Acreage Holdings, Inc.  (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) reported its financial results for the first quarter ending March 31, 2024. Acreage told investors that revenue fell 19% to $45.3 million in the first quarter down from last year’s $56 million for the same period. Revenue also dropped by 14% sequentially. The company attributed the decline to market price compression across various states but said the commencement of adult-use sales in Connecticut somewhat offset it.

The company’s net loss grew to $33 million over last year’s net loss of $16 million. Acreage ended the quarter with $7.3 million in cash and cash equivalents, which fell from $13.6 million at the end of 2023.

Acreage filed its earnings as a going concern. The company has an accumulated deficit of an eye-popping $775 million. It said it isn’t sure it can make it another 12 months and while it has put into place plans to consolidate operations and cut expenses, it might not be enough. The company was going to sell its Ohio operations but decided to keep it.

Debt default

In addition to that the company stated in its filing that during the quarter it was in default of the Prime rate credit facilities due January 2026. The company said it received a default letter dated April 20, 2024, containing allegations that there have been three events of default concerning the credit agreement. On May 10, 2024, the company said it received another default letter from the agents alleging an event of default for failure by the borrower to make a monthly interest payment due May 1, 2024. The default letters did not identify that there had been any exercise of rights or remedies available to the agents or lenders under Section 9.1 of the credit agreement.

“In the first quarter, we diligently focused on cash preservation, implementing cost-saving measures, and honing our business strategy,” said Dennis Curran, Chief Executive Officer of Acreage. “Our Northeastern footprint was a focal point with our entry into the New York adult-use wholesale market and the conversion of our third dispensary in Connecticut to a hybrid model serving both patients and consumers. Our priority remains on delivering high-quality and diversified offerings from our flagship brands to support anticipated growth in this region. With The Botanist and Superflux now available across our markets, we have harmonized and standardized our SKUs to ensure consistency in product lines and packaging for greater consumer access and brand alignment.”

In January, the company relocated a Connecticut dispensary to the town of Vernon, marking the first-ever cannabis dispensary in the borough of over 30,000 residents. In March, it launched adult-use sales at the Vernon dispensary. The Botanist Vernon is now operating as a hybrid dispensary, providing its full suite of products to both medical patients and adult-use customers.

Curran concluded, “Looking ahead, we anticipate a transformational period for Acreage as we gear up for our entry into the Canopy USA ecosystem, coupled with adult-use sales kicking off in Ohio. We are poised to seize significant growth opportunities by forging closer partnerships with industry leaders like Wana and Jetty, who are already in the process of integrating with Canopy USA. The imminent launch of adult-use sales in Ohio will mark a pivotal milestone for Acreage. With our enhanced cultivation and manufacturing operations and strong dispensary network, we stand uniquely positioned to cater to the Buckeye State’s burgeoning market. We eagerly anticipate extending our full range of The Botanist and Superflux products to Ohio consumers, affirming our commitment to delivering high-quality and diversified offerings.”