Amid critical purchases in Nevada and California, a multi-state operator (MSO) reported total revenue of US$77 million for 2018 thanks to the expansion of its business in key states.
On Wednesday (March 20), Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) informed shareholders that its year-end financials received a boost due to the company’s development in Florida and New York along with acquisitions in Massachusetts and Arizona.
The results offer a closer look at how one of the largest MSOs is expanding its reach and business scope throughout the US cannabis market.
Curaleaf posted US$31.96 million in revenue during its fiscal Q4 2018, an increase of 49 percent from its previous quarter, which the company credited to rapid development in Florida and Arizona.
During a conference call with investors and analysts, Curaleaf CEO Joseph Lusardi said Florida is one of the fastest-growing medical states. The firm currently operates 22 stores in the state.
Due to the recent lift on a ban for smokeable products, Curaleaf now expects Florida could double its market. Lusardi added that he expects to see a policy on edibles later this year as well.
The company experienced a net loss of US$61.8 million for the full year and US$16.5 million in the quarter, which the company largely credits to its use of one-time fees to reach a public listing during its most recent quarter.
Boris Jordan, executive chairman of Curaleaf, said the company now operates 42 dispensaries across the country and expects to hold 70 in its portfolio by the end of the year.
Based on the most recent results, the company is maintaining an expectation of US$400 million in revenue for 2019.
Acquisitions signal consolidation in the west for Curaleaf
On Monday (March 18), Curaleaf confirmed its plan to buy Acres Cannabis in a deal worth US$70 million, with US$25 million to be paid in cash and US$45 million in shares of the firm.
This purchase will grant Curaleaf critical assets in Nevada, including one 24-hour dispensary in Las Vegas.
An additional dispensary in Las Vegas is set to open during the second quarter, according to Curaleaf.
The MSO indicated to shareholders that all Acres dispensaries will be rebranded as Curaleaf stores by the end of the year.
“Acres operates a flagship dispensary in the heart of Las Vegas, complementing our existing assets in the state extremely well,” Lusardi said in the press release.
In February, Curaleaf also secured wholesale cannabis assets in California thanks to the US$30-million acquisition of Eureka Investment Partners.
This purchase granted Curaleaf with a production facility primed for an expansion that could produce 50,000 pounds of dry flower per year.
Similar to the Acres acquisition, the payment is split in US$10 million in cash and US$20.5 million in stock of Curaleaf.
Nevada legalized adult-use cannabis in July 2017, while California opened the doors to recreational sales in January 2018.
Both states offer vibrant markets with variety in products and dispensaries compared to other states at earlier stages of legalization.
Hemp market to be addressed with retail strategy in CVS pharmacy stores
During the update, Curaleaf indicated its focus will be on the health and wellness market for hemp-derived CBD products with an aggressive strategy placing its hemp brand in 800 CVS Health (NYSE:CVS) stores starting on Friday (March 22).
The launch is planned to be in effect for 10 states. Curaleaf confirmed that Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee will be included as part of the rollout.
Lusardi said the firm has had talks with a variety of national retailers, and will be making official announcements in the near future.
“I think that, in anticipation of the farm bill last year, many retailers were trying to come to a strategy for how they were going address hemp,” the executive said.
STATES Act potential could show true value of US market, says executive
Jordan said the company expects to see the STATES Act, a policy that would grant states the option to regulate cannabis and to allow businesses to become legal under state protection, introduced this year.
The executive indicated that the lack of a federal policy to oversee the industry has created a “significant impact” on US-based marijuana firms due to the comparisons in value with Canadian leaders.
Jordan pointed out that, despite the differences in market value for the US cannabis space compared to Canada, “the aggregate market cap of Canadian companies dwarfs that of the US.
“We believe that the US market has significantly more value yet to be realized by investors. We expect this will start to change in 2019 as differentiation from Canada will become apparent when US companies post significant financial returns with further expansion and build out,” Jordan said during the call.
Options from MSOs in the US cannabis landscape have caught the attention of investors as the growth trend in the stock market has moved down from the Canadian space.
During an event in Vancouver, Matt Bottomley, director of equity research and cannabis analyst with Canaccord Genuity Group (TSX:CF), told investors that Curaleaf had secured his top stock recommendation of 2019.
On the analyst research site aggregator TipRanks, Curaleaf holds a “strong buy” rating based on three separate reviews.
Based on these reviews, shares of Curaleaf hold an average price target of C$16.75.
During the call, the management team of the company confirmed a voluntary lockup on 81 percent of the shares of Curaleaf by the founders of the firm and other “key shareholders.” It is set to last until October 20, 2019.
Curaleaf shares finished Wednesday’s trading session at a price of C$9.10, representing an increase of 3.29 percent for the day.
Over a year-to-date period, the stock has gained over 30 percent in value.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Acreage Holdings is a client of the Investing News Network. This article is not paid-for content.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.