For Hexo (NASDAQ:) (TSX:) shareholders, the past 12 months have been an experience of ups and downs. And it could get even tighter if a deadline to hit a hitherto elusive milestone looms large at the end of this month.
That's when the cannabis grower must meet the terms of a debt financing deal he most recently entered into with a New Jersey-based hedge fund in May to raise US$360 million in secured convertible bonds. That deal was made so that Hexo could acquire Redecan, an Ontario-based cannabis growing and processing company.
The acquisition propelled Hexo to the top of the Canadian cannabis industry. But the financing agreement included the caveat that Hexo had to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Otherwise it will default the debt. Last week, Hexo officials outlined a plan it laid out last month to generate new cash flow and cut costs. According to a statement, the company plans to cut its sales and administrative costs by 30% by the end of fiscal year 2023 by canceling consulting contracts, migrating to a new IT platform and what it called "the organization on to make the right size". Hexo will also cut approximately $30 million by optimizing its assets, including consolidating some operations. Given the magnitude of the moves and the limited time between now and the end of the month, the clock is ticking at Hexo. Headquarters.
Hexo shares closed about 1.3% on the NASDAQ yesterday to close out the day at 53.4 cents. The stock had peaked in July 2021 when it traded just above $8. In the past year, the stock has lost more than 90% of its value. the US chooses to legalize marijuana even as the federal government drags its feet, just look at what the Arizona Department of Revenue reported last week. recreational marijuana on Jan. 22, it announced that total sales of legal weed reached just over $1.2 billion in the first 11 months of that year, exceeding expectations. The sales for December are not included in the calculations. That generated $190 million in tax revenue — a major source of income. And sales are expected to grow in the coming years. Meanwhile, in Massachusetts, December marked the first time the state generated more tax revenue from the sale of legalized marijuana than from alcohol.
According to a report from news site Marijuana Moment, the state collected $74.2 million in taxes in mid-2021, compared to just $51.3 million from alcohol taxes. state has netted about $100 million in taxes on marijuana sales in 2021. According to a report released earlier this year by the Marijuana Policy Project, just over $10 billion in cannabis tax revenue has been generated in the US since the marijuana was first legally sold in some states in 2014.
