Golden Leaf Holdings Looks Forward To Cannabis Referendum In Oregon

OREGON: Golden Leaf Holdings has released an update on GLH’s operating plan regarding the start of the recreational market in Oregon and the local Marion County referendum coming up for vote on November 8, 2016.  On this day, voters in Marion County will decide whether or not recreational sales and production will be allowed.

While some counties have chosen to opt-out of allowing licensed marijuana business to participate in the recreational market, Oregonians have embraced the industry overall as shown by increased sales and a demand for high-quality branded products. It’s been over a year since recreational or “Adult Use” cannabis became legal in Oregon and sales are generating millions in tax revenue for the state.

Don Robinson, Chief Executive Officer of GLH commented, “The topic of Marion County has been discussed since the implementation of the Marion County Ordinance last year and we have taken necessary steps to minimize any impact that a moratorium would have on our business. We have secured another property in Multnomah County and we are well positioned in the Adult Use market regardless of the outcome in Marion County.”

As previously communicated, Golden Leaf Holdings has a facility in Marion County at its Aurora Campus that has been under a county wide ordinance allowing existing medical marijuana businesses to operate, but prohibiting the establishment of recreational or “Adult Use” businesses. GLH has been operating under its existing medical processor registration.  Over the last nine months the Company has developed a strategic operating plan flexible enough to accommodate the eventuality of a negative or positive outcome of the Marion County referendum, including the leasing of another Portland based property in Multnomah County for recreational production, and is positioned to do well in either scenario. The cost of commissioning the Portland location has already been budgeted and accounted for in the Company’s financials. Regardless of the outcome of the vote, the Company believes its business prospects will be better because of the climate of certainty it will have with which to make decisions. This regulatory uncertainty led to inefficiencies as GLH has had to be prepared to deal with an outcome either way.

If the vote comes out in favor of the “opt out”, GLH will focus its operations at its leased facility in Portland and expand the operations there.  In this scenario, GLH anticipates that it would sell the Marion County property and remove $3 million worth of debt off of its books. As an alternative, or during the period while the property is up for sale, the Company believes it could lease out a large portion of the property actually making it revenue positive. It has received many leasing inquiries from interested parties involved with traditional agriculture.

If the vote goes positively and recreational businesses are allowed in Marion Country, the ordinance will not be changed until around January 2nd 2017. Given the standard timelines associated with receiving a recreational marijuana license from the Oregon Liquor Control Commission, GLH would not anticipate the license to be in place prior to Q2 2017. As such, in order to sell products into the recreational market, the Company expects and already has plans ready to move all production to the Multnomah Country location for a period of time until the Aurora location would receive its recreational license. The Aurora location could be used for limited medical marijuana production during the remainder of 2016 and early 2017.

Golden Leaf Holdings Ltd Announces Resignation of Chief Financial Officer

CANADA: Golden Leaf Holdings Ltd., a leading cannabis oil solutions company built around recognized brands, today announced that the Company’s Chief Financial Officer, Brian Gentry, for personal reasons is resigning.

For the indefinite future, Mr. Gentry will continue to serve GLH in a financial consulting role to ensure a smooth transition. The Company has commenced a search for a new Chief Financial Officer.

Don Robinson, GLH’s Chief Executive Officer, said, “We appreciate Brian’s contributions to GLH over the past year in helping us build our business. We wish him well in the future as he pursues other opportunities.”

Golden Leaf Holdings Announces Q2 2016 and June 2016 Preliminary Results For Oregon And Washington State Brands

OREGON: Golden Leaf Holdings Ltd. (“GLH” or the “Company”) (CSE: GLH), a leading cannabis oil solutions company built around recognized brands, today announced preliminary revenue results for Q2 2016 and June 2016 for the respective brands of the company in Oregon and strategic partner BMF Washington.

GLH Oregon Revenue Overview

Preliminary results show that GLH generated US$3,011,000 in estimated and unaudited revenue for Q2 2016 as compared to unaudited revenue of US$2,476,688 for Q1 2016, representing a quarter over quarter increase of 21.5%.

The Company posted preliminary results for June 2016 showing UD$923,000 in estimated and unaudited revenue as compared to US$1,067,000 (updated and revised from previously published number) in May 2016, representing a month over month decrease of 13.5%. GLH sold all of the products that it produced in the month of June.

GLH experienced lower than anticipated revenue in June 2016 due to a variety of unexpected challenges. The Company is developing plans to address these variables as shown below:

Issue Proactive Response
Production obstacles, including cash constraints that impacted trim and flower purchases, trim quality issues and product testing delays from 3rd party vendors made it more challenging to source material inputs and produce product in a timely manner. GLH is leveraging cash from current convertible debenture funding to fulfill raw material requirements. The Company has developed a strategic trim supply agreement program focused on contracting with selected farmers to obtain low cost supply of high quality flower and trim with specific strain and genetic characteristics. GLH purchased new testing equipment to ensure the quality of trim and efficiency of testing timelines. The Company is building relationships with testing vendors to effectively manage testing bottlenecks.
The Oregon cannabis market saw slower than expected recreational consumer adoption of oils and extracts. The concept of using a vape pen for delivery and usage of marijuana is still relatively new for the average recreational user. The Company is working with dispensaries to provide merchandising tools that educate the consumer on the benefits of cannabis oil and new delivery systems.
The retail buying process at medical marijuana dispensaries, including effective purchasing and supply chain management is still evolving. Not all dispensaries stocked the appropriate inventory to meet new recreational consumer demand. Dispensaries are becoming more familiar with customers buying behavior, but room for improvement exists with raising the level of sophistication as it relates to inventory management and regular purchasing patterns. GLH is working closely with dispensary customers to help manage stock levels and ordering cycles.

Don Robinson, Chief Executive Officer of GLH, commented, “While June 2016 Oregon sales results were lower than expected, we were encouraged by the strong sell through of all available inventory produced. We were also pleased with the positive consumer response to the relaunch of the Golden brand and the new product launch of Private Stash. Our sales and marketing team worked with dispensaries across the state to not only introduce new products but new merchandising tools that elevated the consumers’ shopping experience and increased brand awareness.”

BMF Washington Revenue Overview

Preliminary results show that BMF generated US$1,370,445 in estimated and unaudited revenue for Q2 2016 as compared to unaudited revenue of US$904,359 for Q1 2016, representing a quarter over quarter increase of 51.5%BMF’s June 2016 unaudited and estimated revenue in Washington state was US$537,880, a month over month increase of 13% from May 2016 of US$475,457.