Cannabis producer HEXO (TSX:HEXO,NYSE:HEXO) withdrew its 2020 fiscal outlook due to concerns about retail and regulatory conditions in the Canadian market.

HEXO originally reported the company was on track to generate C$400 million in its fiscal 2020 year as part of its Q3 2019 results, issued in June.


But now, the Quebec-based cannabis firm said lower expectations for fourth quarter revenue have caused it to readjust its projections.

The change in the outlook is due to “lower than expected product sell through,” according to HEXO CEO Sebastien St-Louis, who added that this proved to be a difficult decision for the firm.

In the preliminary Q4 review released on Thursday (October 10), HEXO told investors fourth quarter net revenues are expected to come in between C$14.5 million and C$16.5 million, while yearly net revenue is projected to be between C$46.5 million and C$48.5 million.

According to BNN Bloomberg, average analysts consensus put HEXO’s fourth quarter earnings at C$24.5 million and yearly revenue at C$57.9 million.

During a call an earnings call in June, St-Louis told investors revenues in Q4 would be double the almost C$13 million generated during Q3.

Shares for HEXO took a hit on Thursday after the firm retracted its outlook, losing over 20 percent of their value in New York. Prices dropped to US$2.88 at market close from a closing price on Wednesday (October 9) of US$3.68.

This comes after the company’s shares stumbled earlier this week, when HEXO’s former CFO Michael Monahan stepped down from his executive role on Friday (October 4) after joining the management team in May this year.

The abrupt departure caused analysts from Bank of America Merrill Lynch to downgrade the stock to a price target of C$4 from C$9.

“Given the uncertainties in the marketplace, we have determined that it is the appropriate course of action. We are also placing a greater focus on profitability. We are evaluating our plans and operations to see where we can be even more efficient,” said St-Louis.

Moving forward, St-Louis said HEXO will be making changes to its sales and operations strategy to drive business and will report its year-end results on October 24.

The company attributed missing the mark to slow retail rollouts and a delay in getting government approval for cannabis-derived products, as well as pricing pressure felt across Canada.

Retail store delays have choked off HEXO’s presence in major markets, limiting its customer base, while ambiguity across Canada’s regulatory system has created a barrier for the availability and variety of cannabis derivative products.

Those obstacles, coupled with the recent season filled with illegal growing scandals, a growing vaping health crisis and big shifts in management — including the firing of Canopy Growth CEO Bruce Linton — have made for a challenging year for the cannabis sector over all.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Combined entity creates a market leader in the extract and extract derivatives market.

Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company”), announces that further to its press release issued on December 23, 2020, it has completed the acquisition of all of the issued and outstanding securities of Premium 5 Ltd. (“Premium 5”), a Canada-based recreational and medical cannabis company and market leader in high-quality full spectrum concentrates.

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Online ordering and doorstep delivery have become the new normal as patients and consumers continue to rely on convenient and sustainable delivery services

World-Class Extractions Inc. (CSE:PUMP) (FRA:WCF) (OTCQB:WCEXF) (“Company” or “World-Class”), is pleased to provide an update on Pineapple Express Delivery Inc. (“Pineapple Express Delivery” or “PED”), a company in which World-Class has a controlling interest. PED is a leading logistics technology company offering compliant and secure delivery of controlled substances and regulated products, including medical and recreational cannabis delivery in Ontario, Manitoba and Saskatchewan, and liquor delivery in certain jurisdictions in Saskatchewan

Pineapple Express Delivery – Highlights

The following PED revenues comprise of delivery services of medical and recreational cannabis within Ontario and Manitoba to various Business-to-Consumer and Business-to-Business licensed producer companies and liquor deliveries in Saskatchewan:

  • December 2020 revenues totaled $889,935 (November – $837,875) with gross margin of 34% (November – 30%) (unaudited).
  • November 2020 revenues totaled $837,875 (October – $795,580) with gross margin of 30% (October – 30%) (unaudited).
  • As a result of recent COVID-19 prevention measures, B2C revenue increased approximately 7% in November over October 2020 and an additional 4% in December over November 2020, mainly from an increase in the recreational delivery segment.
  • During 2020:
    • monthly revenue grew from $131,179 in January 2020 to $889,935 in December 2020, representing an increase of 578%; and
    • number of deliveries grew from 11,077 in January 2020 compared to 70,802 in December 2020, representing an increase of 539%.

