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Safe Harbor delivers solid income despite slight revenue dip

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SHF Holdings Inc., which does business as Safe Harbor Financial (NASDAQ: SHFS) announced its financial results for the first quarter ending March 31. Safe Harbor reported that its total revenue decreased 3% to $4.1 million versus $4.2 million in the prior-year period. The company attributed the decline to fewer accounts and lower balances on deposits.

Safe Harbor also reported net income in the first quarter of approximately $2 million, compared to a net loss of $1.4 million a year ago. The company noted that the positive net income was due to lower expenses across the company. Overall, operating expenses in the period dropped by 35.8% to $3.7 million, compared to $5.8 million in the prior-year period.

At the end of the first quarter, the company had cash and cash equivalents of $5.6 million versus $4.9 million at the end of 2023.

“We continued to expand the breadth of our service offering in the first quarter, advancing several strategic initiatives and establishing a more diversified income base,” CEO Sundie Seefried said. “We have been very successful with this effort, specifically within our lending program, nearly tripling our loan book year-over-year and driving a 251% increase in our loan income to $1.64 million in the first quarter of 2024 compared to $466,293 in the comparable period of 2023.”

Cutting costs

The company managed to cut expenses in several areas, including lower investment hosting fees, decreased amortization and depreciation expenses, and reduced business insurance costs. Additionally, there costs related to compensation, employee benefits, marketing expenses, and other insurance also decreased.

Total liabilities fell from $33 million at the end of 2023 to $30 million at the end of the first quarter.

“With the increasing likelihood that cannabis will be reclassified from a Schedule I drug to a Schedule III drug, we believe there will be a material increase of capital from these businesses moved into financial institutions, thereby creating stronger demand for our services,” Seefried said.

Not out of the woods

While Safe Harbor told investors it was able to record some net income in the quarter, the four preceding quarters experienced negative operating income and negative net working capital. The company acknowledged the need to closely evaluate the financial performance in upcoming quarters to mitigate any going concern risks. The company is filing as a going concern.

If it isn’t able to sustain its present level of operations, it may be forced to make more reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned expansion programs.

The company noted that in April it was told by the NASDAQ that its stock needed to regain value over $1. The stock was lately selling at 82 cents.



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Appeals court ruling deals blow to Cannabis Commission – Cannabis Business Executive

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Virginia lawmakers renew push for legal cannabis marketplace – Cannabis Business Executive

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Massachusetts regulators order single-lab testing to combat cannabis lab shopping

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Massachusetts regulators will require cannabis businesses to use a single laboratory for all compliance testing in an effort to prevent companies from shopping around for favorable test results.

The state’s Cannabis Control Commission voted 3-0 to require licensed businesses submit testing samples to one independent laboratory starting April 1, 2025, according to an administrative order advanced Thursday. The new rule is meant to close loopholes that some say have allowed companies to shop around for labs to juice their numbers for market share.

“This administrative order continues our mission of being a strong regulator,” Acting Executive Director Debbie Hilton-Creek said in a statement.

Under current rules, companies can split testing among multiple labs. The practice has led some facilities to report suspiciously high THC levels or overlook contamination to attract business.

The commission’s enforcement team said the changes would reduce risks of noncompliant products reaching consumers and improve audit capabilities. The move follows a November listening session in which testing concerns were raised, according to the announcement.

If an original testing lab needs to subcontract work, they must first obtain commission approval and demonstrate they are “incapable of performing certain required tests due to a hardship.” Labs also can only subcontract with one other facility at a time.

“The commission shall only approve subcontracting agreements when the Originating Independent Testing Laboratory is incapable of performing certain required tests due to a hardship relative to its facilities, instrumentation, personnel, or required consumable materials or in the event of an actual or potential conflict of interest,” according to the order.

Results must be uploaded to the state’s tracking system within 72 hours, with all certificates of analysis containing the complete testing results, including any subcontracted work, it said.

The commission will also begin publishing THC test results on its public data platform and establishing regular meetings with licensed laboratories to improve oversight.

The commission thus far has struggled to implement effective testing oversight. Earlier this year, the agency contracted with a private lab for a “secret shopper” program to verify retail products’ test results, Green Market Report previously reported. Unlike other major cannabis markets such as California and Colorado, Massachusetts lacks a state reference lab to independently verify commercial lab results.

Analysis of testing data by MCR Labs found that across multiple states, laboratories reporting higher THC concentrations tend to increase their market share while those reporting average failure rates lose business, according to Chemical & Engineering News.



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