This week’s big headline came from a cannabis company Wall Street had written off for dead. It turns out that Hexo Corp. (NASDAQ:HEXO) is now generating positive cash flow.
It’s a breakthrough. While the absolute numbers are still on the small side — $202,000 in earnings before interest, taxes, depreciation and amortization (EBITDA) last quarter on $32 million in sales — Hexo has now proved that cannabis companies don’t need to be money pits.
You can make a business in this industry as well as chase capital to fund expansion plans that may never pay off. I hope every cannabis entrepreneur is watching.
And Hexo pulled this off in a very simple way. You know how I’ve been arguing for value-added cannabis consumer products for years now, only to be disappointed at just about every turn.
Hexo has launched a line of CBD-enhanced sodas in Colorado. Simple, elegant, effective.
That’s the Cannabis 2.0 I wanted. If only the big cultivators like Canopy Growth Corp. (NASDAQ:CGC) would get off the farm and start packaging similar enhanced products, the industry could really get moving to make shareholders happy.
I’ve got triple-digit-percentage cannabis fun in my IPO Edge portfolio. We’re holding on.