Ottawa pot investment firm CannaRoyalty increases revenues by 380% following acquisitions

Marijuana

Fresh off a spate of acquisitions and a $15-million financing round, Ottawa’s CannaRoyalty Wednesday announced a five-fold year-over-year increase in annual revenues.

CannaRoyalty, which finances and invests in marijuana companies, posted revenues of just over $3 million for the fiscal year ending Dec. 31, 2017 – a whopping 380 per cent jump from the previous year’s figure of $642,000.

At the same time, the company’s operating expenses more than doubled last year to $13.2 million as it continued its aggressive streak of acquisitions and ramped up spending on sales and marketing. CannaRoyalty (CSE:CRZ) booked a net loss of slightly more than $9 million for fiscal 2017, down from $10.3 million a year earlier.

The value of the firm’s total assets rose 43 per cent to $46 million last year. It reported $4.5 million in cash on hand, up from $2.9 million in 2016.

In the fourth quarter of 2017, CannaRoyalty reported revenues of nearly $1.1 million, double the total of $502,000 from the same period in 2016. Its net loss was $1.14 million, down substantially from $7.4 million in the same quarter a year earlier.

In a letter to shareholders, CEO Marc Lustig said the company’s efforts to build its product lines and distribution network in the massive California market are beginning to bear fruit.

This year alone, CannaRoyalty has announced several acquisitions in the most populous U.S. state, including a deal in principle late last month to buy River Distribution, a firm with two cannabis production facilities in the state and a licence to distribute for both medical and recreational use.

In addition, the company said earlier in March it was planning to raise $15 million to fund more acquisitions and launch new products under the firm’s CR brand.

“The past four months have been a watershed period for CannaRoyalty,” Lustig said. “Our team has made substantial progress executing our strategy to build a leading North American, and one day global, cannabis consumer products company.”

While the company is currently focusing much of its attention on California, Lustig said CannaRoyalty also intends to step up its investments north of the border in anticipation of the federal government legalizing pot for recreational use in Canada later this year.

In March, the company made its first foray into this country’s cannabis retailing market when it inked a deal to help fund 180 Smoke, a Toronto-based seller of vape products.

“As the Canadian market moves closer to the sale of cannabis consumer products, we are assembling substantial know-how, intellectual property and brands to bring back to Canada,” Lustig said. “Since November, we have significantly advanced our focus on this area and anticipate a continuation of this in the months to come.”

CannaRoyalty shares were down 1.8 per cent, or seven cents, to $3.73 on the Canadian Securities Exchange in early afternoon trading. That’s down nearly 30 per cent from their all-time high of $5.05 in early January.