NEW YORK, Sept. 23, 2020 /PRNewswire/ -- When it comes to consumer habits, nothing is more prevalent or lucrative than online shopping and the cannabis industry is no different. Although the industry faced hardship in 2019, the global pandemic has caused significant consumer spending on cannabis products, with sales booming across Canada and some legal US states over the last few months. The crisis has also changed consumer spending habits to favor online shopping, creating new opportunities for cannabis companies with e-commerce capabilities like Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB), Canopy Growth Corp. (TSX:WEED) (NYSE:CGC), Aphria Inc. (TSX:APHA) (NASDAQ:APHA), Thoughtful Brands Inc (CSE:TBI) (OTCQB:PEMTF), and Namaste Technologies (TSX-V:N) (OTCQB:NXTTF).
With Canada's recreational weed sales set to double this year and grow by over 500% by 2025, companies with a competitive edge in the e-commerce space have a chance to capitalize on the growing market. Namaste Technologies is one cannabis company that has been focused on the online market since the early days. The company launched its online cannabis marketplace CannMart back in September 2018 and hasn't looked back since.
The Missing Link of the Cannabis Industry
While most major cannabis companies have some form of online storefront, Namaste Technologies has developed a cannabis marketplace that hosts a variety of cannabis brands and products that distribute to medical patients through its online portal and to recreational users through provincial government control boards and retailing bodies. In addition, the company has signed agreements with government bodies across Canada to bring on new brands to recreational users, creating the missing link between licensed producers, cannabis retailers, and consumers. Adding to this, Namaste Technologies has recently launched "VendorLink", a cannabis and cannabis accessory marketplace where vendors can offer their products directly to both medical and recreational consumers through CannMart.
Last month, Namaste Technologies expanded its product offerings by adding a selection of products from leading Canadian brand Indiva. The company now offers Indiva's CBD Softgels, Indica Capsules, along with its award-winning Bhang chocolates and Wana sour gummies on CannMart's B2C distribution channel for its medical customers. In Q2 2020, Bhang chocolates remained the top-selling chocolate in most major markets and accounted for $1.5 million of Indiva's $2.8 million in sales revenue for the quarter.
Namaste Technologies has also seen a positive uptick in its revenue the last two quarters. In Q1 2020, the company brought in C$5.3 million, marking its highest quarterly revenue in two years. Then in Q2, Namaste reported record revenue of C$6.9 million, a 73% increase over the same period last year and 31% more than Q1. One significant contribution to Namaste's growing revenue is the growth of its B2B distribution channels and its Cannabis 2.0 product launches.
Another company moving into the cannabis e-commerce space is Thoughtful Brands Inc (CSE:TBI) (OTCQB:PEMTF), a natural health products and e-commerce technology company. The company gained a slice of the market last week with the launch of Ecommerce Tech LLC, which will utilize a software platform that has facilitated over C$350 million in consumer transactions. Thoughtful Brands also recently expanded its portfolio of CBD and nutraceutical products through the acquisition of Golden Path LLC and Wild Mariposa.
Demand for Cannabis Continues to Grow
Although online cannabis sales were happening pre-pandemic, lockdowns and stay-at-home orders have sent more consumers online to purchase their pot and the trend is expected to continue. Several provinces have changed the laws surrounding cannabis e-commerce over the last few months to cater to the new norm, and many appear to be working to make that permanent.
As demand flourishes during the health crisis, long-suffering publicly-traded cannabis companies like Aphria Inc., Canopy Growth Corp., and Aurora Cannabis Inc are finally seeing positive sales growth.
In July 2020, Aphria Inc. (TSX:APHA) (NYSE:APHA) reported a 27% increase in its gross revenue from adult-use cannabis to C$56.7 million, marking its fifth consecutive quarter of growth. The company saw a net revenue of C$152.2 million in fiscal Q4, an 18% increase from the previous quarter. Aphria also ended the quarter with $497.2 million in cash and cash equivalents.
Cannabis industry giant Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) also increased its revenue by 22% in the last quarter and beat earning estimates. When the pandemic hit, the company made the decision to temporarily shutter its 23 storefronts in Canada and shift its focus from retail to e-commerce. Canopy also just expanded its online offerings with the launch of its new US e-commerce website ShopCanopy.com, which sells a variety of CBD products.
Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB) has also seen an increase in revenue, with net revenue increasing by 18% in fiscal Q3 to $78.4 million, although it's unclear how much is being generated through online sales. In July 2018, Aurora selected Shopify as its e-commerce platform for medical and recreational cannabis distribution globally.
Of course, what truly sets companies like Namaste Technologies apart from these other cannabis businesses is the fact that it isn't bogged down by operational costs or the price of cannabis. Essentially, Namaste's emerging marketplace is similar to services like Uber and Airbnb, which act as the middleman between consumers and the products and services they desire.
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