Rubicon Organics Reports First Quarter 2022 Financial Results and Operational Update

First Quarter Financial Results

  • $5.2 million in net revenue, 25% increase over Q1 2021
  • 7.1% national market share of premium flower and pre-rolls[1]
  • #1 Premium flower and pre-roll brand in Canada with Simply Bare™ Organic[2]
  • #1 Topical brand in Canada with the licensed brand Wildflower™ topical sticks[3]
  • Granted IMC-G.A.P. Certification by the Control Union (“CU”) a milestone to export to Israel and EU-GMP facilities in Europe and Australia
  • Announces Julie Lassonde as the new Chair of the Board

Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) (“Rubicon Organics” or the “Company”), a licensed producer focused on cultivating and selling organic certified, premium cannabis, today reported its financial results for the first quarter ended March 31, 2022 (“Q1 2022”). All amounts are expressed in Canadian dollars.

“Rubicon Organics is at a turning point in 2022, with higher yields and increased quality coming from our Delta Facility, whilst remaining cost-conscious we are driving to being profitable in 2022. Furthermore, with our IMC-G.A.P certification in hand, I am excited to introduce our premium brands and products to international medical cannabis markets. I am also pleased to reiterate our guidance of achieving positive Adjusted EBITDA and operating cashflow in the second half of 2022,” said Jesse McConnell, Chief Executive Officer.

Q1 2022 Highlights:

  • $5.2 million in net revenue, 25% increase over Q1 2021
  • 7.1% national market share of premium flower and pre-rolls[1]
  • #1 Premium flower and pre-roll brand in Canada with Simply Bare™ Organic[2]
  • #1 Topical brand in Canada with the licensed brand Wildflower™ topical sticks[3]
  • The 1964 Supply Co™ launch showed significant gains with 141% net revenue growth for the three months ended March 31, 2022, as compared to the prior year
  • During January 2022 the Company launch its first Lebanese style hash into market

Q1 2022 Results of Operations


The Three Months Ended


March 31, 2022


March 31, 2021


Net revenue



Production costs



Inventory expensed to cost of sales



Inventory written off or provided for



Gross profit before fair value adjustments



Fair value adjustments to cannabis plants, inventory sold, and other charges



Gross profit (loss)



Loss from operations



Adjusted EBITDA[4]




Cash and cash equivalents



Working capital




Net revenue

For the three months ended March 31, 2022, net revenue increased by 25% or $1,037,651 compared to the prior year.

The Company launched several new strains, product formats and brands, more than doubling the number of SKUs it sold in the three months ended March 31, 2022 as compared to the prior year. Revenue growth compared to the first quarter of 2021 was a result of increased sales from 1964 Supply Co™ and the introduction of Homestead Cannabis Supply™ in the second half of 2021. The Company experienced year on year sales growth compared to the first quarter of 2021 across all markets except Quebec, which was relatively flat from the prior year. BC, Ontario, Alberta and Quebec continue to drive the majority of sales at 97% of total sales (March 31, 2021: 85%). The Company’s growth in concentrate sales triggered an increase in excise tax offsetting net revenue gains as compared to the prior year. Concentrates attract higher excise taxes as a percentage of revenue than flower products.

Production costs

For the three months ended March 31, 2022, production costs decreased by 9% or $237,107 compared to the prior year.

Under the Company’s accounting policy, production costs are expensed as incurred. Production costs consist of the direct and indirect costs incurred to grow cannabis plants to the point of harvest. They include labour related costs, cultivation materials and consumables, utilities, facility costs, certain overheads, and production related depreciation. This methodology means that unless product is produced and sold during the year, the production costs associated with inventory held at year end are expensed prior to revenue being derived.

As a result of cultivation process improvements and the Company-wide restructuring that occurred in the second quarter of 2021, the Company realized a decrease in production costs. Production costs are expected to be relatively consistent quarter over quarter now that the Delta Facility is operating at full capacity, with further improvements expected to occur upon completion of the BC Hydro power project. Due to seasonality, the Company expects to incur moderately more cost in the winter months when additional energy is consumed to heat and light the facility. While the Company continues to find cost saving opportunities these are being offset by higher natural gas prices and broad inflation across most inputs.

Inventory expensed to cost of sales

For the three months ended March 31, 2022, inventory expensed to cost of sales increased by 29% or $427,110 compared to the prior year.

After cannabis is harvested, the remaining costs incurred in drying, processing, and packaging are capitalized to inventory and expensed once the finished good is sold. Inventory expensed to cost of sales was 37% of net revenue for the three months ended March 31, 2022 (March 31, 2021: 36%), which was consistent with the prior year.

Process improvements and the Company-wide restructuring resulted in cost savings during 2021. When compared to net revenue, inventory expensed to cost of sales remained consistent due to a change in product mix with the launch of 1964 Supply Co™ and Homestead Cannabis Supply™ products, both of which return a lower gross margin per product when compared to Simply Bare™ Organic products.

