Emblem Corp. is Quietly Getting the Job Done

In this market news, Emblem Corp. (TSXV:EMC), one of the Canadian marijuana stocks, said its third-quarter revenue surged nearly 300%

SmallCapPower | November 26, 2018: Emblem Corp. (TSXV:EMC), one of the Canadian cannabis stocks, reported recently an approximate 281% YoY jump in revenue to $2.3 million for Q3 2018 (vs. $0.6 million in Q3 2017), driven by the commencement of oil sales during December 2017 and the launch of the adult-use recreational market in Q3 2018. During the third quarter, the Company sold dried flower and oil products to the AGLC and OCS for total revenues of $766,000. Also, GrowWise Health Limited, an indirect wholly-owned subsidiary of Emblem, generated total revenues of $222,000 in Q3 2018 (vs. $161,000 in Q3 2017), representing a 38% YoY hike.

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Total dried flower sold to medical patients during Q3 2018 amounted to 60.4 kg (vs. 50.8 kg in Q3 2017), at an average selling price of $8.25 per gram. Also, total dried flower sold to licensed producers during Q3 2018 was 55.5 kg (vs. nil in Q3 2017) at an average selling price of $5.00 per gram. Further, revenue from cannabis oil products totaled $445,000, signifying 26% of total sales to medical patients.

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Additionally, total bottled oils sold to medical patients in Q3 2018 amounted to 30.6 kg equivalents at an average selling price of $14.52 per gram equivalent. Before December 2017, Emblem did not sell cannabis oil products until it received its license to sell cannabis oil products in November 2017.

Emblem, though, reported a net loss of $10.8 million in Q3 2018 vs. a net loss of $2.8 million in Q3 2017, which the Company attributed to the continued build-out of its management team, higher business development/consulting fees, as well as an increase in selling and marketing costs due to brand development, brand awareness, and media campaigns.

Emblem Corp President and CEO Nick Dean remarked, “This quarter marked a significant period of transformation for Emblem as we strategically aligned the business around our core strengths. This began with the signing of one of the largest business to business cannabis supply agreements, increasing our aggregate annual product supply run rate to approximately 30,000 kilograms beginning in mid-2019. With product volume and cost visibility addressed, management can refocus both human and capital resources on levering core competencies of product innovation, brand building and securing global distribution channels. During the quarter, we began to realize the significant revenue impact of our Symbl brand within the adult-use market as we fulfilled 100% of our provincial commitments, while maintaining product availability for our growing number of registered patients.”

During Q3 2018, Emblem Corp. announced a strategic partnership with GreenSpace Brands to develop and commercialize cannabidiol-infused health and beauty products for the adult-use recreational market in Canada. Also, the Company signed a five-year supply agreement with, and investment in, Compass Cannabis Clinic to become a preferred cannabis supplier through its wholly-owned subsidiary, adult-use retail entity Starbuds Canada.

Emblem Corp. is a fully-integrated cannabis company that cultivates, processes, and sells cannabis and cannabis derivatives in Canada via its wholly-owned subsidiary, Emblem Cannabis Corporation. Emblem Cannabis Corporation is the parent company of GrowWise, one of Canada’s leading cannabis education services. Emblem Corp. stock currently trades at a market capitalization of $157.7 million with a price-to-book multiple of 1.74x and an EV/Revenue multiple of 24.17x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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