In the newest Marijuana Market Update, I discuss two topics:
- Michigan recently released its cannabis sales figures for March. And they are big.
- Reader mailbag: Analysis of The Flowr Corp. (OTC: FLWPF).
Michigan Cannabis Sales a Good Sign for New York
The Michigan Marijuana Regulatory Agency released the state’s adult-use and medical cannabis sales figures for March 2021.
They were impressive. Take a look:
Adult-use sales topped $98 million last month — by far the highest monthly sales figure since adult-use cannabis became legal in 2019.
That’s a 46% jump in sales from the previous quarter and a 345% increase in sales from March last year.
In the first quarter of 2021, adult-use sales were $232 million — a little less than half the $510 million in sales in all of 2020.
That’s massive growth in such a short time.
Medical marijuana sales also jumped from $38 million in February to $48 million in March — a 26% increase month-over-month and a 60% boost from March of last year:
Medical marijuana sales are on pace to hit $508 million for 2021 — an increase from the $474 million in sales from 2020.
For the first quarter of 2021, combined cannabis sales in Michigan were nearly $360 million. At that pace, Michigan could see combined sales of $1.4 billion — well outpacing 2020 sales of $984 million.
The first quarter of sales in Michigan have already surpassed the entire year of sales in the state in 2019 ($288 million).
Now we are looking to New York, which recently passed adult-use legalization, as the next big catalyst for cannabis companies.
New York’s population is about double Michigan’s.
So, if Michigan’s sales are any indication, it’s fair to assume that sales in the Empire State will explode when they start next year. And cannabis companies will reap the benefits in the long run.
Analysis: The Flowr Corp. Stock
I also want to address an email request.
Warren emailed me:
I was wondering about a couple of penny stocks. Do these two have ANY future: The Flowr Corp. (OTC: FLWPF) and MediPharm Labs Corp. (MEDIF)? Love your info and takes.
Thanks for the email, Warren!
I discussed MediPharm in a Marijuana Market Update that you can watch here:
My focus today is The Flowr Corp. (OTC: FLWPF).
The Toronto-based company grows, produces and sells cannabis in Canada. It also has operations in Europe and Australia.
It sells its products in partner retail outlets and online.
The company’s financial growth has been steady over the last few years, as you can see in the chart below:
It brought in around $7.4 million in total revenue last year.
But its projections for the next two years have me perplexed.
You see, estimates have total revenue jumping to almost $32 million this year and $40 million in 2022 — that’s a 440.5% increase in just two years.
But I don’t see a clear path to reaching those kinds of numbers.
Even if the numbers were accurate, the company still struggles to make money.
The chart above shows the rate of annual net income for the company from 2016 to 2022.
As you can see, even with a 440% projected rise in total revenue, the company still projects losses of between $14 million and $16 million in each of the next two years.
The company’s stock price has also underperformed:
FLWPF Stock (Red) Underperforms Ag Stocks (Blue)
Unlike most cannabis stocks, FLWPF did not sustain any rebound from the March 2020 coronavirus crash.
In fact, over the last 12 months — which started after the crash — the stock has fallen nearly 52%.
All told, I don’t have much faith in the projected sales figures for the next two years.
The company continues to lose money, and the stock price is in a downward spiral.
This could be a “buy the dip” situation. But we don’t know where the dip actually starts. This stock could still move to a lower bottom, meaning if you bought it now, it would take even more time before you realized a gain.
The financials of this company need to shift dramatically — its spending, in particular — before I’ll consider this stock a buy.
Thanks again, Warren, for your question.
Cannabis Watchlist Update
Now, we’ll take a look at our Money & Markets Cannabis Watchlist.
Overall, our watchlist is seeing average gains of around 44%.
Several watchlist companies report earnings soon.
PerkinElmer Inc. (NYSE: PKI) releases earnings on May 3.
Scotts Miracle-Grow (NYSE: SMG) and Schweitzer-Mauduit International (NYSE: SWM) report earnings on May 4.
GrowGeneration Corp. (Nasdaq: GRWG) reports on May 13. I anticipate year over year growth. The company also released news that it has signed a lease for 40,000 square feet of warehouse and showroom space in Jackson, Mississippi, to enter the state’s medical marijuana market.
Turning Point Brands (NYSE: TPB) released its quarterly earnings this week, posting a 56% year-over-year increase in earnings and an 18.6% jump in revenue.
Earnings missed analysts’ projections, but revenue beat projections. TPB also provided guidance of between $422 million and $440 million in fiscal year revenue.
Where to Find Us
I’m now on the Clubhouse app. Each week, I will review the stock market and look ahead to the coming week on Wall Street.
You can check that out every Friday at 10 a.m. Eastern time.
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Coming up this week, we’ll have more on The Bull & The Bear podcast and our Money & Markets Week Ahead, so stay tuned.
Don’t forget to check out our new Ask Adam Anything video series, where we ask your questions to Chief Investment Strategist Adam O’Dell.
Green Zone Fortunes co-editor Charles Sizemore also has a weekly series called Investing With Charles where he breaks down dividend stocks each week.
Remember, you can email my team and me at firstname.lastname@example.org — or leave a comment on YouTube. We love to hear from you!
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.