The Company cautions that figures for revenue, gross profit and net income generated from the services offered by Pineapple Express Delivery have not been audited beyond April 30, 2020 and are based on calculations prepared by the management of Pineapple Express Delivery. Actual results may differ from those reported in this release once figures have been audited.

Pineapple Express Delivery – Operational Achievements

Since the Company’s acquisition of a controlling interest in PED, PED has achieved the following operational milestones:

  • In addition to continuing to offer premium delivery services for recreational and medical cannabis products, PED expanded its delivery services to provide same-day and next-day delivery of wine, spirits and beer products from Saskatoon Co-op’s Wine-Spirits-Beer retail stores in Saskatoon, Warman and Martensville.
  • The number of cannabis and alcohol deliveries continues to increase month over month with 67,279 deliveries rendered in November, and 70,802 in December, compared to 62,327 deliveries in October.
  • The number of drivers increased from 55 at the beginning of 2020, to approximately 200 by December 2020. Efficiencies have also been created by routing deliveries through hub expansions and concentrating drivers to tighter geographical areas, leading to less hours used by drivers for the timely delivery of packages.
  • Within the province of Ontario, PED offers same day cannabis delivery service in 37 cities (183 postal code regions) and 3-day service in 65 cities (288 postal code regions).
  • Expanded its services into the Ontario cities of Ottawa, Barrie, London and also into the Windsor/Chatham region.
  • Launched and commenced operations of PED cannabis depots (hubs) in Ottawa, Kingston, London and in the Windsor/Chatham region.
  • Partnered with Medical Cannabis by Shoppers™ to offer same-day delivery to their medical cannabis patients in cities in and around the Greater Toronto Area (GTA). Medical Cannabis by Shoppers™ is Shoppers Drug Mart’s online platform for the sale of medical cannabis.
  • Partnered with Spectrum Therapeutics, the medical division of Canopy Growth Corporation to bring same-day delivery to medical cannabis patients in the GTA, from Hamilton to Scarborough. This builds on PED’s existing services contract with Canopy Growth which offers same-day delivery services for Tweed and Tokyo Smoke retail stores in Manitoba and Saskatchewan.
  • Subsequent to the period ending October, 31, 2020, PED entered into a licensing agreement to provide software and support services to an arm length party. PED shall provide set-up, implementation and development of the software and shall provide support to all locations catered to by the other party.
  • Several contracts in place with Health Canada License Holders for delivery within select provinces in Canada.
  • Late-stage applicant to Health Canada to obtain a ‘Sale for Medical Purposes’ license for its facility located in the GTA. With a population of 6-million people, this sales license gives PED the ability to store inventory for other license holders, allowing PED to leverage its facility in the GTA and offer same day delivery services to the patients of those LPs.

Pineapple Express Delivery – Expansion Strategies

Pineapple Express Delivery continues to advance into new territories, offering safe and secure delivery opportunities to better serve the public. PED anticipates its revenues will increase over the coming months resulting from jurisdictional expansion and continuously improving and expanding its delivery services offerings:

  • Working to launch in three (3) new jurisdictions in Ontario.
  • Working to launch alcohol delivery to service the GTA.
  • Continuing growth of deliveries for the B2B sector which has seen month-over-month increases in revenue since May 2020.
  • Expects to launch prescription medication delivery in British Columbia and the GTA in the near term.

Pineapple Express Delivery – Growth in Delivery Services: COVID-19 and Beyond

Aspiring to be the ‘Amazon’ of regulated product deliveries, Pineapple Express Delivery is based in Burlington, Ontario, providing B2C and B2B delivery options for controlled substances and regulated products deliveries (cannabis, alcohol and prescription products). PED is currently one of the premiere, most utilized delivery services in Ontario, and will continue to maintain its high standards of security and compliance for same day and next day parcels, even as it grows to meet provincial need.

PED benefits from a management team with over 10 years of experience offering same-day delivery services in multiple industries across Canada. Its founder, Randy Rolph, founded Menu Express delivery in Quebec in 2010, which was subsequently purchased by Just Eat in 2014. Mr. Rolph then founded Delivery Direct in 2015, becoming the national leader in 60 min delivery. The proprietary logistics software behind Just Eat and Delivery Direct brings the most reliable same-day, last mile delivery services for the controlled substances and regulated market across Canada.

