The past few weeks for shareholders of the Quebec-based Hydropothecary (HEXO.T) have been disastrous, while the inverse is true for those of us profiting on the sector’s downfall and cheering on offerings like Original Stash.
Hydropothecary’s management revised guidance for its projected fourth-quarter revenues–previously at $26 million but now estimated at $15.5 million–and withdrew outlook for the fiscal year 2020 altogether.
“While we are disappointed with these results, we are making significant changes to our sales and operations strategy to drive future results.”
–Hydropothecary
Sebastien St-Louis, CEO of Hydropothecary, attributed his company’s expectedly disappointing performance to slower-than-expected store rollouts, government red tape, macroeconomic headwinds and more.
On October 10, the date of the aforementioned statement’s publication, Hydropothecary’s stock dropped CAD$1.12, a far cry from its year-high of $11.29.
Now, the company has announced it will be catering to the unwashed masses of the lowest income brackets with its Original Stash product offering, essentially amounting to cannabis leavings for thrift-seeking cannabis consumers.
“Illegal cannabis websites are well built, allow consumers to purchase on-line and products are delivered to their doors. But we know that illegal cannabis products can — and often — contain heavy metals, pesticides and other contaminants, and that concerns me deeply.”
–Sebastien St-Louis
Heavens, it appears Monsieur St-Louis is angling for a board seat with the newly-founded humanitarian make-work project for overzealous socialites, the American Red Cross.
There was a time when Hydropothecary prided itself on premium products. The company was kosher certified by the Ottawa Vaad HaKashrut in 2017 and was hailed by The Deep Dive in 2018 as a “highly polished, professional organization that always seems to go the extra mile.”
How times have changed for $HEXO … from Premium Price Strategy to a Race to the Bottom. #PotStocks pic.twitter.com/0lr2fLZare
— Betting Bruiser (@BettingBruiser) October 16, 2019
It is worth noting that Hydropothecary has mounted a defence against claims the company is merely trawling for bottom-feeders as revenues continue to disappoint.
“Our aim with Original Stash is to disrupt the illicit market, educate consumers about the value of a regulated and tested product, and drive them to purchase their cannabis legally,” St-Louis said via press release.
HEXO’s chief executive added that Original Stash’s ability to meet black market prices was thanks to cheap hydroelectric power in their home province and reduced packaging costs.
But, as it has been so astutely pointed out, Original Stash is only available in one ounce formats, flying in the face of key statistics from cannabis users:
The average quantity purchased from legal suppliers was 8.3 grams. Respondents to StatsCannabis indicated they purchased an average of 4.7 grams when buying at a retail outlet and an average of 9.1 grams when purchasing via mail delivery. The average quantity purchased from illegal suppliers was 17.2 grams, more than double the amount of cannabis purchased through legal methods.
For those of our esteemed readership who promptly entered the workforce without completing their education, an ounce of cannabis is equal to 28 grams.
According to the data presented above, cannabis consumers rarely purchase such quantities at a time. In my youth I volunteered at a local medicinal cannabis dispensary for a time and cannot recall ever serving a patient with such volume.
Pride cometh before the fall, but let us hope Hydropothecary falleth a little further: my mistress’ Christmas wishlist is especially hefty this year.
–Mr. Millionaire