Update: Gov. Reeves signed the bill into law today. Mississippi is the 37th state to legalize medical cannabis in the country.
On January 26, 2022, both the Mississippi House of Representatives and the state’s Senate voted overwhelmingly to approve SB 2095, the bill that will legalize medical cannabis in the state. The House voted 104-13 and the Senate voted 46-4 to approve the bill, sending it to Governor Tate Reeves’ desk.
Back in 2020, voters in Mississippi approved Initiative 65, a ballot measure to legalize medical cannabis. Last year, the state’s supreme court overturned it and invalidated the ballot initiative method.
Mississippi Governor Tate Reeves
Gov. Reeves has been historically against cannabis legalization, but has changed his tune recently. On February 1, 2022, Gov. Reeves told reporters that he has not decided if he’ll sign the bill or not. The Governor’s office is still reviewing the bill.
Once both chambers of the state’s legislature approved the final language in the bill on January 26, it gave the Governor five business days to act on it. That deadline is today and he was left with three options: sign it, veto it or let it become law without his signature. If he did decide to veto it, the legislature had more than enough votes to override that.
The legislation adds a 5% tax on top of the state’s 7% sales tax on all cannabis sales. New amendments to the bill tasks the Mississippi State Department of Health with regulating the market. Patients can buy up to 3.5 grams per day, six days a week, with a limit of three ounces per month.
Let me be honest: I’ve only been part of the cannabis industry for six months. Before that, I worked at B2B tech start-ups and ad tech companies like Roku and Criteo. The most valuable thing I learned is that most good ad campaigns are linked to seasonality.
When I worked at Criteo, the vast majority of our clients were retail and ecommerce. Seasonality initiatives were critical. The more relevant your ads to an upcoming seasonal event, the more relevant they were to the audience. Think about any window display you’ve seen recently – the CVS near me has had Valentine’s Day products in the window since at least mid-January.
When I worked at Roku, we got to take a look at TV streaming behavior. For example, when Ben Affleck started dating Jennifer Lopez again, searches for their movies and music videos skyrocketed. During the space race, general space-related (think Star Trek) TV content went up.
That’s not seasonality – that’s psychology.
As the cannabis industry matures, businesses should start thinking about what seasonal, psychological and cultural factors impact their consumers. Cannabis consumption could be said to be the art of the business, but understanding what cannabis consumers want is the science. Here are three ways to think about that science:
1. The Science of Stash
One analyst recalls that cannabis sales reached “unimaginable” highs in 2020. He called this “pantry-loading” behavior. Let’s call it “stash” behavior.
The buying behavior of a cannabis buyer who buys an eighth is fundamentally different from someone who buys a six pack. The six pack is gone in a weekend. Which flower buyers are buying an eighth just for a weekend? A week? A month?
Is there a correlation? Well, stashing behavior obviously correlates with couch behavior. When people spend more time inside, they’re more tempted to go through their stash and cannabis sales increase.
Cannabis isn’t affected by just regular old seasons – it’s affected by what we could call personal, seasonal patterns. Just like streaming TV, when consumers spend more time inside, they buy more cannabis because they consume it faster.
What is the stash turnover rate for your different audiences? What factors make that turnover rate go faster or slower?
Analyzing stash behaviors can reveal your most loyal and high value customers, and offer new perspectives on how to market to different groups.
2. The Science of Celebration.
One estimate shows that Illinois cannabis sales jumped up by 10% in July due to Lollapalooza. Makes sense – more than 385,000 people attended.
“When people are coming into cities for events, they’re picking up cannabis then and there, and likely consuming it in true real-time.”
Looking at our own data, there’s a clear spike around St. Patrick’s Day – cannabis sales are 70% higher than average daily sales in February and 54% higher than average compared to March daily sales. This goes against stashing behavior, because the sales happen on the same day.
This is a different science. When people are coming into cities for events, they’re picking up cannabis then and there, and likely consuming it in true real-time.
Event trends can have a huge impact on cannabis sales and psychology. Where there’s a celebration, there’s going to be cannabis buyers. Event trends often translate to tourism trends. And these cannabis buyers aren’t just tourists to cities, a lot of them are likely tourists to cannabis itself as well – novelty consumers who go into a dispensary for the specific event and pick up a little bit of everything.
