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Wednesday, January 19, 2022

Green Growth Brands (OTC:GGBXF) Takes Financial Hit, Announces New Assets Sale

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GGBXF’s Stock is witnessing a heavy selling pressure after Green Growth Brands (CSE:GGB) (OTC:GGBXF) reached a definitive stalking-horse agreement for the sale of its CBD operations.

Major Setback

In a development that is expected to be closely followed by stakeholders in the CBD sector, Green Growth Brands announced that it is planning to sell a majority stake in its CBD business. The company announced that the stake is going to be sold to BRN Group. In this regard, it should also be pointed out that the Chief Executive of BRN had been in charge of Sean Combs’ in the past.

Green Growth Brands’ CBD arm is involved in the manufacturing of gummies, body lotions, face toners, and oral drops. The company products are available at leading retail outlets like Abercrombie & Fitch, American Eagle, and DSW outlets in the United States.

GGBXF’s stock tumbled by 33% to $0.22 in the morning session and made a new 52-week low of $0.18.

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However, the company did not reveal the financial terms of the deal as yet. Green Growth stated that it aims to hold an interest of no more than 20% in the company. The deal is expected to be completed after the 30 days go-shop period elapses. The money from the sale is going to be used by Green Growth to further expand its cannabis business interests in Florida, Nevada, and Massachusetts.

Job Cuts, Delays Earnings Call 

However, that is not all. On Monday, the company announced that it has had to resort to job cuts and then went on to reveal that it is also going to delay its earnings call for the second quarter by two days. Green Growth has expanded rapidly and currently operates as many as 200 kiosks and stores within stores. However, the expansion has come at a cost and according to an analyst report; the company only had enough cash to run its operations for a month at the end of the quarter that ended on September 30, 2019.

Moreover, Green Growth Brands posted its second-quarter results late Monday. The company reported a before-tax loss of $34.8 million. CBD accounted for $11 million of the $21.1 million in total revenue during the period.

Although it is true that many other cannabis companies are struggling with cash flow issues, Green Growth’s cash position is the worst in the industry among publicly traded companies.

GGBXF’s stock has tumbled about 60% so far this year. Sign-up for continuing coverage on shares of $GGBXF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $GGBXF, either long or short, and we have not been compensated for this article.

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