Delta 9 Cannabis Inc is Rich’s Latest Stock to Watch

Delta 9

With people stuck in their houses all day trying to avoid COVID-19, cannabis stocks are seeing a rare surge. That’s good news for watchers of RichTV Live, as Rich has plenty of pot stocks to profile. Last week, he broke down the latest news for Canopy, HEXO, and Tilray. Today, he’s turning his sites on Delta 9 Cannabis (TSX:DN) (OTCQX:VRNDF).

In fact, the company’s Co-Founder and CEO, John Arbuthnot, joins Rich via a teleconference call. In 2012, John founded Delta 9 with his father, Bill, while still a fourth-year business student at the University of Manitoba.

Rich and John discuss DN’s reaction to COVID-19, as well as its strong fiscal position.

Diversified, Vertically Integrated, and Expanding

Based in Manitoba, Delta 9 is a vertically integrated cannabis company. Its wholly-owned subsidiary, Delta 9 Bio-Tech Inc, produces medical and recreational cannabis. It also operates an 80,000 square foot production facility in Winnipeg, Manitoba’s capital and biggest city.

In addition, the company owns and operates a chain of retail stores under the “Delta 9 Cannabis Store brand.”

Enter Your E-mail Address To Subscribe

* indicates required
 

Like most stocks—in the cannabis space or not—DN is down for the year to date. The share price has lost 42.9% value since the start of January but has remained stable for the past week. Fortunately, John explains that his company is remaining open during the COVID-19 crisis.

“Like everyone else, we’re taking this thing very seriously,” he says. “We’re taking all necessary precautions, including giving people a mask to wear at the door.”

Delta 9 is Approaching Profitability

The company reported its fourth-quarter and full-year fiscal results on March 19.

For Q4, operating revenues came to $10.6 million, up 101% compared to $5.3 million for Q4 2018. Gross profit also increased to $3.2 million, up 157% from the same quarter last year. Finally, the company’s profit for the quarter was $481,121, compared to a $625,072 loss from operations in Q3 2019.

Ultimately, the company only lost $215,556 for Q4, making it a hair’s breadth away from profitability. For the full-year, it reported record operating revenues of $31.8 million. This represents 315% growth compared to the $7.6 million revenue reported in 2018.

“We’re bullish across all our segments,” John tells Rich. “We’re seeing significant returns on our invested capital, and we’ve got a sufficient cash cushion to continue to operate towards profitability.”

Delta 9 currently owns four stores in Manitoba and is looking to expand broadly over the coming year.

Continued Strategic Partnership with Auxly

In September 2018, Delta 9 entered a strategic partnership with Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF). As per the agreement, Auxly has the right to purchase up to 5,000 kilograms of cannabis and 500 kilograms of cannabis trim per year until July 1, 2030. In exchange, it invested $16.25 million in Delta 9 through the purchase of 5.9 million shares.

On February 25, 2020, the two companies entered a new agreement, whereby Auxly will supply Delta 9’s retail stores with a suite of cannabis 2.0 products. This will include cannabis oils, chocolates, and chewables. Vape products will also be sold where permitted.

There’s a good chance the influx of sales from cannabis 2.0 products will tip the company into the green over the next quarter or two. DN shares are currently trading at $0.40, not far from the 52-week low of $0.33.

What do you think? Is Delta 9 a buy? Let us know what you make of this hot pot stock.

Featured image: DepositPhotos © [email protected]

Please See Disclaimer

If You Liked This Article Click To Share


Risks and Disclosure:

Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained on this website is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions made or suggested and the actual results.

All statements and opinions expressed are the opinions of the author and not of Richtvlive.com or its officers. The author is wholly responsible for the validity of all statements. Richtvlive.com was not involved in any aspect of the article preparation. The author was not paid by Bitrex Inc for this article. The author did not pay Richtvlive.com to publish or syndicate this article.

This article does not constitute as investment advice. Each reader is encouraged to consult with his or her individual financial advisor; any and all actions taken by a reader as a result of the information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Richtvlive.com's terms of use and full legal disclaimer. This article is in no way a solicitation for investment. Richtvlive.com does not render general or specific investment advice. Any information on Richtvlive.com should not be considered a recommendation to buy or sell any security. Richtvlive.com does not endorse or recommend the business, products, services or securities of any company mentioned on Richtvlive.com.

Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks, and options may fluctuate, and, as a result, clients may lose more than their original investment and possibly their entire investment. Any content on this website should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades to make. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Please see our full disclaimer here for additional details before making any investment decisions.