This important cannabis market could turn a new page

This important cannabis market could turn a new page

You’re reading a copy of this week’s edition of New Cannabis Ventures’ weekly newsletter, which we’ve been publishing since October 2015. The newsletter includes unique information to help our readers stay ahead of the game as well as links to the most important events of the week. new.

Friends,

Florida, the third most populous state with 22 million people, has a mature medical cannabis program dominated by publicly traded MSOs. The program improved after initially limiting its patients to medical cannabis derivatives exclusively by adding flowers and then edibles. Florida releases data weekly, but it’s not tied to dollar volume at all. The most recent report from the Office of Medical Marijuana Use is a good example of the type of information transmitted – how many patients and how much unit volume for each type-approved company:

Top Cannabis Companies in Florida

The top 4 companies, Trulieve, Verano Holdings, Curaleaf and Ayr Wellness, own over 59% of licensed dispensaries. In the week ending Sept. 15, they produced 74% of formulated products in Florida and nearly 76% of flowers sold in the state.

An unusual program

The Florida program is unusual in that the market is almost entirely vertically integrated, meaning that almost all customer sales are generated by the dispensary owner. There is very little wholesale activity. Therefore, margins in the state tend to be higher than in other states. For example, the forecast adjusted EBITDA margins for 2023 at Trulieve and Verano are 34.9% and 36.6%, respectively. That’s considerably higher than its peers, which are 16% (Planet 13 Holdings) to 32.1% (Green Thumb Industries). Although we do not strongly anticipate the pressure on margins in Florida that we have seen in other states, it would decrease sharply if the state became significantly less vertically integrated. The Florida Supreme Court in May 2021 upheld this aspect of their program.

Florida Cannabis Facts

The state releases unit volumes weekly, but it does not share historical growth rates. Florida revealed it now has 751,311 qualified patients, or 3.4% of the state’s population, a healthy percentage. This week, the growth compared to a year ago was 22.0%, a record. At the end of 2021, the annual growth rate was 41.9%. By looking at the data from BDSA Analytics, one can get a better idea of ​​the dollar volume. In July, sales of $193.8 million increased by 27.2%. This was a little higher than the 24-25% annual growth rate in the number of patients during the month.

Over the past year, with the number of patients up 22.0% on 09/15, the unit volume of MMJ products has increased by 23.6%. Flower sales only increased by 11.7%. With patiently strong but slowing growth and companies improving their production capacities, we believe the market could become more competitive even without going wholesale.

Adult use could happen

We don’t foresee big problems in Florida, and we also note that the state could move towards legal adult use and we think that would be good for licensees. State residents could vote on adult use in 2024 if activists manage to collect 900,000 valid signatures from registered voters.


As one of nine publicly traded U.S. cannabis companies generating more than $100 million in quarterly revenue, Ayr Wellness is poised to benefit from new growth in states moving towards adult use such as the New Jersey and Massachusetts. The company’s shares have fallen significantly since the start of the year and its August second-quarter results are in line with expectations. Founder and CEO Jonathan Sandelman said, “With our core operating footprint in place, the vast majority of our capital spending behind us, and a strong cash position of $117 million on our balance sheet, we believe we are well placed to face this economic situation. environment and come out stronger on the other side.

Get up to speed by visiting the Ayr Wellness Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Business button to keep up to date with its progress.


New Cannabis Ventures publishes selected articles as well as exclusive news. Here are some of the most interesting business content from this week:

Exclusives

Greenlight, a multi-state private operator, has 23 operational dispensaries and 15 more under construction. The company, which has greatly expanded its footprint by winning licenses, is focusing on Midwestern states that competitors have typically overlooked. However, society sees opportunity as these states prepare to transition to adult use. In an exclusive interview, CEO John Mueller, a serial entrepreneur, talks about the company’s market presence, upcoming ballot initiatives and company growth plans.

Sales data

Michigan cannabis sales fell sequentially in August. Medical sales fell 53.9% from a year ago to $18.5 million, down 12.4% sequentially. Adult sales increased 50.9% year over year to $189.4 million, and increased 0.3% sequentially. Sales are up 26.1% so far this year to $1.45 billion.

Earnings

Fire & Flower Q2 revenue fell 6% to C$40.7 million from C$43.3 million in the same period a year earlier. The company reported higher revenue with fewer retail stores, but also a sharp drop in digital revenue, which weighed on the company’s second-quarter results. Newly installed CEO Stephane Trudel was only in the role for one month in the reported quarter and said the company is “focused on transforming our business and on strategic opportunities with the goal of generating EBITDA.” adjusted and positive free cash flow. ”

High Tide said third-quarter revenue nearly doubled to $95.4 million from $48.1 million in the same quarter last year. Sequentially, revenue increased 18%. The company noted that its results came despite a global slowdown in e-commerce sales as pandemic-related restrictions were lifted. “I’ve always strived to under-promise and over-deliver. It’s a value I constantly instill in our team. We set goals and are held accountable as a team if we don’t achieve them. I am pleased to report that, based on our latest financial results, we have consistently exceeded our objectives as communicated to the market,” said Raj Grover, President and Chief Executive Officer.


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Sincerely,

Alain and Joel

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Alan Brochstein, CFA

Based in Houston, Alan draws on his experience as the founder of the online community 420 Investor, the cannabis industry’s first and still largest public equity-focused due diligence platform. With his vast network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Prior to focusing on the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as a freelance research analyst after more than two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 on Seeking Alpha, where he has 70,000 subscribers, Alan is a frequent speaker at industry conferences and a frequent source for the media, including the NY Times, Wall Street Journal, Fox Business, and BloombergTV. Contact Alan: Twitter | Facebook | LinkedIn | E-mail

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