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StateHouse reports third quarter 2023 financial results

November 30, 2023  By Grow Opportunity Staff

(Globe Newswire) San Diego and Toronto — StateHouse Holdings Inc., a California-focused, vertically integrated cannabis company, today announced its financial results for the three-month and nine-month periods ended September 30, 2023, and provided additional business updates. The unaudited condensed interim consolidated financial statements for Q3 2023, as well as the corresponding management’s discussion and analysis are available for download from the company’s investor website,, and on the company’s SEDAR profile. Unless otherwise indicated, all dollar amounts in this press release are denominated in U.S. currency.

Q3 2023 financial highlights

— Q3 2023 net revenues were $25.5 million, compared with $30.8 million in Q3 2022. Retail revenues were $13.2 million, representing 51.8 per cent of total sales for Q3 2023, compared to $16.5 million or 53.6 per cent of total sales in Q3 2022.

— Manufacturing revenues were $11.7 million, representing 45.9 per cent of total sales for Q3 2023, compared to $13.2 million or 42.7 per cent of total sales in Q3 2022.


— Wholesale revenues were $0.6 million, representing 2.2 per cent of total sales for Q3 2023, compared to $1.2 million or 3.9 per cent of total sales in Q3 2022.

Management commentary

“Our premier products continue to captivate the market and are proving popular with discerning California customers. California is at the center of cannabis culture and our leadership position has empowered us with necessary insights and capabilities to create brands and products that resonate with consumers. Our STASH loyalty program is an important differentiator, and we were thrilled to celebrate over 292,363 enrolled members as of November 26, 2023. Approximately two thirds of our revenues are generated from STASH members. Establishing customer loyalty and garnering insights from our customers provides us with a strong foundation for the future. We are confident that firmly establishing ourselves in California will provide a competitive edge once we can introduce our west coast brands and products to new markets.” — ” Ed Schmults, CEO, StateHouse

“Demand remained strong throughout the quarter and our on-going focus on operating efficiencies has further enhanced our ability to keep up with demand. We’ve implemented new processes, including automated trimming and pre-roll production, as well as improvements to our lighting and air circulation in our greenhouses. With these enhancements, we have continued to improve our yields and the quality of our products. In addition, we are thrilled to be starting our new managed facility located in Humboldt County. Together with Pelorus, we are applying our cultivation expertise to bring this facility up to the quality standards expected from such a premier location. This new line of business is an exciting development for us as we are exploring multiple opportunities to further expand this service offering. Throughout the year we have strengthened our financial position and increased our capabilities to advance our leadership position. In 2024 we will continue to focus on success in California to prepare for the future, backed by our strong cultivation, popular brands, and high-quality retail footprint.”

Q3 2023 operational highlights

— Strengthened the company’s financial positioning with a capital infusion and revised debt obligations through an agreement with Pelorus Capital Group. Under the agreement the repayment date of the Series A Loan agreement has been extended to February 10, 2027, and including a incremental term loan of $7.5 million to bring the total principal amount of the Series A Loan to $15.0 million.

— Enhanced strategic capabilities through a new managed services arrangement with Pelorus where StateHouse will operate Pelorus’ cultivation facility located in Humboldt County. StateHouse is providing Pelorus with its cultivation and operational expertise as well as services including human resources, legal and compliance, post-harvest production and processing, contract manufacturing, distribution, and safety management.

— Bolstered senior management team with the appointment of Zed Schlott as Vice President of Retail. Zed is an experienced cannabis executive with over a decade of experience in retail operations, leadership and business analysis.

Subsequent highlights

— Entered into a sales agency agreement with Stinson Brands, Inc., under which StateHouse will sell Stinson Brands products through its sales team and in its Harborside and Urbn Leaf dispensaries across California. These brands include Kikoko, a cannabis botanical wellness company focused on offering women plant-based alternatives.

— Appointed Davidson & Company LLP, CPA as the company’s auditor.

Operations update

Total revenue in Q3 2023 was $25.5 million, representing sequential growth of $0.2 million despite the ongoing competition, price compression, a reduction in retail foot traffic and the closure of the company’s Seaside store. With better utilization of raw material through vertical integration, the company has continued to generate strong gross profit before biological asset adjustments with a gross profit of $11.4 million or 44.9 per cent of total revenue.

Additionally, the company remains committed to reducing operating expenses, implementing additional changes during the quarter that have reduced annualized operating expenses from the prior quarter by approximately $2.3 million. These reductions have been achieved through a comprehensive evaluation of company operations, including process improvements, outsourcing of distribution, upgraded and consolidated technology, and the elimination of redundant operations and service providers.

Management continues to explore the potential sale of various non-core assets, which is expected to generate approximately $7-10 million of non-dilutive capital to strengthen its balance sheet and fund its growth objectives.

The company has continued to execute on improvements at its cultivation operations, with significant enhancements being made at its Salinas facility. The company expects flower yields and efficiency to improve through 2024 due to infrastructure investments that will increase CO2 distribution, which are expected to increase cannabis yields and potency.

In its retail operations, the company has focused on increasing profitability despite competitive pressures related to sales discounting. Gross margins have held steady as the company achieved its goal of in-house branded products representing over 50 per cent of total retail sales. In connection with this effort, subsequent to quarter-end, StateHouse has sold its Grossmont store and property.

The company continues to add new automation to its manufacturing operation as it pushes to lower costs while enhancing the quality of its products. New product innovation, new flavors and new product sizes have hit the market in Q3 and will continue to flow as the company revitalizes its product line to enhance competitiveness. The company has a goal for new product sales to reach 20 per cent of total sales by the end of Q4 2023.

The company has completed a number of integration milestones to establish itself as a leading California cannabis company. StateHouse is now well positioned as a focused, integrated CPG business with proprietary production, processing, brands, and retail stores. This strong platform should provide the foundation for growth, as well as improvements in profitability.

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