That’s an opportunity for new brands and more niche categories (beverages, pills, edibles) to connect with a new group of customers. That said, after that initial purchase, how can the brands stay in touch? That’s where dispensaries and cannabis brands need to come up with new strategies for managing cannabis customer data.
3. The Science of States.
Events like Lollapalooza are regional – and so are cannabis markets. In Massachusetts, BDSA data shows continued growth. In the West Coast, analysts call it a “rollercoaster.”
Note the specific pandemic trend lines. Any state that suddenly saw more than 50% sales one year and a sudden slump the next year at the same is bound to see a market crash. It also made it easy to ignore a lot of structural problems – which states like California are now trying to correct.
Legal cannabis sales are radically different depending on the maturity of the market. Let’s not forget that this goes deeper than just states. Only 32% of the California market even has legal dispensaries open right now.
What are regional trends? What are event trends? What are cultural trends?
The more dispensaries and cannabis brands can proactively market to anticipate these needs – and get the message out there to the right audience segments – the better.
Making Cannabis Personal
What keeps becoming apparent is that above all, cannabis is personal. Everyone is looking for something a little different. A consumer’s tastes can change based on all sorts of factors – or not change at all. Different products might suit different occasions. Different messages will talk to different use cases – some people want cannabis that can make a concert better. Others want it to sleep. Dispensaries need to figure out who’s who.
At the end of the day, that’s what makes the cannabis industry so unique. It is an end-to-end experience like no other. From researching products and dispensaries to analyzing brands and products to consuming it, every interaction a consumer has with a cannabis business is very personal. And if they don’t like their personal experience, they won’t come back.
As the industry looks ahead into a competitive 2022, the mission should be simple: make every touchpoint for every customer a great experience, from start to finish.
Back in November of 2020, voters in New Jersey overwhelmingly approved Question 1, the ballot measure to legalize cannabis. On February 22, 2021, New Jersey Governor Phil Murphy signed three bills into law, laying out the framework for how the state would move forward with legalized adult use cannabis.
New Jersey Governor Phil Murphy
The legislation became law once the Governor signed the bills, tasking a five-member Cannabis Regulatory Commission (CRC) with developing regulations for the market by June of 2021. The CRC set a deadline of February 22, 2022, six months after the regulations have been established, for when they wanted to officially launch the adult use cannabis program and commence sales.
It looks as though the Garden State is not quite ready to meet that deadline. According to NJ.com, the setback is due to a couple issues, namely municipalities dragging their feet and worries about a weak supply chain. Before a CRC meeting kicks off today, Jeff Brown, executive director of the CRC, told NJ Cannabis Insider that they still have work to do before they can give the green light. “Feb. 22 is not a concrete date to open,” says Brown. “There is no firm commitment on timing of when recreational sales will begin.”
Among the issues that are causing these delays is local approval. Municipalities need to first approve and adopt the cannabis rules before allowing businesses to open. “One of the biggest deficiencies we’re seeing is a lack of municipal approval,” Brown told NJ Cannabis Insider. “That’s an issue, and supply continues to be issue. It’s the priority of the CRC to get recreational sales started as soon as we can, but we have to do it in a way that’s compliant with the law. We need the industry to get there.”
As Brown noted, the CRC also thinks they need to make sure there is adequate supply before the state opens the market. However, businesses appear to be ready and chomping at the bit to get started with the adult use program. Patrik Jonsson, regional president of the northeast for Curaleaf says they have been ready. “Give us 48 hours, and we can pretty much do whatever the state wants, and we’ll open,” says Jonsson. “We have product, the people and the facilities. There are a few minor things we need clarified around the product. But we are very much ready for turning it on as soon as the state lets us.” Curaleaf is the biggest cannabis company in New Jersey and has two cultivation facilities and three retail locations across the state.
While the February 22 deadline is still in place, questions still linger about when exactly the state will be ready to launch its adult use cannabis program and commence sales.
Ask any cannabis connoisseur, and they’ll likely tell you that cannabis delivery services have been around for a long, long time. Given the distancing requirements of the COVID years, the increasing number of medical cannabis patients who need or would like cannabis delivered to their door and the surge in recreational adult use sales, cannabis delivery is coming out of the shadows and into the legal cannabis industry.