Management expects an improvement to cost of sales as a percentage of net revenue as product sales increases and operational efficiencies are realized from process improvements and the completion of certain capital projects, although in a higher inflationary environment there remains risk that the identified cost savings are offset by inflation.

Loss from operations

For the three months ended March 31, 2022, loss from continuing operations decreased by 66% or $2,224,920 compared to the prior year. Growing sales and production efficiencies combined for an increase to gross profit ($1,336,324). A decrease in cash operating expenses ($324,369) coupled with an increase in the gain from fair value adjustments to cannabis plants, inventory sold, and inventory written off ($1,080,461) and offset by increases to non-cash items of stock based compensation and depreciation ($516,234) led to the overall improvement to loss from operations.

Company Outlook

In the fourth quarter of 2021, Rubicon Organics defined a three-pillar strategy for 2022 focused on yield and quality, improving product mix to optimize margin, and launching international products, each of which we expect will have a positive impact on our profitability and cashflow. This strategy remains in place and the Company is having positive trajectory on each of the pillars.

Our first pillar is to optimize production processes at the Delta Facility to increase yield and THC of our super-premium cannabis. We have completed facility upgrades, invested in process improvements, and continue to identify opportunities for cost efficiencies. The Company installed new climate control systems, most critical being the dehumidification units, and refined its cultivation system, which has allowed us to reach an annualized production rate of 9,000 kg’s as at the end of the first quarter 2022. In the first quarter of 2022 we have seen our average THC increase significantly, with certain strains as high as 29% THC. Maintaining high quality flower with greater THC content from each crop continues to be a priority and we anticipate our improved product offerings to enter the market in the second quarter.

Our Delta Facility is expected to also benefit from the upgrade to the BC Hydro grid resulting in further production cost savings in the second half of 2022.

The second pillar is to implement our commercial strategies within the Canadian domestic market to maximize the gross profit for each unit produced from our Delta Facility which, coupled with delivering increased quality of flower and higher THC, is expected to drive more volume into our Simply Bare™ Organic and 1964 Supply Co™ brands.

During the first quarter of 2022, the Company maintained significant market share in the premium and organic product categories with its Simply Bare™ Organic brand capturing 7.1%[5] of the premium flower and pre-roll market. We grew revenue 25% year over year compared to the same quarter in 2021. While January sales were weaker than in the fourth quarter of 2021 with the effects of ‘dry January’, thereafter the Company’s revenue returned to more normalized patterns in February and March. In the first quarter of 2022 we now have the full suite of Rubicon brands in market and invested behind them to ensure that we are able to launch innovation at different price segments to satisfy consumer preferences.

In line with our strategy, we have seen the sales of 1964 Supply Co™ increase by 141% as compared to the same three month period in 2021. 1964 Supply Co™ has made significant gains in the BC marketplace and we expect the brand to become a mainstream category leader.

The premium cannabis market is gaining momentum and outpacing the growth of the total market[6] and this is expected to benefit the premium product innovations we are bringing to the market. 2022 is expected to be the first full year with all five of Rubicon’s wholly owned and licensed brands in market with national distribution. Future line extension and innovation in flower, pre-roll and 2.0 products are expected to be launched under the existing brand portfolio.

Our third pillar is to open the routes to market for our products internationally by obtaining key certifications and agreements to launch into Israel and Europe, with our first exports expected to occur in the second half of 2022. The IMC-G.A.P. certification received May 2022 is one of the key milestones to delivering to certain international markets. The Company also expects to receive its EU-GMP certification in 2022 allowing for export of finished goods to the European market.

Rubicon believes that the combination of new brands in key Canadian markets and increased product offerings enable us to capitalize on our momentum and, coupled with a continued increase in production quality and yield, we expect strong topline and margin growth in 2022.

We continue to believe that the cannabis sector will have significant volatility in 2022 as there are ongoing changes in the retail stores environment, provincial mandates, and increased competition. With the COVID-19 wave in the first quarter we experienced staff shortages at our facility and lower than forecast demand in January and February which we believe is attributed to seasonality and changing COVID mandates for access to Quebec stores. In March we saw a return to our previously anticipated sales levels. Notwithstanding this volatility, with our current trajectory of increased supply we expect to able to sell everything we cultivate to either domestic or international market demand during 2022.

From a capital management perspective, Rubicon intends to extend its existing debt facility or find a new facility at similar rates to keep cash optionality in the business.

The Company performed a cost review in the first quarter of 2022 to drive the business towards profitability as quickly as possible and expects to be able to maintain a lower cost structure while still delivering on forecasted revenues.

The Company achieved positive operating cashflows for the first time in the fourth quarter of 2021. The Company’s current expectation is to be operating cashflow positive and Adjusted EBITDA[7] profitable in 2022. We believe that despite any market volatility 2022 our focus on our three pillars coupled with our brand portfolio expansion achieved in 2021 will position Rubicon to continue to deliver on its commitments and win in the premium market.


