You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
A capital raise of $5 million didn’t qualify for publication this week due to its small size, but we think this was actually a big story that investors and operators should know about. Today, we are using this newsletter to remind our readers of something we have been discussing for a while. The outlook for the American cannabis industry has improved greatly over the past few months, but, as we have been saying, not all companies are positioned to capitalize. One of those is a company that we follow closely and actually think has a great strategy and has executed operationally, but we have been warning subscribers at 420 Investor consistently to be cautious on the name due to financial constraints.
Flower One operates a large-scale greenhouse as well as a processing facility and an additional indoor cultivation facility in North Las Vegas, offering turn-key production and distribution for many leading brands. The company reported a challenging Q2 on Wednesday morning, with revenue impacted by the store closures in Nevada, but it also guided for Q3 revenue that was higher than previous analyst consensus expectations. It closed the day at an all-time closing low, but not too far from the March lows. Thursday morning, it priced a C$5 million unit offering at a 24% discount to that close, and the stock ended up dropping below the offering price:
To put things in perspective, the one day decline following the C$5 million capital raise knocked almost C$27 million off the market cap of