Proponents of cannabis delivery say that creating a legal structure and guidelines that allow cannabis home delivery encourages people to buy from legal sources rather than the legacy market. In some cases, it’s a way to entice legacy cannabis delivery operators to transition to the licensed and regulated market. While many states remain hesitant to allow adult use cannabis delivery, some do, and others have taken the first step, allowing delivery to registered medical cannabis patients and caregivers.
Where is Cannabis Delivery Legal?
According to Cannabis Business Times, states that permit medical cannabis delivery as part of another license type, retail, for example, or with a specific delivery license include: Arizona, Arkansas, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, Oregon, Rhode Island and Vermont. Complex reports that delivery service is legally available without any restrictions to anyone 21 years or older in California, Nevada and Oregon.
Medical or adult use, there are restrictions on where cannabis can be delivered, even within states that allow it. For instance, you can’t legally deliver cannabis to college or university campuses. Although many people still discreetly deliver and receive cannabis products on campuses, it’s illegal to do so since cannabis is a federally controlled substance and higher education institutions that receive federal funding must prohibit its use and distribution.
It’s noteworthy that some states without legal cannabis delivery regulations have a “loophole” through which some delivery businesses operate. Gifting, for example, is an established, though not entirely legal, delivery practice. According to NJ.com, New Jersey falls into the gifting loophole category:
Licenses to sell legal weed are still months away, but there’s a handful of entrepreneurs coming into the scene through a possible legal loophole — “gifting” cannabis. It’s a scheme popular in other states and particularly in Washington, D.C. A company lets you buy cookies, snacks or brownies that come with sticker shock of $50 or more. But when they make the delivery, it comes with a suggested gift: maybe a cannabis edible or an ounce of flower.
Although many underground businesses thrive in the Garden State’s “in-between” market, NJ.com also reports that gray market operators have faced legal penalties and even jail time.
Why Are Cannabis Delivery Services Popular?
Cannabis delivery services have a rich cultural history in the underground market. Rather than making a transaction in public, home delivery provides a more intimate and secure way of selling cannabis to consumers.
Cannabis delivery has skyrocketed in popularity due to the COVID-19 crisis. MJBizDaily reports that online cannabis orders boomed during the pandemic, increasing the need for cannabis delivery services.
Historically, cannabis delivery services also help registered medical cannabis patients receive access to their medicine since their disability or chronic condition might prevent them from leaving the house and visiting a dispensary. This can be especially true for seniors, even if they aren’t a registered patient, but live in a state with adult use cannabis.
What’s the Difference Between Cannabis Delivery and Transport Licenses?
There is real confusion surrounding the differences between delivery and transport licenses. Basically, delivery licenses are B2C (business to consumer), and transport licenses are B2B (business to business).
Cannabis delivery and courier licenses allow licensees to deliver cannabis products directly to patients, caregivers, and in some states, consumers. While the name of the license differs depending on the state in which you seek to operate, delivery licenses tend to allow operators to act as a retailer without a traditional bricks and mortar location. Delivery licensees purchase and store wholesale cannabis products and sell them via the delivery model. Couriers, however, are traditionally hired by retailers as their delivery arm. In this model, the retailer takes the order, and the courier delivers, like Door Dash or Uber Eats. One key difference between a delivery and courier license is the significantly lower cost of entry for couriers as they don’t have facility, inventory, or storage costs, and generally have lower operational expenses.
But what about transport licensees? Rather than delivering to individuals, transport licensees typically deliver cannabis products between licensed cannabis facilities, such as a cultivator or manufacturer to a retail dispensary or testing facility.
In Massachusetts, there are three delivery and transport licenses (courier, delivery operator, and transporter) as well as a delivery endorsement that allows certain licensees to deliver directly from a licensed establishment to consumers.
The first step to operate a cannabis delivery or transport business is determining whether you want to deliver for retail establishments, buy product and deliver directly or transport cannabis between licensed cannabis businesses. Each model has its plusses and minuses, just depends on what you want. It’s important to note that Massachusetts delivery operator licenses are currently reserved for social equity participants, as reported in the Milford Daily News:
“The new “marijuana delivery operator” licenses…will be available exclusively to participants in the CCC’s social equity program and economic empowerment applicants for the first three years.”
Once you decide which type of license you want, the next steps are first to familiarize yourself with your state’s cannabis rules and regulations, and then to complete and submit a license application.
