Possible shift in OCS retail plan https://mjbizdaily.com/ontario-freezes-cannabis-store-leasing-possible-shift-sources-say/
With the win of Doug Ford as premier who is in favour of the private retail model, the OCS (already far behind in their rollout for Oct 17) is currently in limbo. They have frozen cannabis store leasing, and probably wont be able to open their goal of 40 stores (for 2018) in Ontario.
"The OCS is set to announce supply arrangements with licensed producers in the coming weeks, but it’s unclear where exactly the cannabis products will be sold."
There is a high probability that they might abandon the crown corporation model. And since Delta9 didn't even bother to apply for a MOU (for the largest market in canada) due to margin concerns, it will be interesting to see how Delta9 decides to approach any changes in Ontario. My guess after being "long" on this stock is that it's not even on their radar - another missed potential opportunity.
Since they are so concerned about margins over gross sales, anyone know what their cogs are per gram currently? They constantly praise their "Manitoba advantage" of low power costs, labour costs, land costs, leasing costs.
In their Feb Investor report they claimed "4. Management estimates production cost could be as low as $1.11 per gram when full scale production is achieved. This would make Delta 9 one of the lowest cost producers in Canada."
Now in the latest report they anticipate it being $1.20
"Estimated COGS at scale will be $1.20/gram, allowing for higher margins even at wholesale prices."
So at full production (2020) their COGS will be optimistically $1.20 - which is almost +50% more than Aphria's current cogs. And in Vic latest interview about their south american expansion they plan to get it down to $0.05-0.10. Kid's still growing weed in a leased shipping container, in a leased warehouse in Canada, with plans to build more - no foresight whatsoever.