Nova Cannabis Inc., a retail chain with 92 locations in three provinces, says it’s beginning to see consistent green on its spreadsheet through market stabilization, data licensing agreements, and a private label partnership with a cannabis producer.
Nova, which has locations in Alberta, Ontario, and Saskatchewan, primarily under its Value Buds and Firesale Cannabis banners, reported net earnings of $2.1 million for Q3 2023, compared to a loss of $1.5 million for the same period in 2022.
Nova estimates its market share was approximately 19.1% in Alberta for the third quarter of 2023. Stabilization, specifically in the Alberta retail market, helped the company report record gross margins and profits, with 60 Value Buds locations listed by the Alberta cannabis regulator.
In Ontario, a market with nearly 2,000 retail stores, it estimates it has about 3.5% of the market share, with about 35 locations either approved or in the approval process.
The company reported a record gross margin of $17.0 million (25.1% of revenue), a 52.8% increase from $11.1 million for the third quarter of 2022 (18.9% of revenue), and a 16% increase from the previous quarter from $14.6 million (22.8% of revenue).
Nova’s “data licensing program” continues to grow exponentially, with $4 million in revenue for the third quarter of 2023, compared to $1.4 million in the third quarter of 2022 and $2.7 million for the second quarter of 2023. Previously, the company expected its data licensing revenue to increase its gross margin by approximately two percentage points each quarter.
In late 2022, Nova and SNDL had a tentative agreement that would have seen SNDL hand over control of 26 cannabis stores it owned under the Spiritleaf and Superette banners located in Ontario and Alberta. SNDL would also get exclusive access to Nova’s intellectual property, such as sales data, from its Value Buds retail brand.
The two companies have been repeatedly extending the closing of that partnership due to what they say is a review by one provincial regulator. The most recent extension is to November 30, 2023.
SNDL became Nova’s majority shareholder when it acquired Alcanna in 2022, Nova’s largest shareholder at the time. Similarly, High Tide, another sizeable retail cannabis business in Canada with 156 Canna Cabana locations across the country, reported sales from its own “Cabanalytics business data and insights platform” increased to $6.5 million in the third fiscal quarter of 2023 from $5.5 million during the same period in 2022.