How to Apply for a Cannabis Delivery or Transport License
While the delivery and transport license application process looks different in each state that allows them, all states require applicants to be 21 years of age or older and most require operators to be current residents of the state where they intend to operate. There are also required, non-refundable application and licensing fees. While these fees are not insignificant, the good news is that they tend to be lower than the fees required for other cannabis business license applications.
Since compliance with state rules and regulations is a condition of licensure, licenses are awarded to some or all applicants that meet the application and regulatory requirements. Once awarded, cannabis delivery and transport licensees must maintain compliance or risk hefty fines and/or face a temporary or permanent shut down. One regulatory example is that delivery operators must digitally verify any and every customer’s photo ID before and when a cannabis product is delivered to a recipient; missing this critical step can put your businesses at serious risk of legal and financial consequences.
How to Maintain Compliance Once You’re Licensed
Maintaining compliance for any cannabis business can be challenging. There are strict guidelines on marketing and advertising, security, employee training, inventory management and more. Additionally, there are restrictions specific to cannabis delivery services, particularly limits on how much product can be delivered per order/transaction.
What does cannabis compliance specifically look like for cannabis delivery licensees? For one, all merchants must verify ID before an order is fulfilled. In states with medical cannabis, this would require medical card ID verification. Otherwise, for adult use markets, a driver’s license or other state-issued photo ID with a valid birthdate is acceptable. Some states require recipients to sign a manifest or receipt acknowledging that they accepted the cannabis order and for the licensee to maintain a record of that acknowledgement for a specified number of years.
There are many other regulations that delivery operators must adhere to and many ways to stay up to date and compliant. Tasking a staff member to handle all things compliance is one option. Another is hiring a compliance professional to set up and oversee a compliance operating system and/or partnering with a compliance software solution provider.
Cannabis delivery services can be very profitable. In comparison to other cannabis licenses, they don’t require as much finance capital to get started. Once a license is obtained, your priority will turn to maintaining compliance. Too many delivery services exist in a precariously legal gray area; don’t let yours be one of them.
Last week, Gary Chambers Jr., a Baton Rouge native, launched his political campaign to run for a U.S. Senate seat in Louisiana. He took the internet by storm with his first political advertisement, a 37-second-long video where he advocates for cannabis legalization, discussing the disproportionate effects that cannabis prohibition has on communities of color.
But that’s not why he made such a splash on social media; the campaign ad made headlines as possibly the first major party candidate to smoke a cannabis blunt in an advertisement.
The timing of the video is also very intentional, lasting 37 seconds. “Every 37 seconds, someone is arrested for possession of marijuana,” Chambers says in the video. “Since 2010, state and local police have arrested an estimated 7.3 million Americans for violating marijuana laws, over half of all drug arrests. Black people are 4 times more likely to be arrested for marijuana laws than white people.”
Chambers is running against Sen. John Kennedy, the Republican incumbent with support from Trump and very deep pockets.
“Most of the people police are arresting aren’t dealers, but rather people with small amounts of pot just like me,” says Chambers. “I’m Gary Chambers, and I’m running for the U.S. Senate.” Click here to see his campaign website and make a donation.
One study published in the Journal of Natural Products two weeks ago proposes using the cannabinoid CBDA in conjunction with vaccines to prevent SARS-CoV-2 (Covid-19) infection. The study was conducted in a lab and says that cannabinoid acids (CBGA, THCA-A, CBDA, etc.) can bind to the SARS-CoV-2 spike protein, blocking cell entry and effectively prevent infection.
Another study published in Science Advances claims cannabidiol (CBD) inhibits SARS-CoV-2 replication and helps prevent infection by inducing endoplasmic reticulum stress response and innate immune responses. The study was conducted in cells and mice, but also had groups of human patients that tested positive for Covid-19 less after taking CBD. “In matched groups of human patients from the National COVID Cohort Collaborative, CBD (100 mg/ml oral solution per medical records) had a significant negative association with positive SARS-CoV-2 tests,” reads the abstract.
Two studies in Israel, one proof-of-concept study and one early-stage clinical trial, have just launched examining the effects of CBD on patients already infected with Covid-19.