The COVID-19 pandemic has forever changed shopping behaviours. With the unfortunate outbreak of COVID-19 and the cannabis sector deemed an ‘essential’ service, there has been a surge in demand for delivery with more and more people staying indoors and practicing social distancing. Cannabis patients and consumers have embraced delivery to safely access regulated products, and PED is experiencing increased demand for its services. In response to this surge in volume, PED has increased the number of delivery drivers to over 200 in 2020.

An increase in deliveries during a health crisis also equates to an increase in routine and preventative measures. As such, PED has implemented strict COVID-19 practices and procedures in its offices, warehouses, and in delivery driver procedures, including equipping all driver vehicles with a 360º security camera. PED ensures that its staff has the necessary tools to abide by Health Canada and provincial health guidelines, including face coverings, gloves, hand sanitizer, and disinfectants.

Rosy Mondin, CEO of World Class Extractions stated, “The COVID-19 pandemic has created an urgent demand for home delivery like we’ve never seen before and it’s unlikely that Canadians will ever return to their old shopping habits. People shop online because of convenience – and online shopping and delivery of legal cannabis is no different. E-commerce is thriving, and according to a recent Paypal study, online shopping increased by 53% as more people self-isolated and worked from home, and over 45% of consumers also used home delivery[1]”. Ms. Mondin continued, “Given the history of cannabis legalization, there still exists a lingering stigma of physically visiting retail cannabis stores for many new consumers. After months of lockdown and social distancing pushing more patients and consumers online, Canadians have come to value the convenience of a legal, proven and reliable delivery solution for cannabis and other regulated products, a trend that is likely to stay.”

Randy Rolph, Founder & CEO of Pineapple Express Delivery stated, “In 2020, we have seen the public health and economic crises of the COVID-19 pandemic take a terrible toll on many Canadians and Canadian businesses and we are proud to be a platform that so many Canadians have been able to use to during these difficult times. The guiding principles of PED is that patients and consumers should be able to receive their regulated product orders (alcohol, prescription medications and cannabis) as quickly, safely and as easily as they can obtain any other product in Canada. The pandemic is far from over and many of the habits formed during this pandemic will likely stick post-pandemic. PED’s widespread network and large delivery fleet provides important, much-needed access to thousands of patients and consumers every day.”

About World-Class

World-Class is an innovation-driven company with a principle focus on the rapidly evolving cannabis and hemp industries. World-Class offers compliant and secure delivery of government regulated products through its subsidiary Pineapple Express Delivery Inc., including medical and recreational cannabis in Ontario, Manitoba and Saskatchewan, and liquor delivery in certain jurisdictions in Saskatchewan. World-Class continues to investigate opportunities to deploy and manage custom-built extraction centres utilizing its custom systems, technology, and processes to efficiently produce high-quality cannabis and hemp concentrates and end-products.

Investor Contact
World-Class Investor Relations
1-437-266-1968
ir@worldclassextractions.com
https://worldclassextractions.com

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this press release, which has been prepared by management.

Cautionary Note Regarding Forward-Looking Statements

All statements in this press release, other than statements of historical fact, are “forward-looking information” with respect to the Company within the meaning of applicable securities laws, and the ability of Pineapple Express Delivery to expand its delivery services and to provide discrete shipment of products. The Company provides forward-looking statements for the purpose of conveying information about current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. These risks and uncertainties include but are not limited those identified and reported in the Company’s public filings under the Company’s SEDAR profile at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by law.

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AMP German Cannabis Group Inc. (” AMP “) (CSE: XCX ), ( Frankfurt : C4T ) (ISIN: CA00176G1028) and Aphria Inc.’s (” Aphria “) (TSX: APHA ) (NASDAQ: APHA) wholly-owned German subsidiary, CC Pharma GmbH (” CC Pharma “), have entered into a strategic agreement (the ” Co-Promotion Agreement “) covering joint marketing of sales for Aphria brand medical cannabis products for the German market.

The Co-Promotion Agreement is a collaboration contract between AMP and CC Pharma to sell the Aphria medical cannabis brand in Germany . In addition, AMP will organize with the support of CC Pharma, “information events” in Germany to market Aphria branded products to doctors and pharmacists.

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Imminent receipt of licence will allow the Company to begin production and distribution of cannabis-infused beverages in Canada

Emerging leader in infused cannabis beverages, BevCanna Enterprises Inc. (CSE:BEV, Q:BVNNF, FSE:7BC) (“ BevCanna ” or the “ Company ”) confirmed today that its application for a Standard Processing Licence (SPL) is in the final stages of the in-depth review with Health Canada.

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