(Image via Harborside)
While investors in Canadian cannabis are still waiting for the market to properly grow, the market in the US continues to expand at a rapid pace.
One big advantage is the sizeable population. Companies operating in large states like Florida and Texas have been impressing with revenue growth and profits that would make certain Canadian LPs jealous.
The biggest prize, however, is the California market. With a population bigger than all of Canada combined, the Golden State is
forecasted to hit US $3.1 billion in legal sales this year. Over the next few years that number is expected to grow as it chips away at the state’s US $8.7 billion illicit market.
A key part of that market capture is due to come from an increase in cannabis retail stores, and
Harborside Inc. (
CSE:HBOR,
OTC:HSDEF,
Forum) is a
major player in the field. The established cannabis retailer has been focused on growing its retail footprint in California and a look at its recent quarterly earnings show that it is well on track.
Last Friday, the Company
reported its Q3 2019 fiscal results showing a third quarter revenue of US $14.1 million, an increase of 22.4% year-over-year. The increase was driven by growth in retail revenue of 13.5%, as well as an increase in revenues from the Company’s growing wholesale operation by 57.1%.
(Image via Harborside)
Peter Bilodeau, the Interim CEO of Harborside, commented on the Company’s strong traction and direction for the rest of the fiscal year:
“We are pleased with the continued strong results from our retail and wholesale operations, which have contributed to a robust third quarter. Our revenue growth remains solid and Q3 represents the 15th quarter in a row in which our revenue has tracked over $10 million.
While we are pleased with our third quarter results, there is still much work to be done. We are focused on executing on our goals, continuing to drive growth through our retail and wholesale divisions, and remaining laser-focused on our California-centric growth plan.”
Despite the positive increase in the Company’s revenue and significant year-over-year reduction in net loss from US $5.2 million to US $1.2 million, Harborside is hungrily pursuing further growth. In addition to the Company’s dispensaries in Oakland and San Jose, three additional dispensaries are soon to join Harborside’s portfolio.
One location, the Desert Hot Springs location, is slated to open on Dec. 7 and will be one of two cannabis stores in California with a licensed drive-thru window. Another under-construction 7,000 square foot store in San Leandro was
fully acquired on Oct. 11 and is slated to open towards the beginning of 2020, while a third store acquisition is on the docket for the end of the year.
(Image via Harborside)
Part of what makes Harborside stand out to cannabis investors in today’s market is an honest and calculated approach towards profitability. Due to the acquisitions and rollouts of the new retail stores hitting delays, the Company’s fiscal update pushed those expected revenues into 2020 and adjust its revenue guidance for 2019 by US $5 million.
Additionally, Harborside’s Interim CEO Bilodeau commented extensively on the cost-cutting and management growth the Company is pursuing:
“The Company recognizes that a strong management team will be required to enable the Company to achieve its goals, and to that end, our CEO search remains on track and we are devoting internal and external resources to identify the best candidate to lead Harborside to its next phase of growth in a nimble, yet prudent way…
In addition, in order to be a profitable business, we must address costs. To reach our goal of reducing our operating expenses, we have begun implementing the cost cutting initiatives the Alvarez & Marsal team identified to recognize the efficiencies in our business and have focused on streamlining our operating costs at our Salinas facility.”
And yet, impressive revenue growth from Harborside going forward seems almost inevitable. On one hand you have the retail side of the business continuing to grow alongside the California cannabis market.
On the other, you have a wholesale business which is already a boon even in its infancy. The latest results showed an increase of 57% in revenue year-over-year to US $3.7 million due to positive economies of scale and expanded distribution, and that’s not accounting for Harborside’s newest growing facility. The 44,000 square foot Dutch Venlo greenhouse saw its first harvest commence on Nov. 15, with approximate annual production of 4,500 kgs expected in 2020.
As cannabis investors and companies shift their focus towards long-term profitability, Harborside looks like it is on the right track. The Company’s focus on innovative retail and wholesale growth is evident to see, and a great opportunity that investors keen to get into the largest cannabis market in North America are watching with interest.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.