You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
Friends,
Florida was one of the most discussed topics on Q1 conference calls across the sector this past month. Cresco Labs, of course, talked about how it plans to scale in the state following the closing of the acquisition of Bluma Wellness in mid-April. Ayr Wellness, which acquired Liberty Health Sciences earlier this year, announced an important change ahead on its conference call: It is moving its corporate headquarters to Florida later this year. GTI, in response to a question, suggested that some of the recently raised capital will be deployed into the state, and Columbia Care and Curaleaf spoke very optimistically about their operations there.
The state is well penetrated by MSOs, which of course include the market leader, Trulieve, as well as Parallel, Verano, Cansortium, iAnthus, MedMen, Harvest, and Red White & Bloom. The only non-MSO with more than one dispensary open is VidaCann. In fact, of the 339 open stores, over 93% are owned by an MSO. The MSOs sold over 98% of both the flower and the non-flower products in Florida during the most recent week ending May 27th.
Florida is rather unique, with complete vertical integration. There is no wholesale market: Every gram sold to a customer must be produced by the company operating the dispensary. This past week, the Supreme Court upheld a lower court ruling that had rejected a challenge to vertical integration, removing the risk of the state being required to permit new entrants. Because of the market structure, the operators enjoy extremely high margins.
The growth of the program has been extraordinary. In the most recent week, the number of patients surpassed 567K (2.5% of the state population), up 65.6% from a year ago and 152% from two years ago:
We have discussed the resurgence in growth since COVID-19, driven by a number of factors that include the implementation of telehealth for patients to get their cards as well as the recent introduction of edibles. Another factor has been the population growth in the state over the past year.
Flower wasn’t permitted until two years ago and continues its robust growth. Year-to-date, unit volume of cannabis flower has increased 102%, growing faster than the growth in patients. Medical cannabis product units dispensed has grown 82%. BDSA recently began publishing data on the market, with Q1 sales in Florida totaling $392 million. In March, flower and pre-rolls accounted for 49% of the market. Concentrates were 40%, and the recently introduced edibles represented 8% of the market.
The effort to legalize for adult-use hit a roadblock in April, with a ballot initiative for 2022 struck down by the state’s Supreme Court. The timeline for potential legislative action is unclear, but, even without the prospects for adult-use, the booming medical market, with few barriers to access by patients, bodes well for the MSOs operating in Florida. For many of them, the challenge has been scaling cultivation with high temperatures and humidity levels.
It’s easy to see why the MSOs are so excited about Florida. The number of patients continues to soar, the potential for a change to the vertical integration market structure just disappeared, their operations are scaling, and edibles offer another market opportunity.
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New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
- 4Front Q1 Revenue Increases 82% to $23 Million
- Ayr Strategies Q1 Revenue Increases 74% to $58.4 Million
- Cresco Labs Q1 Revenue Increases 169% to $178 Million
- HEXO to Acquire Redecan for $925 Million
- Hydrofarm to Pay $125 Million for 2nd Nutrient Company Acquisition in 2021
- Jushi Q1 Revenue Increases 29% Sequentially to $41.7 Million
- Planet 13 Q1 Revenue Increases 42% to $23.8 Million
- Exclusive: TILT Holdings Resets With a Unique B2B Cannabis Business Model
- Valens Raises $40 Million Selling Units at $3.30
- Exclusive: Village Farms Prepares for a Regulatory Shift in the U.S. As It Leads the Flower Segment in Canada
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Sincerely,
Alan & Joel
