Ventura Cannabis (VCAN) Continues to Execute on Cannabis Revenue Growth Strategy with a Dispensary and Delivery License in Sacramento; Posts Audited Annual Financial Statements (Ending February 28, 2019) For BLVD Centers; Appoints Jacob Gamble as Chairman
LOS ANGELES, July 2, 2019 (GLOBAL NEWSWIRE) – Ventura Cannabis and Wellness Corp. (CSE:VCAN) (“Ventura Cannabis” or the “Company”) is pleased to announce it has secured a license to operate a dispensary in Sacramento, California. Additionally, VCAN has posted audited financial statements on SEDAR (www.sedar.com) for the 12 months ending February 28, 2019 for BLVD Centers Corporation, the rehab business it owned during that period.
Ventura Cannabis was officially launched in April 2019 with the support of its shareholders at its AGM.. Ventura Cannabis has a strategy to become a vertically integrated, branded cannabis product company selling into several underserved segments in the California market, the largest and most diverse cannabis market in the United States. Most of the milestones to accomplish this strategy are completed.
The Company set out the strategy, illustrated in the most recent investor presentation (http://venturacanna.com/).
In summary, the new management team has a three-tiered plan to generate significant revenue growth and cash flow from the fast-growing California cannabis market.
- Manufacturing and Distribution License
VCAN has signed a binding Purchase Agreement to acquire a vertically integrated cannabis product license for the state of California, announced May 8, 2019. VCAN is working with the various regulators to close the acquisition of CannaSun, a small product company operating in Los Angeles, California with a projected $750,000 in annual revenues and a projected $150,000 in EBITDA. The target acquisition operates a facility with capacity for at least $12,000,000 in annual revenues at current market prices for vape products. Once closed, with the assumption the four dispensaries under contract are closed and offering the CannaSun products on premium shelf space, Management has projected it can generate $5,000,000 in annualized revenues, with projected $1,500,000 in EBITDA, within the first twelve months of the last closing, representing 50% of the total annualized revenue target for the first year of full operations.
- Dispensary Network In California
VCAN has started to build a network of California dispensaries to serve as distribution of the products developed by the CannaSun brand. The Company has announced several purchase agreements ranging from January 2019 to June 2019, including the Sacramento dispensary announced today. Once the last of the four dispensaries under contract are closed, they are expected to generate annualized revenues of an additional $5,000,000, with projected $750,000 in EBITDA, representing the other 50% of the total annualized revenue target for the first year of full operations.
- Build Cash from Sale of Rehabs
VCAN has begun selling the BLVD Centers business units to raise additional capital. Management plans to use the cash to acquire or start additional dispensaries to increase revenues as well as invest in branding and product development of CannaSun and other brands to increase profits.
Management has already successfully completed several milestones this fiscal year to execute on the Company’s strategy:
- Executed a binding Purchase Agreement for a vertically-integrated Los Angeles based cannabis product company, with the brands CannaStar and CannaSun.
- Executed several binding Purchase Agreements for dispensaries around California under the owner-operator model.
- Re-organized the Board of Directors and Management Team.
- Changed the Business name from BLVD Centers to Ventura Cannabis and Wellness.
- Developed its’ team to market it’s branded products to several segments currently underserved in the California market, including seniors 65 years and older, professional men and women 40-55 years of age and opioid addiction sufferers.
- Executed binding Purchase Agreements to sell the BLVD Centers outpatient business line for $5.5M in total cash while retaining rights to sell cannabis products to past, current and future inpatient clients for up to 10 years.
- Executed a LOI for the sale of one of its’ inpatient detox units and putting up the other unit for sale.
As part of expanding its distribution footprint, VCAN is pleased to announce it has secured an operating partner and location along with a dispensing and delivery license in Sacramento, California. The Company has committed US$300,000 in total cash for start-up expenses, including payments for securing the license and expects to see $500,000 in revenue at break-even the first year of operation, $1,000,000 in revenue with $200,000 in EBITDA in the second year of operation and $1,500,000 in revenue with $525,000 in EBITDA in the third-year operation. The location, which will operate out of a 1546 square foot space, is expected to be operating, generating revenues and selling CannaSun brand products in the current fiscal year.
Additionally, Jacob Gamble, one of the architects of the transition into a cannabis company has been appointed Chairman of the Board of Directors.
Year End Audited Financial Statements
According to the audited financial statements, the BLVD Centers business units generated a steady $30M in annual revenues, similar to the audited 2018 Financial Statements. The business reflected in the financials has either been sold or is up for sale. None of the financial results reflect the new cannabis business line. Management expects the full impact of the Amberlight acquisition, which is expected to generate $225,000 a quarter, will be reflected in the second quarter financials. A small portion of the revenue will be recognized in the first quarter ending May 30, 2019 as the deal was approved by regulators on May 15, 2019 The other cannabis acquisitions are awaiting regulatory approval, which can take several months in California.
“We have been quite productive since our launch just three months ago,” said Chris Heath, President of Ventura Cannabis. “We are awaiting our regulatory approvals to close the several dispensaries and the cannabis product company we have under contract. Once closed, we do expect to generate about five million in annualized revenues from our dispensaries and five million in annualized revenues from our product company. We plan to divest the remaining BLVD Centers business units this year as well, using the cash to continue to build our dispensary network and build our revenues to the target of ten million dollars annualized.”
“I recognize it has taken time for these deals to close as we wait for the California regulators to approve our acquisitions,” continued Mr. Heath. “This process is time-consuming, but once complete, we will start seeing the results in revenue and cash flow in our quarterly financials from dispensary revenues as well as our product revenues. We have a twelve million dollar capacity facility in Los Angeles and I am excited to get our product development plan in motion. The more dispensaries we own, the more output we can generate from the facility. We continue to work to expand that network and have the cash and cash flow to continue to make progress on that front.”
“Lastly, we have made capital markets communications a focus recently. For a company with projected annualized revenues of ten million dollars, and a strong balance sheet with no debt, our stock seems severely undervalued relative to its peers. We are working to introduce the new company to the broader market. It has not been easy as this is a crowded space. However, we are quite different from our peers in that we have a long-term experience operating a public company and we have capital and revenues and a plan that is being executed that will be reflected in the upcoming quarterly financials. Again, once the California regulators give us our approval for the current acquisitions, along with deals in the pipeline which we can close with our balance sheet, we should be exiting our first full operational year with ten million dollars in annualized revenue generating cash flow. I think once the market grasps this reality, we will see a better result from the capital markets.”
For more information contact:
Ventura Cannabis and Wellness Corp.
Certain statements contained in this presentation constitute “forward-looking information” as such term is defined in applicable Canadian securities legislation. The words “may”, “would”, “could”, “should”, “potential”, “will”, “seek”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “confident” and similar expressions as they relate to the Company. Such statements reflect the Company’s current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions. The forward- looking information included are made as of July 1, 2019 and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. VCAN holds or is acquiring marijuana assets in the United States. Previously disclosed acquisitions are still subject to closing. Marijuana is legal in each state VCAN is looking to operate, however marijuana remains illegal under US federal law and the approach to enforcement of US federal law against marijuana is subject to change. Shareholders and investors need to be aware that adverse enforcement actions could affect their investments and that VCAN’s ability to access private and public capital could be affected and or could not be available to support continuing operations. For additional information about forward looking statements and the risks of investing, please refer to the page on our website with the conference call transcript.