11:20:09 EDT Thu 03 Jul 2025
Enter Symbol
or Name
USA
CA



C21 Investments Inc
Symbol CXXI
Shares Issued 120,047,814
Close 2024-08-16 C$ 0.36
Market Cap C$ 43,217,213
Recent Sedar Documents

C21 Investments loses $1.41-million (U.S.) in fiscal Q1

2024-08-16 16:24 ET - News Release

Mr. Sonny Newman reports

C21 INVESTMENTS REPORTS FIRST QUARTER RESULTS

C21 Investments Inc. has filed its unaudited financial statements and management discussion and analysis (MD&A) for its first quarter ended June 30, 2024, on SEDAR+. The company's financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). All currency is reported in U.S. dollars. The company recently changed its fiscal reporting period to a March 31 year-end (see news release dated Aug. 1, 2024, for the audited two-month stub period) and does not have traditional sequential or year-over-year comparable reporting periods.

First quarter highlights (April 1, 2024, to June 30, 2024):

  • Revenue of $6.6-million, up 1 per cent from Q4; state of Nevada sales down 1 per cent over the comparative period;
  • Gross margin of 31 per cent, impacted by temporary internal inventory supply issues and resulting product mix with the launch of the South Reno dispensary (see management commentary herein and in MD&A);
  • Loss per share of one cent;
  • Cash flow from operations of $600,000; positive free cash flow of $400,000;
  • Acquisition of third dispensary closed in the quarter (see news release dated June 10, 2024); new dispensary rebranded and operational during final week of Q1;
  • Closed $4-million (Canadian) convertible debenture financing; principal financing for the acquisition of the new dispensary (see news release dated May 6, 2024).

Q1 management and operational commentary

"Our company reported a slight increase in revenue over Q4 (ended Jan. 31, 2024) despite sales in Nevada declining 1 per cent over the comparative period. We are pleased C21 continues to outperform the state of Nevada in terms of run rate and cash flow, which includes our flagship Sparks dispensary again generating more than twice the run rate of the average dispensary in the county," stated Sonny Newman, chief executive officer and president. "Our gross margin in the quarter was impacted by a variety of factors, including one-time internal inventory issues as we prepared for the launch of our new dispensary. We anticipate improved margins in the second half of the year. With the opening of our new dispensary in the last week of June, we are excited by the strong, positive customer reception and momentum that we have experienced since opening and expect continued traction moving forward."

Q1 revenue of $6.6-million was up 1 per cent compared with Q4 (ended Jan. 31, 2024) despite a 1-per-cent decline in Nevada sales over the comparative period. Retail revenues remained relatively stable, with continued robust retail transaction volume at C21's two legacy dispensaries offset by a decline in basket size as inflationary pressures continue to impact the industry with a trade-down effect in purchases for lower-priced products.

Q1 did not include material results from the new Silver State Relief dispensary, which opened June 26, 2024. It is important to note that there is no equivalent time period to this Q1 report in the company's historical results due to the previously reported change in fiscal year-end from Jan. 31 to March 31.

Gross margin of 31 per cent was down in Q1, resulting from several factors (see MD&A), including one-time internal inventory supply issues, delays in approvals for production upgrades and continued retail price discounting in the state.

SG&A (selling, general and administrative expenses) was impacted by non-capitalized start-up costs for the new dispensary as well as non-cash share-based compensation -- the first grant of employee options since 2020.

Cash flow from operations was $600,000 for Q1 -- slightly up from Q4. Including taxes payable for the period, operating cash flow and free cash flow remained positive for Q1.

C21 reported a net loss of $1.4-million in the first quarter, or a loss of one cent per share, due to aforementioned lower margins, increased SG&A from non-cash share-based compensation granted in Q1, as well as non-capitalized start-up costs for the new dispensary. The company generated $300,000 of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter.

Cash at the end of Q1 was relatively flat from the stub period at $3.1-million, due to $400,000 of positive free cash flow generated, offset by partial treasury payment for the dispensary acquisition. Total assets and liabilities increased by $3.1-million compared with the stub period due to the dispensary acquisition and convertible debenture financing associated with the acquisition.

As C21 operates in the cannabis industry, the company is subject to the limitations of Internal Revenue Code (IRC) Section 280E for U.S. income tax purposes. Under 280E, the company is only allowed to deduct expenses for tax purposes directly related to costs of goods sold. Given the recent announcement by the DEA (Drug Enforcement Administration) to reclassify cannabis as a Schedule III drug, C21 anticipates the elimination of the future applicability of IRC Section 280E on its business upon final rule. Many U.S. cannabis operators are currently challenging the historic applicability of 280E on state-legal operations. C21 is reviewing its tax stance regarding these matters.

About C21 Investments Inc.

C21 Investments is a vertically integrated cannabis company that cultivates, processes and distributes quality cannabis and hemp-derived consumer products in the United States. The company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing and distribution assets in strategic markets, leveraging industry-leading retail revenues with high-growth potential multimarket branded consumer packaged goods. The company owns Silver State Relief and Silver State Cultivation in Nevada, including legacy Oregon brands Phantom Farms, Hood Oil and Eco Firma Farms. These brands produce and distribute a broad range of THC (tetrahydrocannabinol) and CBD (cannabidiol) products from cannabis flowers, prerolls, cannabis oil, vaporizer cartridges and edibles. C21 Investments is based in Vancouver, Canada.

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