Legal Marijuana Finally Becomes Profitable

Canadian giant Aphria became the first major cannabis company to report net profit, raising its shares by 32 percent during the auction, the performance of companies like GreenStar Biosciences Corp. (CSE: GSTR) has helped restore investor confidence in the sector

The company stated that it earned CAD 15.8 million ($12 million) by early June and earned CAD 129 million ($97.6 million). This figure surpassed analysts’ highest estimates and increased by 75 percent compared to the previous quarter.

Recreational cannabis sales

Revenue from recreational cannabis sales amounted to C$18.5 million ($14 million), an increase of 158 per cent over the previous quarter. Marijuana sold 5574 kilograms more. Cash costs per gram of cannabis fell from 1.48 ($1.1) to 1.35 Canadian dollars ($1.02).

These results are a real breakthrough for the company compared to the previous quarter. At the time, Aphria reported a significant decrease in gross profit and revenue, as well as the transfer of CAD 50 million to its Latin American assets.

The company said it expects to generate a net profit of 650 to 700 million Canadian dollars in 2020. Analysts expect this figure to reach 701 million Canadian dollars ($530 million).

The company is now looking for strategic partners in the U.S. to confidently enter the U.S. market. Irwin Simon, CEO a.i., said that Aphria is looking for investors to build long-term and mutually beneficial relationships.

New territories to plant cannabis

Canadian companies are actively building capacity on the continent. Aurora acquired 9 hectares for sowing in Denmark, Aphria is developing a comparable size plot in Germany. Besides, Canopy Growth already has a production facility in Denmark. All companies applied for licenses to grow medical marijuana in Germany. Another Canadian company, the Wayland Group, is currently growing 170 hectares of cannabis near Dresden. By 2020, it is a future plan to expand to 1000 hectares and invest 25 million euros in production. Canadianical Pharma plans to grow at least nine tons of marijuana in Cologne over the next three years.

One other company worth noting is GreenStar Biosciences Corp. (CSE: GSTR) that is in the process of building a portfolio of the most promising American cannabis companies. Cowlitz, their partner tenant company, is a producer, marketer and distributor of high quality cannabis products at affordable costs. With GreenStar’s support, these two companies became a market leader in their home Washington state.

Cowlitz consistently records quarterly revenue of $4 million and at the end of last year (2018) reported a revenue of $14.6 million. This is a huge achievement in just five years of operations. They stand out in the local market because there are no other companies that can offer cannabis with higher quality or THC level and sell them at low cost at the same time. Cowlitz utilized a cultivation technology which was made available to them thanks to GreenStar, and which allowed them to stay ahead of the competition.

The medical use of cannabis has triggered a consumer boom, with people buying food, cosmetics and marijuana-based clothing. “In our society, cannabis perceived as a consumer product,” says Georg Wurth, head of the German Cannabis Association.

Many countries are decriminalizing and legalizing marijuana

More and more countries are decriminalizing and legalizing marijuana. Over the past few years, these plants allowed to grow and sell in the UK, Germany, Italy, Switzerland and many other countries. The new market brings in huge profits, for example, one hectare of hemp grown in Italy brings in ten times more profit than wheat.

According to the Italian Council for Agricultural Research and Analysis, the area of durum wheat sown last year decreased by 7.4 per cent in southern Italy and by more than 9 per cent in the north. Hemp cultivation is a real opportunity for diversified farming and could help revive abandoned and less fertile land.

How to earn on marijuana?

“Hemp saved our business. This year we earned 10 times more than we know how to earn on wheat, and this allowed us to hire four workers,” says Salvo Scuderi, president of the Colli Erei Agricultural Cooperative. According to the association Rete Canapa Sicilia, wheat in Italy brings a net profit of 250 euros per hectare. As a result, hemp is already 2500 euros. Not surprisingly, many farmers’ profile changes have made it possible to seriously strengthen their position.