Medical cannabis provider Columbia Care reported on Thursday, May 14, a substantial revenue increase of 125% or $28.9 million despite the COVID-19 pandemic.
The company reported a strong customer demand for medical cannabis for the first quarter of 2020, securing the momentum in key locations despite the heightened competition.
Columbia Care reported improved processing capabilities and increased product offerings since the beginning of May. Moreover, medical sales are up by 40%, leading to higher gross margins.
Investors also injected $45 million in financing to Columbia Care as part of strengthening the company’s operating costs in the time of pandemic. According to Nicholas Vita, CEO, the new liquidation speaks volumes on the investors’ confidence in the company.
These are only the tip of the iceberg as the company also secured multi-million sales from the 10% minority interest of non-US business to Avalon Pharma. The deal is worth $11 million and two companies are already in the talks of the minority stake.
Columbia Care also joined the Virginia market, which is the company’s 16th location. As it entered Virginia, it is abandoned the unprofitable operation in Puerto Rico. Top profitable locations according to its report are Massachusetts and Pennsylvania, showcasing strong economics during the pandemic.
While the Ohio operation is doing pretty great, generating at least $2.6 million, the earnings were excluded as ownership is yet to complete in the fourth quarter. The business model is working for the company as it focuses on higher product volumes and leveraging operations. The margin expansion was backed by this business model, achieving key milestones so far in the first quarter of 2020.
Columbia Care Operational Updates
In light of the pandemic, the company is providing updates on key financial and operational movements. Some highlights include a $34.3 million first-lien term debt commitments, a portion of it funded in the first quarter.
Meanwhile, the closure of Puerto Rico operations resulted in the 10% savings or $7.5 million in cash operating expenses annually. The market is not functional any more because of several operation suspensions and regional instability. In addition, there is limited near-term profitability recorded, which led to the closure.
As mentioned, the Ohio operations are yet to reflect on the overall profitability record, as Columbia Care completes the construction of the 56,000 square feet cultivation facility. The company states that the first phase of the construction was completed and the commercialization buildout phase comes next.
The construction of this facility will greatly increase Columbia Care’s product offerings to its retail customers. Some expected outcomes include the increase in biomass for processing wholesale flowers for dispensaries.
Speaking of product offerings, the Florida market recently introduced 40 new products, which still await regulatory approval before these are commercialized. A significant canopy square footage will be resolved in June and July of this year.
Joining the Virginia market is part of Columbia Care’s move to expand operations in the United States. The company recently received approval to begin cultivation in 62,000 square feet cannabis facility. The first harvest is expected in the second half of 2020.
Finally, it’s New Jersey integrated facility is on the completion part of the construction, with the first harvest expected in early July. To be ahead of the competition, the Vineland location is hiring staff as it opens the dispensary and takes advantage of the supply availability. The management is eager to accelerate supply capabilities and provide retail customers with quality cannabis products.
Columbia Care is said to be ‘well-prepared’ in executing growth strategy in the time of the pandemic. While some markets are experiencing halt in round-the-clock operations, the company was able to strategize to maximize profit opportunities. Besides ensuring a stable supply chain, Columbia Care also introduces new cannabis products for consumers to try.
The integrated facilities being built also mirrors the company’s expansion strategies to serve more retail customers. In each market, the company opened new facilities that would allow customers to access products without the ability to travel to the location or dispensary. New technology solutions are put to place, servicing a wider market in each state.
In order to balance sheet later this year, if pandemic persists, Columbia Care also monetizes real estate on the sale of Leasebacks. It is part of the plan to avoid losses, as to what other companies are doing at the moment. Additionally, the medical marijuana market expanded overseas to Germany and the United Kingdom, helping the company increase sales.
The investors also have a huge role in helping the company expand and continue developing new novel products that could improve Columbia Care’s branding. The money used for constructing facilities along with other expenses helped the company maintain its position in the cannabis market. While the workforce decreased and more customers cannot visit the dispensaries physically, the sales are consistent because of the sale strategy and innovation.
There is an emphasis on the community in helping the company thrive amid pandemic. With the help of policymakers, Columbia Care received approval for operations and a go signal to sell new products. At this rate, the position of the company in the marijuana sector is firm and is expected to thrive for more months leading to the new calendar year.
In light of the pandemic, the company pledges to focus on efforts and to use resources in driving profitability in each market. It will continue to monitor the performance measures of each market, plan ahead, and adjust operational costs if needed. In the words of CEO Vita, ‘We continue to focus on our efforts…something we believe will demonstrate the power [of] our operating model.’
Columbia Care is one of the trusted brands for marijuana cultivation, manufacturing of medical marijuana products. The brand collaborates with renowned hospitals and medical centers globally to provide patient-centered service. The company secured licenses for operating in 18 U.S. jurisdictions.
Have you tried any of Columbia Care’s cannabis products? Let us know about your experience in the comment section.