Appointment of New Chair of the Board of Directors

Effective May 20, 2022, the Company has accepted the resignation of Bryan Disher as Chair of the Board of Directors (the “Chair”) and has appointed Julie Lassonde as the new Chair, until the close of the Company’s next Annual General Meeting. Mr. Disher will continue in his role as Director and Chair of the Company’s Audit Committee. The Company would like to thank Mr. Disher for his significant contributions to the Company during his time as Chair.


Conference Call

The Company will be hosting a conference call to discuss the Q1 2022 results on May 24, 2022. Conference call details are as follows:

Time: 7:00 AM PT / 10:00 AM ET
Conference ID: 39266654
Local dial-in: +1 (416) 764-8658
International dial-in: +1 (888) 886-7786
Webcast: https://app.webinar.net/7OWrkR0VpxN



Rubicon Organics Inc. is the global brand leader in premium organic cannabis products. The Company is vertically integrated through its wholly owned subsidiary Rubicon Holdings Corp, a licensed producer. Rubicon Organics is focused on achieving industry leading profitability through a focus on differentiated product innovation and brand portfolio management, including its flagship super-premium umbrella brand Simply Bare™ Organic, its premium flower and hash brand 1964 Supply Co.™, its premium concentrate brand LAB THEORY™, and its mainstream brand Homestead Cannabis Supply™. The Company ensures the quality of its supply chain by cultivating, processing, branding and  selling organic certified, sustainably produced, super-premium cannabis products from its state-of-the-art glass roofed facility located in Delta, BC, Canada.



 Margaret Brodie

Chief Financial Officer

Phone: +1 (437) 929-1964

Email: [email protected]


Cautionary Statement Regarding Forward Looking Information

 This press release contains forward-looking information within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs of future performance, statements regarding Rubicon Organics’ goal of achieving industry leading profitability are “forward-looking statements”. Forward-looking information can be identified by the use of words such as “will” or variations of such word or statements that certain actions, events or results “will” be taken, occur or be achieved. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward looking statements. The forward-looking information in this press release is based upon certain assumptions that management considers reasonable in the circumstances, including the impact on revenue of new products and brands entering the market, and the timing of achieve Adjusted EBITDA profitability and cash flow positive. Risks and uncertainties associated with the forward looking information in this press release include, among others, dependence on obtaining and maintaining regulatory approvals, including acquiring and renewing federal, provincial, local or other licenses and any inability to obtain all necessary governmental approvals licenses and permits for construction at its facilities in a timely manner; regulatory or political change such as changes in applicable laws and regulations, including bureaucratic delays or inefficiencies or any other reasons; any other factors or developments which may hinder market growth; Rubicon Organics’ limited operating history and lack of historical profits; reliance on management; and the effect of capital market conditions and other factors on capital availability; competition, including from more established or better financed competitors; and the need to secure and maintain corporate alliances and partnerships, including with customers and suppliers; and the effects of the COVID-19 pandemic. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. Although Rubicon Organics has attempted to identify important risk factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other risk factors that cause actions, events or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. Rubicon Organics assumes no obligation to update any forward-looking statement, even if new information becomes available as a result of future events, new information or for any other reason except as required by law.


Non-GAAP Financial Measures

This press release contains certain financial performance measures that are not recognized or defined under IRFS (“Non-GAAP Measures”) including, but not limited to, “Adjusted EBITDA”. As a result, this data may not be comparable to data presented by other companies. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. For more information, please refer to the “Selected Financial Information” section in the MD&A for the three months ended March 31, 2022, which is available on SEDAR at www.sedar.com.

Adjusted EBITDA is calculated as earnings (losses) from operations before interest, tax, depreciation and amortization, share-based compensation expense, and fair value changes. The following table presents a reconciliation of Adjusted EBITDA to the most comparable IFRS financial measure for the three months ended March 31, 2022 and March 31, 2021.


Three months ended

March 31, 2022 March 31, 2021


Loss from operations




IFRS fair value accounting related to cannabis plants and inventory






Interest revenue



Depreciation and amortization



Share-based compensation expense



Adjusted EBITDA




[1] Hifyre, Market share in Canada represents the premium flower and pre-roll category sales for the 12-months ending March 31, 2022.

[2] Hifyre, Q1 2022 market share rankings calculated from the April 1, 2021 to March 31, 2022 period sales by brand.

[3] Hifyre, Market share in Canada represents the topical category sales for the 6-months ending March 31, 2022.

[4] Adjusted EBITDA is a non-GAAP measure. Refer to “Non-GAAP Financial Measures” for more information, including a definition and reconciliation of Adjusted EBITDA.

[5] Hifyre data for premium flower & pre-rolled products covering the period of April 1, 2021 through March 31, 2022.

[6] Hifyre data for flower and pre-roll products covering the period of January 2022 through March 2021.

[7] Adjusted EBITDA is a non-GAAP measure that is calculated as earnings (losses) from operations before interest, tax, depreciation and amortization, share-based compensation expense, and fair value changes. See Selected Annual Information for details on the Adjusted EBITDA calculation.

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