The Cannabis industry is growing, and a lot of businesses are taking advantage of this. The sale of CBD oil, CBD tincture, edibles, CBD cart, and other CBD products is rising. One of such businesses is the Delta 9.
Delta 9 is a retail store in Edmonton. It was the 13th company licensed to produce cannabis in Canada. As time passed, other companies were approved. There are about 700 of them now.
This brings about intense competition in both market share and shelf space. This is why Delta 9 thought it wise to join forces with other cannabis retail shops. They did this to improve their returns. Delta 9 has recorded a 20% increase in revenue and has doubled its market share. This growth happened after they acquired seventeen Uncle Sam’s Cannabis shops.
They announced the acquisition with another big news. A $10 million investment from Sundial Growers Inc. With these, Delta 9 had a revenue shoot up to $62.3 million. The Uncle Sam stores acquisition deal was worth $14.3 million.
Clearly, Delta 9 did not come to play. Their CEO, John Arbuthnott, estimated that the revenue from the store would be $21 million in 12 months. The company had made it clear that they were keen on making its retail footprint bigger. They planned on doing this by vertical integration of their cannabis company. Thus, making the transition into wholesale.
Likewise, the Sundial CEO noted that the most profitable business style for Cannabis in the United States is vertically integrated. Therefore, the cannabis companies that make the most prominent bank control the supply chain. This supply chain runs from seed production to customer consumption.
At the time of the Uncle Sam acquisition, Cannabis made up 25% of sales for Delta 9. So, the more stores that are opened, the more Cannabis products Delta 9 will have in the stores.
Nevertheless, Delta 9 experienced a drop in share price. At one point, it hit 27 cents. However, this drop was a ripple effect of the general fluctuations in the Cannabis market in Canada. Thus, Delta 9 is expected to recover.
It was reported by an analyst at Research Capital Corp, Venkata Velagapudi, that Delta 9 was going to benefit a lot from the deal. It was going to improve their wholesale department and expand their business outside Manitoba province. Thus, the business’s wholesale sector will get better in the long term.
Venkata also added that Delta 9 should hit $100 million based on his estimates by 2022. More and more companies are getting into the cannabis business and cashing out.