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
All of this research already underway does not mean that cannabis prevents Covid-19. In fact, one clinical trial in Brazil that has finished, found no evidence that CBD helped patients with mild Covid-19. Published in the Cannabis and Cannabinoid Research Journal, patients with mild Covid-19 received 300 mg of CBD for 14 days or a placebo. The study suggests that clinical trials should be conducted for the effects of CBD on patients with severe Covid-19, not just mild symptoms.
The clinical trial in Israel that is trying to study the effects of CBD on patients with severe Covid-19 is having trouble finding participants because the newer Omicron variant mainly produces only mild to moderate symptoms.
It is far too early to tell if any of these studies will show evidence of cannabis treating Covid-19, let alone if they mean cannabis products can be used as a treatment or preventative for Covid-19. However, the research is significant and we should keep an eye on any developments that come from those studies.
“The latest hubbub is an example of both the promise of cannabinoids — components of cannabis — as potential therapies, but also the hype around them, which can far outpace the evidence that they work. It’s left researchers and consumer advocates scrambling to warn people that patients shouldn’t be turning to over-the-counter products or recreational marijuana in hopes that it might protect them from Covid-19.”
What does Lean Mean to the World of Cannabis Testing?
Rob Radke, President, Method Testing Labs
In this session, Rob Radke delves into the world of Lean management, how Lean process implementation can enhance quality in a lab setting, what it means for customers and why it is unique and effective in the cannabis industry.
TechTalk: Hardy Diagnostics
Jessa Youngblood, Food & Beverage Market Coordinator II, Hardy Diagnostics
How Cannabis Labs Can Prepare for Accreditation?
Renee Delauter, Cannabis Program Manager, A2LA
Learn when to apply for your lab’s accreditation, what to expect during your ISO/IEC 17025 audit and find guidance on how to approach deficiency findings.
TechTalk: Bio-Rad
Helen Fong, Product Manager, Food Science Division, Bio-Rad
The Challenges and Benefits of National Standardization for Hemp Testing
Dillon Burns, Lab Manager, Infinite Chemical Analysis Labs
This presentation takes a deep dive into current hemp regulatory programs, why standardization is crucial and some shortcomings in current regulations.
Dalwhinnie Enterprises is a cannabis brand that started in Ridgeway, Colorado. Based in the San Juan Mountains in Western Colorado, the company includes brands like Dalwhinnie Farms Cannabis, Shift Cannabis, Ridgway Hemp Company and the Dalwhinnie Farms Boutique in Aspen, Colorado.
Brandon Barksdale has about a decade of experience in cannabis. He has worked for small startups and large multi-state operators. Most recently, he has worked with CohnReznick’s Advisory Practice. At CohnReznick, he worked alongside the Dalwhinnie team, helping them launch their boutique in Aspen. Since joining the team as their new CEO, Barksdale has shifted his focus to expansion, scalability and operational excellence, using things like GMPs and other certifications to improve quality and consistency.
We caught up with Barksdale to learn about his experience, his new role, entrepreneurship, social equity and what it means to be a minority leader in the cannabis space.
Cannabis Industry Journal: You have an impressive background before joining the cannabis industry full time. What made you take the leap into this space? Tell us about your background.
Brandon Barksdale: The majority of my background is driven around transforming businesses cross functionally, specifically in operations and finance. When it comes to the cannabis industry, it still lacks maturity; so being able to apply key performance indicators, benchmarking, controls and analytics can drive the industry, and more specifically, our organization, to operational excellence.
Brandon Barksdale, CEO of Dalwhinnie Enterprises LLC
While I was in the professional service space, I was an advisory leader within our cannabis industry group. I was able to be involved and work with organizations at differing levels of maturity, guiding corporate strategy and functional and operational improvement before fully jumping in to lead this organization. Dalwhinnie was the perfect opportunity to use my previous experience to instill value to the company as it continues to scale and grow.
CIJ: With a such a big portfolio of cannabis clients, why leave all that behind to take the reins at Dalwhinnie?
Barksdale: Simply put, I was eager to roll up my sleeves and drive a single organization through its growth lifecycle. When you’re working with and cycling through multiple clients, you’re supporting them from a strategic perspective and providing value and direction but the execution is left to the operational teams internally to follow through. No matter how detailed the plan or deeply you are involved you are still third-party. During scope changes and ramping up and down there’s always some momentum that gets lost. I want to focus on one company, to really tie myself to its DNA, so that I can better be in the driving seat toward success and operational excellence.
