IM Cannabis Reports Record Financial Results for the Second Quarter of 2022

Highlights from Q2 2022

To $23.8 million, revenues rose by 114% year over year. Before fair value adjustments, the gross profit was $5.6 million. The sale of SublimeCulture Inc. was part of a restructuring and streamlining strategy that was put into action in Canada. This is expected to lead to yearly cash cost reductions of around $4 million (“Sublime”).

Focus Medical Herbs Ltd. (“Focus Medical”) completed the closure of the Sde Avraham cultivation farm that it owned and ran in Israel, with an anticipated annual cash cost savings of $2.5 million. It also further consolidated operations of newly acquired assets there.

Administration Commentary

IMC CEO Oren Shuster said, “We have advanced down the road to profitability, with increasing revenues, operational efficiency, and a focus on cost reduction.” “Our main objective is maintaining revenue growth in each key area to create long-term shareholder value.

We think we can reach profitability shortly by concentrating on long-term revenue development while assiduously pursuing cost and margin savings.”

“Our long-term strategy depends on regional diversification and planning to target new adult-use recreational cannabis markets in Germany first, then the rest of Europe, if cannabis is legalized. We are getting ready to use our international brand, commercial know-how, and cultivation to take significant market share across Europe successfully.

Our ability to successfully position our brands in various regions and introduce new SKUs to satisfy patients constantly and consumer expectations is one of our strengths.” “As part of our attempts to integrate globally and save expenses, we have started a comprehensive reorganization of our operations in Canada, just as we did in Israel. To that aim, we have completed the sale of Sublime, which, combined with our streamlining efforts in Israel, is anticipated to result in annual cash savings of $6.5 million.”

According to our forecasts, “Shuster” ended; the majority of the protection should begin to take place in the third quarter and be completely achieved in the fourth.

Also read: Key factors affecting Innovative Industrial’s Q2 earnings

Administrative Highlights

  • Focus Medical finished shutting down its Sde Avraham cultivation farm to further simplify operations in Israel. The Company may now more effectively use its entirely permitted import-export supply chain and concentrate on importing premium and ultra-premium goods from its Canadian subsidiaries and other top Canadian suppliers, thanks to the closure of Sde Avraham Farm.
  • The Company’s primary emphasis in Israel remained the importation of premium and ultra-premium indoor-grown dry cannabis from its licensed Canadian growing facilities and top-tier cannabis suppliers and supply partners. The Company’s well-liked WAGNERS Canadian brand was successfully launched in Israel, and it anticipates launching additional medical cannabis products in Q3 and Q4.
  • Due to the strong market demand for its brands WAGNERS and Highland Grow, which now occupy the top 3 places in the premium and ultra-premium divisions in Ontario, the Company released several new products in Canada. At the end of Q2 and in the first few weeks of Q3, Tiki Rain, Blue Lime Pie, and TRPY SLRP pre-rolls were added to the Ontario Cannabis Store (“OCS”), increasing the WAGNERS pre-roll selection.
  • Along with adding soft black hash and 3.5g soap bar hash to the concentrated portfolio, two new 3.5g dried flower SKUs—Tiki Rain and Purple Clementine—were also released.
  • In addition to White Lightning pre-rolls and Gas Tank and Diamond Breath dried flower SKUs, Highland Grow expanded their OCS offering. The launch of new strains, including Frost Bite, Leviathan, and Space Jagger, is part of the ongoing rollout of new products.
  • The sale of Sublime, together with other streamlining initiatives implemented in Canada, was finalized by the Company on August 5, 2022, and is anticipated to result in annual cash cost savings of around $4 million.
  • The Company’s facilities in Kitchener, Ontario, which have the cultural capacity to support the streamlining endeavor, have been used as the primary location for all cultivation, genetics, and logistics. For a total of $100,000 fewer modifications, the Company sold Sublime to a group of buyers that comprised both current and former members of the Sublime management team.
  • According to Multilateral Instrument 61-101 – Take-Over Bids and Special Transactions, the deal qualified as a “related party transaction” (“MI 61-101”). The transaction is excluded from the formal valuation and minority shareholder approval requirements of MI 61-101, following Sections 5.5(a) and 5.7(1)(a) of that document.
  • Adjupharm GmbH (“Adjupharm”), one of the top 10 cannabis companies in Germany, sold the most IMC Hindu Kush strain T20 in May. This was the biggest sales month there yet. The Company reached a new milestone in support of its product and brand diversification strategy with the acceptance of the extended EU-GMP license on May 24, which included extra manufacturing, testing, and release processes. As part of its preparations for the Q4 2022 and Q1 2023 launches of new, high-quality, high-THC products, Adjupharm has started many new product licensing applications.

