Amid some serious stock market woes—and signs that a recession is on the way—it’s important to take a moment and look at the companies that are doing well. In the cannabis space, that means looking at stable businesses focusing on long-term growth. Earlier this week, Rich talked about MediPharm Labs (TSX:LABS) (OTCQX:MEDIF) (FSE: MLZ) actually posting a profit. Today, we look at Zenabis Global Inc. (TSX:ZENA) (OTCPK:ZBISF) and its Q2 financial earnings report.
Zenabis is a Canadian licensed cultivator of both medicinal and recreational cannabis. It is best known for its impressive cultivation capacity split between state-of-the-art greenhouses in New Brunswick and British Columbia that collectively provide the company with 3.5 million square feet of facility space.
Rich has talked about Zenabis in the past, most notably when it made an agreement with a Tilray (NASDAQ:TLRY) subsidiary for $30 million of dried cannabis. Today’s news brings more positive attention to the Vancouver-based company.
“[With Zenabis] we’re finding a gem of a company at a really low price before they explode,” says Rich.
Zenabis Posts Higher Than Expected Production
From April to June this year, Zenabis cultivated nearly 2,500 kgs of dried cannabis. This exceeds the company’s original forecast by an impressive 40 percent. On top of that, during that same time, the cost of cultivation at one of its key facilities, Zenabis Atholville, was lower than expected at $0.78.
These results have led the company to revise production expectations for the future, leading to more product at lower costs. Zenabis Atholville is now projected to produce up to 46,300 kgs—up from 34,300 kgs—increasing Zenabis’s total licensed cultivation capacity to 54,000 kg of dried cannabis.
“To put this into perspective, last quarter Canopy Growth Corporation did 40,000 kgs,” says Rich. “This means that just from its Atholville facility, Zenabis has the ability to outperform what Canopy just reported and made about $90 million on. So the upside here is tremendous.”
On top of its Altholville facility, the company is moving forward on its massive Langley production facility. There, it forecasts the production of 17,679 kg of dried cannabis between July and December of 2019. Beginning next year, it plans to continue scaling that facility, which ultimately represents 86,200 kg of annual design cultivation capacity.
When fully-functional, the Langley facility is expected to be the second-largest greenhouse fully dedicated to the cultivation of cannabis in the entire world.
Zenabis Builds Investor Trust
In addition to near record-breaking cultivation, Zenabis has been cited as a cannabis company that’s building trust. Its CEO, Andrew Grieve, elected not to take a salary, asking instead for 750,000 options in the company exercisable at current market price. That way, he makes money when the company makes money.
“This is a recipe for success,” Rich notes. “You can see based on their timelines, on their news, on their business plans that Zenabis continues to exceed their targets, to meet or exceed their estimates.”
What do you think? Is Zenabis gunning to be one of the major players in the cannabis space, competing with Canopy? If you plan on investing in this company, or have a company you want profiled on RichTV Live, let us know about it in the comments below.
Featured image: LinkedIn