RE:RE:RE:Valens being bought today for $138 millions Last year at this time, SNDL filings showed $1B in the bank. They now have ~$350M.
Valens could never avoid their main issue: The cost of processing using CO2 is too high and time consuming. It's a pincer. In a perpetual disinflationary environment like cannabis, any bulk order they acquired for input, by the time processing is complete the cost of said inputs had fallen significantly. You either run too many machines and eat the manufacturing costs or bulk process with a few machines and eat the cost in losses against competitors who's input costs (cannabis) fell while you were slow processing. CO2 requires a significant lead time on orders that saw demand evaporate by the time production was complete, which caused Valens to write down much of their inventory on repeated occasions.
SDNL offers no benefit here. Yes they have a retail & growers network, however 26% of all grown cannabis goes directly into the trash. This combined with store saturation crushes any advantage SDNL brings. This partnership would be a competitive advantage if waste was 5% and Valens had a direct line to it. Instead the entire market is flooded with processor grade grass making that pipeline moot. https://www.yahoo.com/now/cannabis-producers-destroyed-record-amount-185213038.html
SDNL won't even be able to benefit from CBD legalization/OTC regulations since CO2 is even less capable of producing pure hemp CBD in any sort of profitable manner.
We get excited to see OILS margin growth QoQ but realistically they're a small company scratching at $1M revenue per quarter. At best the argument for this stock price is it should be in the 0.20's. They need to start showing significant revenue growth across multiple markets and income streams.
Does anyone know if the capsul products ever came out or was that another thing advertised that just kinds got stuck in the mud (Alberta sales anyone?). The THC/CBD-O-Acetate stuff is great but the market needs to see it make money first before getting excited.
The Cannabis industry has never been short on people making wild claims about insane profits being just around the corner. The difference now is everyone's on to that game. Hype and cool ideas doesn't have the pumping power it used to, the only thing that matters is revenues & margins now.