Reviews Record Breaking and Transformational 2021 LAS VEGAS, NV / ACCESSWIRE / February 8, 2022 / CLS Holdings USA, Inc. (OTCQB:CLSH)(CSE:CLSH), the ''Company'' or ''CLS'', a diversified cannabis company operating as Cannabis Life Sciences, proudly reviews the financial and operational highlights that made 2021 the most successful and transformational year to date, and releases its initial 2022 outlook.
2021 Highlights and 2022 Outlook
- Despite the Nevada cannabis market decelerating in 2021, CLS saw net revenues increase 44% year over year
- CLS entered into two important joint ventures, which should transform the Company and add substantial revenue at attractive margins
- City Trees achieved a 6.5% brand market share, according to BDS Analytics, with leading market share positions across key categories
- For calendar year 2022, we are projecting substantial net revenue growth while maintaining current gross margins and increasing EBITDA
Year-in-Review
2021 was a year to remember. We set out to accomplish some lofty goals and shake things up in the cannabis industry. We knew that if we were disciplined and executed on what we could control, we had the potential to achieve our best year ever. While the legal cannabis market in Nevada saw a deceleration of growth in 2021, our small but mighty company strongly grew YOY for the 3rd year in a row. This has everything to do with the teams we have in place on the ground working tirelessly to achieve a common goal, simply put, to be the best version of ourselves. We also entered into several key joint ventures, which we strongly believe will strategically transform the CLS story. The significant benefits of these partnerships will be increasingly visible to our investors and our customers as we progress through 2022. The Company's primary wholesale brand, City Trees, further established itself as one of the leading brands in Nevada, achieving a top market share position across its categories and winning numerous industry awards for product quality and innovation. We take great pride in contributing to the cannabis industry as a whole and fostering change within our community. We would like to thank all of those who have contributed to our successes in 2021.
Rolling into the Future
The Company announced a joint venture to manufacture pre-rolls, a category that represented approximately 11% of overall cannabis sales in Nevada, in 2021. This collaborative venture will allow for the rapid production of high quality pre-rolls. We are excited about this opportunity as the joint venture should yield a structural cost advantage, which we believe will enable it to be one of the lowest cost providers of pre-rolls. While we will be manufacturing pre-rolls for other brands under exclusive licensing agreements, we will also be creating our own line of branded pre-rolls under the Naked City Pre-Roll moniker, an extension of our award-winning City Trees brand. We also look forward to creating additional jobs and opportunities that will benefit the community around us. The joint venture has begun ramping up for production and the initial wholesale demand we have seen for the pre-rolls has exceeded our expectations.
Going to the Flower Market
For the first time in the Company's history, we will be entering the flower market. In October 2021, we announced a landmark joint venture with the Fort McDermitt Paiute and Shoshone Tribe in Northern Nevada, creating a premier cultivator of low-cost, high-quality flower in the state. Unlike the rest of Nevada, the Tribe's land near the Oregon border is an ideal location for growth, boasting an optimal climate for cultivation. We are excited about the possibilities of this partnership and the exposure it will give our investors to this unique opportunity to become a key player in the Nevada flower market, with premier product to be grown on our partner's tribal lands. The joint venture anticipates harvesting 25,000 pounds of premium outdoor flower in 2022. Similar to the pre-roll partnership, we believe this joint venture will add material revenue to CLS through the joint-venture at attractive margins over time.
Strength in Numbers
Our 2021 numbers surpassed expectations. With the hard work and dedication of our team, the Company achieved the milestone of greater than $20 million in net revenue for the first time in Company history, which was an increase of 44% from the year prior. City Trees, the Company's branded product division, achieved a YOY net revenue increase of 112% while maintaining a gross profit margin in excess of 50%. Oasis Cannabis Dispensary, the Company's retail division, saw a 26% increase in net revenue compared to 2020. Further, Oasis saw YOY growth of 15% with respect to average number of transactions and a 7% increase on the average ticket spend totaling $57 per transaction. Oasis proudly filled over 260,000 orders in 2021, which was a 14.6% increase from 2020, and had its largest individual net sales day ever on 4/20.
Small but Mighty
We take great pride in being a local company that understands our customers and brings them the highest quality product at the best price. We believe that is why City Trees continued to outpace the market despite competing against large multi-state operators. According to BDS Analytics, from January 2021 to November 2021, City Trees maintained a 6.5% brand market share across all categories (vapes, concentrates, tinctures) in Nevada. During the same time period, City Trees had a dominant position in all of its individual categories in Nevada, as follows:
- #1 brand for the entire concentrate category in units sold and #2 in dollars sold for the months of September, October and November
- #1 brand in the dabbable concentrates subcategory in both dollars and units sold
- #2 brand in the entire concentrate category for units sold and the #3 brand in dollars sold for the entire year
- #1 brand in tincture category in units and dollars sold
Due to its success, the brand grew its team from 19 to 44 by the end of 2021, adding more jobs to the market, an accomplishment that the Company values tremendously.
With Hard Work Comes Great Reward
During 2021, City Trees was awarded 3 different awards by LeafLink, the cannabis industry's wholesale marketplace, which considers data and analytics across a multitude of categories, states, and markets. The LeafLink List recognizes outstanding businesses in the LeafLink community that are advancing the cannabis industry through their quality and ingenuity. This year LeafLink named City Trees a top performing brand in Nevada as well as the winner in two concentrate categories: the fastest growing THC Distillate and top selling THC Distillate.
City Trees also won two first place awards at the 2021 High Times Cannabis Cup: People's Choice Edition. The largest pool of judges in history selected City Trees as the winner in two categories: Sativa Concentrates (awarded to Apricot Crumble Sativa Live Resin Sauce) and Sativa Vape Pens (Apricot Crumble Sativa Live Resin Vape).
These wins are a testament to the quality of product the City Trees' team is producing as well as to the team's hard work and dedication to the craft of cannabis as a whole.
What to expect in 2022
CLS recognizes the key to success is to focus on what it can control. Once the new joint ventures commence operations, the Company will have direct control over its large expansion into the flower and pre-roll categories while continuing to capitalize on the current successes of City Trees and Oasis. This next year has a lot in store, full of new products and stories to tell. We are excited about growing into other markets while giving back to the communities around us and continuing to invest in our people. After experiencing strong performance in calendar year 2021, the Company expects 2022 to be even better. CLS anticipates YOY revenue growth to accelerate while maintaining gross margins with continued EBITDA improvement.
About CLS Holdings USA, Inc.
CLS Holdings USA, Inc. (CLSH) is a diversified cannabis company that acts as an integrated cannabis producer and retailer through its Oasis Cannabis subsidiaries in Nevada and plans to expand to other states. CLS stands for "Cannabis Life Sciences," in recognition of the Company's patented proprietary method of extracting various cannabinoids from the marijuana plant and converting them into products with a higher level of quality and consistency. The Company's business model includes licensing operations, processing operations, processing facilities, sale of products, brand creation and consulting services.
https://www.clsholdingsinc.com/