Decibel Continues Growth in Key Products, Markets

The story of the cannabis industry has finally boiled down to its essence after years of hype- and story-driven investment. The fundamental question is now, as it should be: Who can sell their stuff and make money doing it? It is time for companies to show their hands, and the market decides who is bluffing.

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) is certainly not a huge player or a household name in the industry, but maybe it should be. Decibel is achieving a sizable share of sales across key Canadian markets with its range of premium products. The company is growing quickly, financed to continue expansion, and has reported positive adjusted EBITDA over the two most recent quarters as well as for the full fiscal year 2020. Let’s take a peek at Decibel’s situation.

Concentrates and Vapes Fuel Success

Decibel recently updated the market on its progress, and the news is uniformly positive. In late 2020, the company introduced 22 vape and concentrate SKUs to the recreational markets in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. In 2021 so far, Decibel added another 7 SKUs, with plans to launch at least another 23 products by the end of the year.

The response from consumers has been solid. Over Q1, the company’s Blendcraft by Qwest concentrate line was the top brand in terms of sales, achieving a 21.9% market share across BC, Alberta, Saskatchewan, and Ontario. In the last month of the period, March, that number bumped up to 22.5%.

Click here to receive an investor deck and corporate updates

Decibel’s General Admission line of vapes was rated third in sales in those same provinces for the quarter, hitting a 10% market share for the period and 10.8% in March. The company continues to introduce differentiated products, looking to build upon the initial success of its offerings by giving consumers new and unique choices.

Decibel’s more established lines of premium flower products continue to enjoy solid market share while commanding high prices. The Qwest brand achieved 8.4% share of sales across the same four provinces for the quarter, ranking as the #1 premium flower brand.

Small Company, Big Results

These levels of market penetration are not easy to achieve, especially for a smaller craft producer like Decibel. The company’s commitment to high quality is evidenced by its small batch, hang dried, hand trimmed approach to growing cannabis and seems to be bearing fruit in the marketplace. Its products regularly sell out due to supply constraints, and Decibel is hard at work fixing that relatively desirable problem.

Qwest flower is grown on its 100-acre estate in the Creston Valley, BC, utilizing the property’s fresh mountain water to produce consistently premium cannabis with unique genetic profiles. In an effort to boost production while maintaining quality, the company invested in some tweaks to the system. The moves paid off with the harvest from the estate increasing from 300kg in Q4 2020 to 483kg in Q1 2021, representing a 61% increase.

On top of that, the company’s newish Thunderchild Cultivation facility in Ontario is greatly expanding capacity. Thunderchild generated its first revenue in March, slightly ahead of schedule. Four harvests have been completed there, and 30% of the facility is planted. Increasing production levels will allow Decibel to meet existing demand, which often exceeds current supply. More importantly, it will also allow the company to greatly expand its already successful product offerings into existing and new markets.

Decibel recently reworked its credit facility to increase access to capital under favorable terms, boosting the amount it can borrow against government receivables from $1.5 million to $7.5 million at an interest rate of Prime + 1% (currently 3.45%). With the company’s working capital in place, the Decibel team can focus on executing its growth plans. Management has already demonstrated the ability to run a tight ship while expanding and achieving a high level of sales success, reporting $1.5 million of positive adjusted EBITDA for 2020. And the EBITDA trend is very positive, with Q4 2020 contributing $1.1 million to that yearly figure after the first reported positive EBITDA in Q3 2020. It looks like management has learned how to walk the tightrope required to smartly navigate through growing pains.

Click here to receive an investor deck and corporate updates

 What’s Next?

Look for continued market penetration and expansion over the coming quarters as new products are introduced, existing product lines (many of them launched in just the last few months) solidify their standing with consumers, and more capacity is brought online. In some ways, Decibel has been flying under the radar compared to some of the bigger players in the Canadian cannabis industry, but perhaps it shouldn’t be.

Disclaimer

The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.