Cannabis extractor Valens turns profit but warns of potential COVID-19 fallout

Canadian cannabis extractor The Valens Co. reported its fourth straight quarterly profit, a rarity in a sector that experienced rampant losses throughout 2019 – the first calendar year of legalization.

The British Columbia company reported adjusted EBITDA of 14 million Canadian dollars ($10 million) for the December-February period – its first fiscal quarter of 2020. That’s lower than the CA$17.7 million profit for the period ending in November.

First-quarter revenue came in at CA$32 million, up slightly from the previous quarter’s CA$30.6 million.

The company warned that it is unable to predict the full impact of the COVID-19 pandemic, despite surging retail demand for adult-use cannabis.

“We are seeing challenges in the current market environment with several of our customers experiencing reduced workforces, temporary decreases in cultivation output, and a resulting reduction in demand for extraction services,” Valens President Jeff Fallows said in a news release.

Valens, one of the largest third-party marijuana extractors in Canada, attributed the higher profits to improved revenue from extraction, white label formulation and manufacturing and analytical testing services.

The company said it launched the first cannabis-infused white label beverage in Canada via a partnership with Iconic Brewing subsidiary A1 Cannabis Co.

The amount of biomass extracted fell to almost 20,000 kilograms (roughly 44,092 pounds) in the quarter, down from 24,426 kilograms and 26,625 kilograms in the two previous quarters, respectively.

Valens said it received final approval to uplist its shares to the Toronto Stock Exchange.

Shares will start trading on the Toronto Stock Exchange on April 16 under the ticker symbol VLNS.

The company’s shares currently trade on the TSX Venture Exchange as VLNS.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

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