Shares of The Second Cup Ltd. (TSX:SCU) were up 30.91% in early afternoon trading on April 12 after the company announced that it had signed an agreement with National Access Cannabis Corp. (CSE:NAC) to develop and operate recreational cannabis stores. The spike demonstrates that investor enthusiasm remains for the cannabis market in spite of severe turbulence in recent weeks. National Access Cannabis stock also rose 12% in early afternoon trading.
The Second Cup released its 2017 fourth quarter and full-year results on February 26. Adjusted EBITDA soared over 350% to $2.72 million for the full-year and adjusted net income stood at $110,000 compared to a $975,000 loss in the prior year. Second Cup reported positive responses to its new offering of Pinkberry premium frozen yogurt which is now offered in over 30 stores across Canada, and it intends to expand this offering in the spring and summer.
Second Cup will be required to obtain a license from provincial regulators before it can roll out any stores with the offering. Some of the largest markets, including Ontario and Quebec, will offer cannabis solely through government-run stores. However, central and Western provinces such as Manitoba, Alberta, and British Columbia will allow private sales of recreational cannabis.
The rollout of recreational cannabis is fast-approaching – expected in the late summer or early fall. Assuming Second Cup obtains its license it will likely see rollouts in central and Western province. Whether its entrance into the cannabis market will shore up slumping sales is yet to be determined.
