4 Small Cannabis Stocks with Big Cash Balances

The Canada-listed cannabis stocks we’ve picked have enough cash to sustain operations for at least the next four quarters

SmallCapPower | October 4, 2019: Last week was the worst week for cannabis stocks this year, with New Cannabis Ventures Global Cannabis Stock Index Down 11.2%. There have been some issues weighing down cannabis companies including: weak retail rolls out in Canada and California with the black market controlling a ~70% market share; the abrupt ousting of Bruce Linton as CEO of Canopy Growth Corporation; the CannTrust illegal growing scandal; and the vaping epidemic. However, another problem that is appearing is constrained access to capital. Cresco Labs (CSE:CL) had to raise money at $10.00, which was a discount to the company’s share price ($10.50) at time. Recently, iAnthus (CSE:IAN) raised a $100M convertible note at a 13% interest rate. Both companies’ share prices are down from the announcements. Today we have weeded out four Canada-listed cannabis stocks with enough cash to sustain their businesses for at least the next four quarters.

*Share prices as at October 2, 2019, data obtained from S&P Capital IQ

**Cash burn measured by using Free Cash Flow (FCF) = Cash Flow from Operations + Capex

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Aleafia Health Inc. (TSX:ALEF) – $0.92
Cannabis

Aleafia Health is a vertically-integrated cannabis health and wellness company. The Company operates in four major business segments: 1) Cannabis Cultivation & Products; 2) Health & Wellness Clinics; 3) Cannabis Education and; 4) Consumer Experience with eCommerce. Operations are conducted from three cultivation facilities owned by the Company, which are comprised of: 1) Port Perry Facility, which is an indoor grow that is licensed and fully operational; 2) the Niagara Facility, which is a greenhouse in a plant-ready state that is waiting for a Health Canada cultivation license; and 3) the Paris Facility, which is a 25,000 sq. ft facility that is federally licensed for cultivation, processing and sale of medical and recreational cannabis. On July 15, 2019, the Company announced it secured a Health Canada licence amendment to increase its outdoor cultivation area at Port Perry from 292,000 sq.ft to over 1.1M sq.ft. Currently, the Company serves 60,000 medical patients. On August 14, 2019, the Company reported its Q2/19 financial results, which showed record revenue of $4M, an increase of 159% when compared to the previous quarter.

  • Market Cap: $252.8M
  • 90-Day Return: -27.8%
  • YTD-Return: -36.4%
  • 90-Day Average Trading Volume: 605,290
  • Average CFO/quarter: -$7.5M
  • Average Capex/quarter: -$4.5M
  • Free Cash Flow/quarter: -$12M
  • Last Reported Cash Balance: $63.5M
  • Quarters of Cash on Hand: 5.3

Green Thumb Industries Inc. (CSE:GTII) – $12.25
Cannabis

Green Thumb Industries manufactures, distributes, and sells various cannabis products for medical and recreational use in the U.S. GTII distributes its products primarily to third-party retail stores, but also sells its finished products directly to consumers in its own retail stores. As of May 2, 2019, it owned and operated 18 retail stores, as well as had licenses for 77 locations across 12 U.S. markets. Green Thumb operates five dispensaries within Illinois and is in the midst of a capacity expansion at one of its two production sites. As a major cannabis player in Illinois, Green Thumb is expected to benefit from the legalization of cannabis in Illinois, as it can now obtain five more retail licenses.

  • Market Cap: $2,668.9M
  • 90-Day Return: -11.1%
  • YTD-Return: +13.6%
  • 90-Day Average Trading Volume: 263,570
  • Average CFO/quarter: -$0.1M
  • Average Capex/quarter: -$21.4M
  • Free Cash Flow/quarter: -$21.5M
  • Last Reported Cash Balance: $136M
  • Quarters of Cash on Hand: 6.3

Plus Products Inc. (CSE:PLUS) – $3.90
Cannabis

Headquartered in San Mateo, California, Plus Products is a manufacturer of cannabis products in the state of California. Plus Products provides consumers with edible products for the medical and recreational markets. The Company offers several lines of gummy products with varying THC:CBD ratios. As such, some of the Company’s products are marketed as “restorative” gummies, others intended for daytime use, and some gummies are targeting consumers seeking pain relief. On September 9, 2019, Plus Products reported Q2/19 financial results, highlighted by revenue of 3.6M, as well as a cash balance of $34M.

  • Market Cap: $169.6M
  • 90-Day Return: +19.1%
  • YTD-Return: -10.0%
  • 90-Day Average Trading Volume: 80,260
  • Average CFO/quarter: -$3.4M
  • Average Capex/quarter: -$0.7M
  • Free Cash Flow/quarter: -$4.1M
  • Last Reported Cash Balance: $34M
  • Quarters of Cash on Hand: 8.3

Planet 13 Holdings Inc. (CSE:PLTH) – $2.18
Cannabis

Planet 13 Holdings cultivates, produces, and distributes medical and recreational cannabis in Nevada. The Company owns the world’s largest cannabis store, the Planet 13 Superstore. This store acts as a showcase for a growing portfolio of branded products, including vapes, edibles, pre-rolls, and concentrates. Planet 13’s ambition is to operate high-end dispensaries in Tier-One markets nationwide and to sell its brands in both its branded stores and wholesale. The Company’s brands include Medizin, Trendi, and Leaf & Vine. On August 29, 2019, PLTH reported Q2/19 financial results, which was highlighted by $16.5M in revenue, a net loss of $1.0M and adjusted EBITDA of $2.7M. Planet 13 is planning on opening a 15,000 sq. ft expansion to its Superstore during Q3/19, which will include a customer-facing production facility, a restaurant, a coffee shop, and event space.

  • Market Cap: $297.6M
  • 90-Day Return: -15.8%
  • YTD-Return: +49.7%
  • 90-Day Average Trading Volume: 204,040
  • Average CFO/quarter: -$0.8M
  • Average Capex/quarter: -$4.5M
  • Free Cash Flow/quarter: -$5.3M
  • Last Reported Cash Balance: $20M
  • Quarters of Cash on Hand: 3.7

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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