Ottawa-based CannaRoyalty aims high with rising Q1 revenues

Smoking pot

With the first fiscal quarter of the year in the books, CannaRoyalty’s CEO suggested that rising revenues and high-potential acquisitions are positioning the Ottawa-based cannabis holding firm to capitalize on emerging legal pot markets in North America.

CannaRoyalty (CSE:CRZ), which acts as a vehicle to give investors exposure to legal cannabis companies by acquiring producers and adjacent firms in the field, reported its first quarter earnings on Tuesday morning.

Revenue for the three-month period ending Mar. 31 was $643,437, more than double the firm’s earnings over the same quarter last year. While most of the increase came from the firm’s services stream – up nearly $350,000 year-over-year – CannaRoyalty also earned $84,773 in revenue from product sales, a vertical that was non-existent in 2017.

In the past six months, CannaRoyalty has been on an acquisition spree focused on cannabis producers in the California market. CEO Marc Lustig said in a statement that the firm’s acquisitions include pot distributors with more than $30 million in revenues this past fiscal year.

He added that the firm’s holdings in California position CannaRoyalty to be “one of the largest revenue producers in the Canadian publicly-traded space.”

“Over the past several months we have also established a beachhead in Canada to eventually bring our leading products home and we expect to continue to make progress on this significant opportunity over the balance of the year and as the Canadian regulations continue to develop," he said.

The Canadian inroads Lustig is referring to include a supply deal with Ottawa-based National Access Cannabis and coffee shop franchise Second Cup as the latter converts a number of the company’s western Canada cafes into cannabis retail shops.

As CannaRoyalty continues to acquire cannabis companies and foster strategic relationships, its expenses and losses deepen. The firm posted a net loss of $4.3 million on the quarter, compared to $2.1 million a year ago.

The firm saw a five per cent drop in share prices on the Canadian Securities Exchange Tuesday, sinking to $5.11 in late afternoon trading, though its stock is up roughly 22 per cent over the month of May.