Dalwhinnie stands out because of their unwavering focus on quality and the integrity of the brand. To that end, I want everyone within the organization to succeed and to nurture a healthy company ecosystem that allows for professional development, training and being an industry leader. We have a really big opportunity here to set the standard for what quality looks like going forward and what it means to really care about the product that you’re putting out into the marketplace.
CIJ: Dalwhinnie Farms has a cool location in Ridgway, Colorado at the base of the San Juan Mountains and sustained by the snowmelt from the Uncompahgre River. How does this make Dalwhinnie cannabis different?
Barksdale: There is no doubt that growing at a high elevation with different seasonalities is a challenge. However, every region on Earth presents its own benefits and challenges as it relates to cultivation. You can use the comparison to different regions of wines. Wine from Bordeaux and wine from Napa are going to have different profiles because of all the unique factors of climate, water, humidity, aging practices, etc.
Dalwhinnie Farms in the Sun Juan Mountains
This is one of the things that will make the future of cannabis very interesting. There are multiple elements and variables that help tell the story of the product through its experience of growth. Just like there are tons of wine regions and varietals, there are hundreds of cannabis strains and exponentially more crosses where one can discuss multiple facets of what makes that particular product unique. It is one of the things that will continue to evolve in the cannabis market and one of the most exciting components—knowing that we are still on the way to creating a unique and original marketplace!
CIJ: The Dalwhinnie Farms retail store in Aspen is a unique cannabis dispensary. What is the retail strategy moving forward?
Barskdale: Every cannabis wholesaler, and most markets, are feeling the pressure of price volatility and retail is one of the best-known ways to help stabilize an organization. Our strategy is to stay as nimble and creative as we can, focusing on continuing to build out the success of our flagship Aspen dispensary as well as partnering and entertaining retail expansion opportunities. Our strategy is not to ignore that fact, but to act as perceptively as we can to broaden our retail footprint.
The Dalwhinnie Boutique in Aspen, CO
CIJ: Tell us about your short-term goals for Dalwhinnie.
Barksdale: When I came onboard with Dalwhinnie, I hit the ground running. I had some history with Dalwhinnie and the family of companies so I was lucky to have a head start and insight toward necessary changes. Short term goals included attention to production expansion initiatives, operational changes that moved us closer to excellence, and fine-tuning our GMPs. My eye is also focused on company culture, performance management, and constantly pushing the envelope on quality. While always of importance, we want to continue as a pioneer on cultivation and manufacturing standards as it relates to quality in organics.
CIJ: And what are your long-term goals for the company?
Barksdale: Mentioned as a short-term goal, I want to move toward GMP and GACP manufacturing standards and create a continual cycle of improvement as we move through our expansion and growth plans. In the future, multi-state operations and partnerships are also a big part of our strategic direction. We aim to continue to provide an elevated cannabis retail experience at our flagship location and to expand our retail footprint in the marketplace.
CIJ: There’s been a focus on racial disparities in the cannabis space and the need to improve social equity and opportunities for minorities. How do you hope to support equity and help drive change?
Barksdale: We are at a turning point in the industry where substances are becoming legal, yet so many people are still suffering from nonviolent, non-serious offenses related to cannabis. It is unavoidably apparent and it is something that deserves significant attention and commitment. Every company that is operating in this space should take a level of responsibility to help address or support reparations in some fashion whether that be through jobs, access, and/or partnerships.
There should be an obligation to support some type of social equity improvement project as it relates to the cannabis industry. Some legacy states and now new states coming online, are attempting to course correct by making it a part of the compliance or access components for licenses.
There is still a lot of work to be done. I am working through the strategies that work for us as a company. I am actively exploring how to incorporate opportunities into our operating and business model.
As a women-owned company and myself being a minority leader, it is on the forefront of our priority list to come up with a comprehensive plan and commitment to supporting social and equities in this space.
Curaleaf Holdings, Inc., a Florida-based cannabis company operating in 23 states and Europe, made two big announcements earlier this morning. First, they acquired Bloom Dispensaries for $211 million. As part of the acquisition, Curaleaf is purchasing Bloom’s four dispensaries in Phoenix, Tucson, Peoria and Sedona. They also acquired Bloom’s cultivation and processing facilities outside of Phoenix.
