Delta 9 Cannabis sees revenues, profits soaring

A Winnipeg-based cannabis producer and retailer has posted glowing year-end financials, ones buoyed significantly by adult-use legalization of the drug.

Reporting on their end-of-year financial and operating results, Delta 9 Cannabis Inc.’s operating revenues skyrocketed in 2018, growing from just under $1 million in 2017 to $7.57 million for the year ending Dec. 31, 2018 — a 702% increase.

Additionally, the company saw a massive 1,200% increase in gross profits — from $442,000 to $5.74 million — while also lowering its losses per share from three cents to two from Q3 to Q4.

“When you look at the breakdown of quarter-over-quarter revenue, we’re showing the strong top-line growth and gross profitability, but I think unlike a lot of our competitors, we really trim the loss,” Delta 9 CEO John Arbuthnot said Tuesday. “What we’re looking to show investors is that we’re running a pretty lean operation. We’re cognizant that, as the company grows, we’re being prudent from a cost-control standpoint.”

In Q1 of 2019, Delta 9, which has an 80,000-square-foot production facility in Transcona, tripled the number of retail outlets, adding a second Winnipeg location in Osborne Village and a third in Brandon.

Supply and demand issues have plagued the rollout of legalization over the past several months and slowed down retail expansion for Delta 9.

Market analysts suspect that while the industry in Canda will grow past $5 billion by 2024, it won’t be until late 2020 or 2021 before supply levels reach that which can sustain the demand.

At the internal level, Arbuthnot said he feels his company has addressed many of the issues that contributed, including packaging, labelling and testing, so they’re more streamlined now. For consumers, that means more offerings in-store and online.

Delta 9’s first location on Dakota Street in St. Vital opened with eight to 10 cannabis products. When it’s River Avenue location opened last month, there were about 25, and 35 when the Brandon store opened.

“That overall supply picture is getting better,” Arbuthnot said. “But it’s not yet like a liquor store where you find a product you like and it’s on the shelves every week. That is what takes quite a bit of time for the market to flesh out.”

Arbuthnot is projecting a bright future.

Delta 9 has entered a non-binding agreement with Pharmasave to become the preferred supplier of its 650 pharmacies across Canada. The company is now in the final stages of being licensed to produce ingestible oils and several other product types are set to be launched later this year.

“We look at the company from a production standpoint, we grew tenfold,” Arbuthnot said. “We went from 35 employees to over 175… you look back and you actually go, ‘Wow, what a year.’ And then you try to look forward a year and go, ‘Am I going to be looking back at 2018 and going, that was such small year compared to 2019?’

“It’s a good time of year to kind of take stock at what’s happened and then look forward.”

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Twitter: @scottbilleck