Adam Jackson
Columbia Care Inc. (CSE: CCHW) (OTCQX: CCHWF) reported modest first-quarter growth, despite economic headwinds and the closure of several retail locations, according to the cannabis company’s financial results for the period ending March 31, 2023.
The U.S.-based cultivator, manufacturer, and retailer of cannabis products said its top-line revenue grew 1% from the same quarter in 2022 to $124.5 million. The growth beat expectations by $1.3 million and was largely driven by strong performance in the East Coast markets, particularly New Jersey, Virginia, and West Virginia.
In a statement, CEO Nicholas Vita cited the company’s efforts to optimize its portfolio, manage its capital structure, and reduce costs as key factors in its performance.
The company also highlighted the successful launch of its Stash Cash loyalty program and operational changes, including the sale of its Missouri operations and closure of unprofitable Colorado retail locations. While these changes didn’t materially impact first-quarter results, Vita said they will influence future profitability. The company expects to see the effects of its cost-reduction measures, non-core asset divestitures, and improvements in cultivation and manufacturing utilization rates in the coming months.
Columbia Care opened two locations in Virginia and one in West Virginia in the first quarter, contributing to the company’s growth. It has plans for further expansion, with five more dispensaries under development in 2023, including three in Virginia, one in New Jersey, and one in Maryland.
The company maintained its wholesale revenue at $15.2 million in Q1 2023, matching the figure from Q4 2022. However, retail revenue declined 1.5% sequentially due to seasonal factors and the closure of three retail locations at the beginning of the quarter.
In addition to its retail operations, Columbia Care has been focusing on its cultivation and manufacturing capabilities. The company reported a decrease in cultivated cost per gram of more than 11% YoY in Q1 2023 due to operational efficiency gains. It also noted a 4-percentage point increase in its share of concentrates within its wholesale revenue product mix.
Columbia Care ended the quarter with $40.2 million in cash. On March 13, the company divested its interests in the Missouri market for approximately $7 million. Later in March, it extended the maturity date of its 13% senior secured notes from May 2023 to May 2024.
The company said it continues to collaborate closely with Cresco Labs on the divestiture transactions needed to obtain regulatory approvals for the acquisition of Columbia Care. However, no updates were provided on the timing for the execution of agreements regarding outstanding divestiture transactions.