Bloom’s revenue last year was near $66 million, with EBITDA margins above 40%. Boris Jordan, executive chairman of Curaleaf, says the Bloom acquisition is huge for the company’s position in Arizona, a state with a billion-dollar-market. “Bloom is an excellent strategic fit for Curaleaf as it further expands our capacity and retail footprint in Arizona with an attractive set of assets, enabling us to better serve the state’s US$1.4 billion-plus annual market opportunity,” says Jordan. “Adding to these benefits, Bloom will be immediately accretive to our adjusted EBITDA margins.”
Now that they have 121 retail locations across 23 states and over 5,000 employees, Curaleaf is on a path to become one of the largest cannabis companies in the world.
According to Matt Darin, president of Curaleaf, their growth strategy is continuing well into 2022. “We are excited to kick off this year continuing our momentum of expansion and growth in Florida,” says Darin. “Throughout this year our patients can expect to see Curaleaf continue to lead the Florida market with new innovative products and convenient new locations.”
Canadian cannabis giant Tilray (NASDAQ:TLRY) announced its fiscal second quarter of 2022 results last week. The company reported net revenue of $155 million in Q2 which was an increase of 20% year over year. Tilray attributed these gains to its expansion in verticals that include alcohol as well as hemp-based wellness.
Despite an uptick in sales, Tilray’s gross margin reduced by 7% to $32.8 million as the Canadian cannabis market continues to wrestle with oversupply issues resulting in lower-priced products. Alternatively, Tilray claimed its cost-reduction program is running ahead of schedule and it expects to save $100 million by 2023, up from its earlier forecast of savings of $80 million.
Tilray reported a net income of $6 million in Q2, compared to a year-ago loss of $89 million. The fiscal second quarter was also the 11th consecutive quarter where Tilray reported an adjusted EBITDA. This figure stood at $13.8 million in Q2.
Tilray stock rose by 15% in the two trading days following its Q2 results.
What impacted Tilray in Q2 of fiscal 2022?
Tilray explained its Q2 results were solid as it has successfully built a cannabis and lifestyle brand. Further, the company continues to benefit from its scale, global distribution capabilities as well as operational excellence allowing it to increase sales and maintain profitability despite macro-economic headwinds.
The company enjoys strong brand recognition and is focused on ensuring an adept pricing environment. It also believes marketing adjustments will allow Tilray to aggressively capture market share going forward.
Germany is the largest medical cannabis market in Europe where Tilray has a 20% share. It’s well-positioned to capture the adult use cannabis market as well in Europe, if and when cannabis is legalized in this region.
Tilray, similar to most other producers aggressively acquired companies in the past. Its acquisition of the U.S.-based SweetWater Brewing and Manitoba Harvest provides it a foothold in the world’s largest cannabis market. These two companies have invested in product innovation to enhance awareness and distribution.
Further, SweetWater and Manitoba Harvest are profitable and provide Tilray an opportunity to launch THC-based products in the U.S. when pot is legalized at the federal level.
What next for TLRY stock?
During its earnings call, Tilray disclosed its new parent name called Tilray Brands. It reflects the company’s evolutions from a Canadian licensed producer to a global consumer packaged goods company with a leading portfolio of cannabis and lifestyle CPG brands.
Tilray aims to post annual sales of $4 billion by 2024 which is quite optimistic given analysts expect revenue to grow to $980 million in fiscal 2022 and $1.2 billion in fiscal 2023. In order for Tilray to reach its lofty goals, it will have to acquire other licensed producers resulting in shareholder dilution.
Germany is expected to legalize marijuana at the federal level, making it the largest country to do so in terms of population. Tilray already has an EU GMP-certified facility operating in Germany which can increase production capacity to accommodate demand from the adult use segment.
Bottom Line: Is Tilray Stock a Buy Post Fiscal Q2 Results?
While Tilray’s stock gained pace, following its Q2 results, investors should understand that it was estimated to report revenue of $171 million in the quarter. Despite the cost synergies enjoyed by Tilray, the adult-use market in Canada is crowded as well as highly fragmented and should consolidate in the upcoming years which will allow companies to improve the bottom line.
Tilray stock is valued at a market cap of $3.2 billion which suggests its forward price to sales multiple is over 3x. Unlike most cannabis producers in the U.S. Tilray continues to post an adjusted loss making it a high-risk bet at current multiples.
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