C21 Investments Inc - $CXXI.CN

A Cash-Flow Positive Cannabis Play Gaining Market Share in Nevada

Business Model:

C21 Investments Inc. is a vertically integrated cannabis company that cultivates, processes, and distributes cannabis and hemp-derived consumer products in the Nevada, United States. Their product range includes cannabis flowers, pre-rolls, oils, vaporizer cartridges, and edibles.

As of March 2025, C21 Investments operates in the state of Nevada. The company owns Silver State Relief and Silver State Cultivation in Nevada, including legacy Oregon brands Phantom Farms, Hood Oil, and Eco Firma Farms.

The Company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing, and distribution assets in strategic markets, leveraging industry leading retail revenues together with high-growth potential and multi-market branded consumer packaged goods (“CPG”). The Company currently holds licenses in Nevada spanning the entire cannabis supply chain. With the winding down and sale of its Oregon licenses and operations, the Company presents its Oregon operations as ‘held for sale’ on the Balance Sheet and as ‘discontinued operations’ in the Income Statement.

Retail Dispensaries/Cannabis Stores:

As of March 2025, C21 Investments Inc. operates three dispensaries, all located in Nevada:

1. Silver State Relief – Sparks: This dispensary is situated in Sparks, Nevada, and has been a cornerstone of C21's retail operations. It opened its doors in 2015, marking a significant milestone in Nevada's cannabis industry. Sparks, Nevada Dispensary – 8,000 sq. ft., serves a large customer base.

2. Silver State Relief – Fernley: Located in Fernley, Nevada, this dispensary complements the Sparks location in serving the northern Nevada market, opened on Jan 16, 2019. The Silver State Relief dispensary in Fernley, Nevada, spans 6,000 square feet

3. Silver State Relief – South Reno: In June 2024, C21 expanded its footprint by acquiring a 6,500-square-foot dispensary in South Reno, Nevada. This acquisition was part of the company's strategic plan to enhance revenue growth and improve profit margins (70% margins on house brands vs. 30% third-party).

These dispensaries collectively contribute to C21's robust retail presence in Nevada, serving a substantial customer base and offering a wide range of cannabis products. South Reno Dispensary (acquired June 7, 2024, opened June 26, 2024) – 6,500 sq. ft., high-traffic area. Expected to boost revenue and increase in-house product sales .

OPERAITONS:

Cultivation, Processing & Wholesale:

• The company grows and processes cannabis in Nevada under Silver State at a 104,000 sq. ft. facility, with 37,000 sq. ft (35% utilization). for growing and 1,200 sq. ft. for extracting oils.

• The company makes and sells branded cannabis products, including Hood Oil cartridges, Phantom Farms pre-rolls, and Silver State flower & concentrates.

  • Hood Oil Cartridges:

Hood Oil is renowned for its high-quality cannabis oil vaporizer cartridges. Introduced to the Nevada market in June 2019, these cartridges quickly gained popularity. Notably, at Silver State Relief dispensaries, Hood Oil units outsold all other cartridges combined, with 11 of the top 25 SKUs being Hood Oil products. This success underscores the brand's strong market presence and consumer preference.

• Phantom Farms Pre-Rolls:

Phantom Farms offers premium pre-rolled joints crafted from meticulously cultivated cannabis flower strains. Launched in Nevada in January 2021, these pre-rolls, along with new Phantom flower strains and CBD products, have been well-received by consumers. The introduction of these products has diversified C21's offerings and strengthened its position in the market

• Silver State Flower & Concentrates:

Under the Silver State brand, C21 produces a variety of cannabis flower strains and concentrates. These products are integral to the company's retail operations, with in-house brands like Silver State contributing significantly to dispensary sales. For instance, in the fiscal year ending January 31, 2024, these in-house brands accounted for 34% of sales in C21's dispensaries

• House brands accounted for 28% of 2024 dispensary sales.

· With the new third dispensary, the company will sell more of its own products in-house rather than wholesale. C21 offers a wide range of SKUs, including third-party products, while encouraging customers to purchase our in-house offerings.

• 700,000 transactions in three stores annually

• 700 SKU selection drives customer loyalty

Total Addressable Market (TAM) Size of Nevada:

The addressable market size for cannabis in Nevada has experienced fluctuations in recent years. In 2021, total legal cannabis sales peaked at over $1 billion. However, by 2024, sales had declined by more than 17%, amounting to approximately $861 million. This decline has been attributed, in part, to competition from the illicit market. Estimates suggest that approximately 21-30% of cannabis sales in Nevada occur through unlicensed transactions, posing challenges for the legal market. Despite these challenges, Nevada's cannabis market remains significant, bolstered by its robust tourism industry, which contributes to higher per capita sales compared to other states. In summary, while the legal cannabis market in Nevada was valued at approximately $861 million in 2024, the presence of a substantial illicit market suggests that the total addressable market could be considerably larger.

· Established market with stable pricing

· 117 active dispensaries

· Limited licensing framework restricts new competition

· Indoor cultivation required due to climate, ensuring higher-quality products

· Strong demand from both tourism and local consumers (Viva Las Vegas)

· Vertically integrated operations with surplus capacity

· Independent operators facing margin pressures

Competitors:

1. Planet 13 Holdings Inc.

Planet 13 Holdings, based in Nevada, is renowned for its expansive cannabis dispensary near the Las Vegas Strip, which, at 112,000 square feet, is the largest in the world. The company operates under brands such as Medizin, Trendi, Leaf & Vine, PURC, and Planet M, offering a diverse range of cannabis products. Beyond Nevada, Planet 13 has expanded into California, Florida, and Illinois.

2. Cresco Labs Inc.

Cresco Labs is a prominent multi-state cannabis operator with a presence in several states, including Nevada. The company is involved in cultivation, manufacturing, and retail operations, offering a wide array of cannabis products. Cresco has pursued strategic acquisitions to bolster its market position, such as the planned acquisition of Columbia Care for $2 billion, aiming to enhance its retail footprint.

Valuation & Financial Analysis:

Balance Sheet: