard to their potential New York operations, iAnthus is expecting to close their previously announced acquisition of Citiva Medical in the fall. Citiva Medical was granted dispensary locations in Brooklyn, Staten Island, Dutchess County and Chemung County and is in the final stages of securing leases for all four locations. The company's Brooklyn dispensary is expected to be one of only three competitors operating in the borough, and its Staten Island dispensary is expected to be the only one in the borough. Citiva expects that it will open its Brooklyn and Staten Island locations in the coming 4-6 months and they expect the cultivation facility to be operational in 9-12 months.
Related: iAnthus to Buy NY MMJ Operator, Citiva Medical
The company's Mayflower Medicinals partner is preparing to take advantage of the robust patient growth recently seen in Massachusetts. Total Active Patient Certifications are up 9.75% year-to-date as reported by the commonwealth's department of health. Mayflower expects to finalize their Boston build-out by Nov 1, 2017, giving them one of only three current locations in the city. They also have a half mile non-compete zone as mandated by a Boston city ordinance. In regards to their other two locations, Mayflower is in the process of obtaining local approvals. At their 36,000 square foot cultivation and processing location in Holiston, the company has received phase one approval for the final certification of registration. They expect to plant seeds in the fourth quarter and have product ready in the first quarter of 2018. iAnthus has extended a loan of 7.0 million USD (as of June 30th) for the build-out of the facilities. The current balance of the loan is $9.7 million USD. Additionally, iAnthus is working with Mayflower's management company, Pilgrim Rock to finalize iAnthus' 79% equity ownership in Pilgrim Rock. The company expects this to be finalized in the third quarter of 2017. Pilgrim Rock will provide real estate and equipment leasing, IP licensing and professional services to Mayflower.
Related: iAnthus Starts Construction on Holliston, MA Cannabis Facility
In New Mexico, iAnthus' 29% owned Reynolds Greenleaf & Associates has realized $3.9 million USD in total sales across its three licenses in 2017 year-to-date. This represents a 34% increase versus the comparable period of 2016. Earlier this year, Reynolds Greenleaf & Associates opened a sixth dispensary and in its first four months of operations it has already generated $321,000 in revenue. Average revenues across all six of Reynolds Greenleaf & Associates' dispensary locations top $111,000 per month.
Related: New Mexico Health Sec. Rejects MMJ Board Recommendations
The company's Grassroots Vermont partner is poised to strongly benefit from the recent changes to that state's medical cannabis program. As a quick reminder, in June, Vermont Governor Phil Scott signed S. 16, a bill that makes significant improvements to the state's MMJ program. One of the changes allows for licensed MMJ establishments to convert from non-profit organizations to for-profit entities. In the case of iAnthus, this will allow them to convert their $775,000 USD loan and services contract with Grassroots into a controlling equity position in a for-profit management company. The regulatory changes also allow Grassroots to open an additional dispensary location. something that they recently submitted a proposal to do so.
Related: iAnthus Capital's Vermont Operations Update
iAnthus' Colorado partner, Organix, LLC did $1.6 million USD in sales in the first half of 2017 and has approximately 29% of the local market share in Breckinridge, CO. Organix has completed its cultivation upgrades and the company expects yields to improve just in time for the upcoming ski season. In the first half of the year, two of iAnthus' wholly owned Colorado subsidiaries acquired all of the non-cannabis related assets of Organix. Together, the companies will be providing services including real estate and equipment leasing to Organix.
Related: CO to Recognize PTSD as MMJ Qualifying Condition
In midday trading following this announcement, shares of iAnthus Capital are rising roughly 3% on the CSE. The company's OTC Markets symbol is up roughly 1% on extremely light trading volume. Year-to-date, iAnthus shares are down about 4%.
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