Cannabis companies find in the way several obstacles that can change the revenue projections. KushCo Holdings Inc. has made an update regarding revenue expectations for this second quarter of 2020, and said that it expects to collect revenue of $30 million, which is a 14.28% decline if compared to the previous quarter’s results. So far, the company attributes this decrease in its revenue to slower than expected launch of hemp trading business, as well as a delay in introducing its products in Canada after the Cannabis 2.0 legislation was passed. Another factor for decreased sales was the unstable demand for vape hardware products.
The present situation is not stalling the company from future plans, and the CEO, Chairman and co-founder of KushCo, Nick Kovacevich, is confident that his company will present much better results than expected in the second half, despite those short-term factors that impacted the business negatively. KushCo team has been working on tightening the credit terms negotiated with its customers, even with all the challenges in the California market. Another business decision has been to step away from less financially stable customers as well as the smaller ones.
KushCo is one of the largest multi-state operators, and, in 2019 alone, its sales surged over 60%, when in 2017 sales increased by less than 20%. The company’s plans are to move full-scale and focus solely on larger customers in an effort to secure the business. KushCo has been taking advantage of the robust markets in Canada, Massachusetts, Michigan and Illinois for the biggest portion of its sales. KushCo hopes that at some point in the near future the demand for vaping products goes back to the normal trend as customer sentiment improves and more regulations are set in place so customers feel safe. Also, in case of emergency, KushCo has a revolving credit with Monroe Capital for up to $35 million, but funds are only available after meeting certain requirements.