Also read: How Cannabis Testing Labs Help Put Undue Focus on THC Potency

Q2 financial results for 2022

In Q2 2022, revenues were $23.8 million, an increase of 114% from Q2 2021. With an average selling price per gramme of $5.72, 3,210 kilogrammes of the dried flower were sold globally in Q2 2022, up from 1,842 kilogrammes in the same period of 2021 with an average selling price per gramme of $3.92.

The rise in sales of both medicinal and recreational cannabis products and the higher average selling price per gram the Company obtained from its portfolio of premium branded cannabis products in Israel and Canada are principally responsible for the rise in revenues.

In Q2 2022, gross profit before fair value adjustments increased to $5.6 million from $0.6 million in Q2 2021.

In Q2 2022, general and administrative costs were $11.1 million, up from $7.4 million in Q2 2021. Following the Company’s acquisitions in 2021, the rising business operations in Israel and Canada are mostly to blame for the growth in general and administrative expenditure.

In Q2 2022, sales and marketing costs were $5.0 million as opposed to Q2 2021’s $1.2 million. The Company’s expanded marketing efforts in Israel, brand launch in Germany, higher distribution costs related to the rise in sales, and consolidation of the sales and marketing costs of businesses acquired in 2021 were the primary causes of the increase in sales and marketing expenditures.

Comparing Q2 2022 to Q2 2021, the adjusted EBITDA loss was $(4.6) million instead of $(5.7) million.

In Q2 2022, the net loss was $18.98 million vs. $5.01 million in Q2 2021. In addition to associated write-downs of tangible and intangible assets, including other non-cash impairments of $1.5 million in financial costs and $3.8 million in general and administrative expenses, a non-cash charge of $5.4 million for restructuring activities in Canada and Israel was included in the net loss.

As of June 30, 2022, there was $5.86 million in cash and cash equivalents, down from $34.05 million on December 31, 2021.

For the three months ended June 30, 2022, and 2021, the Company’s interim condensed consolidated financial statements and corresponding management’s discussion and analysis will be posted under its SEDAR profile at

Also read: Pennsylvania Medical Cannabis Company Lays Off 55 Workers, Calls For Relief

Concerning IM Cannabis Corp.

Leading multinational cannabis firm IM Cannabis (NASDAQ: IMCC, CSE: IMCC) offers superior products to medicinal marijuana users and adult-use customers. One of the few businesses operating in Canada, Germany, and Israel—the three biggest markets with federal legality—is IM Cannabis.

The ecosystem that the Company has developed as a result of its worldwide activities makes use of the Company’s distinctive data-driven approach and global product supply chain. The Company has swiftly risen to prominence as one of the world’s top producers and suppliers of high-quality cannabis thanks to its dedication to responsible expansion, prudent financial management, and capacity to function in even the most restrictive legal conditions.

The Company operates retail pharmacies, online platforms, distribution hubs, and logistical hubs in Israel through IMC Holdings Ltd. and its subsidiaries and affiliates, enabling secure delivery and quality control throughout the entire value chain.

The business imports and retails medicinal cannabis that is both premium and ultra-premium. The IM Cannabis ecosystem in Germany is managed by Adjupharm, which also provides medicinal cannabis patients with cannabis via pharmacies.

In Canada, IM Cannabis does business via Trichome Financial Corp. and its subsidiaries TJAC and MYM. At its Ontario, Nova Scotia facility, IM Cannabis grows and processes marijuana for the adult-use market under the WAGNERS and Highland Grow brands.

Financial Prospects

The Company and its management consider the statements in this press release regarding higher revenue and adjusted EBITDA to be true as of the date hereof. These statements are based on the Company’s current views, strategies, expectations, assumptions, and forecasts, and they have been calculated using accounting principles that are generally consistent with the Company’s current accounting principles.

According to the relevant securities legislation, these statements are regarded as financial information and future-oriented financial outlooks (collectively, “FOFI”). The Company’s management has consented to these declarations and any additional FOFI listed below.

Such FOFI is provided to disclose information about management’s current expectations and goals concerning the advantages of the streamlining and restructuring plan in Canada and Israel, the expansion of the Company’s product portfolio in Israel, Canada, and Germany, existing sales and supply agreements with Focus Medical and Adjupharm, increased sales in Israel through the fulfillment of Focus Medical’s existing supply agreements, increased sales from the restructuring and streamlining plan, and increased sales from the r.

However, as this information is highly speculative and prone to multiple hazards, including those covered in the “Disclaimer for Forward-Looking Statements” section above, it shouldn’t be taken as predictive of future outcomes. Actual outcomes could differ significantly from those predicted here should one or more of these risks or uncertainties come to pass or if the FOFI’s underlying assumptions are erroneous.

Although IMC management has made an effort to identify significant risks, uncertainties, and other variables that might significantly affect actual outcomes, there may be other factors that prevent them from turning out as planned, projected, or expected. Except as required by securities laws, the Company disclaims any intention or duty to update or modify any FOFI, whether as a result of new information, future events, or otherwise.

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