Adam Jackson
A batch of cannabis earnings dropped this week, and two industry leaders, Trulieve Cannabis Corp. and Verano Holdings Corp., offered contrasting financial snapshots that highlight how the two have approached Florida’s medical market.
Both Trulieve and Verano are excited about their future growth prospects, particularly concerning the opportunities in Florida, as the two craft strategic plans to seize potential growth in the Sunshine State.
Trulieve, based in Tallahassee, Florida, reported a significant net loss of $64 million for Q1 2023, yet remains rosy about its future growth.
Trulieve’s revenue for the quarter stood at $289 million, with 95% attributed to retail sales. This figure fell slightly short of the Yahoo Finance average analyst estimate of $292 million.
However, the company’s sizable gross profit of $150 million, which represents a GAAP gross margin of 52%, indicates the company’s ability to generate profits before operating expenses and taxes.
Despite the net loss, Kim Rivers, CEO of Trulieve, expressed optimism during the company’s earnings call, emphasizing the importance of the company’s scale, service, operational flexibility, and strong balance sheet for success in the current environment. She also highlighted the company’s emphasis on cash preservation and generation as it prepares for future growth.
Trulieve is still extremely bullish on the potential legalization of adult cannabis use in Florida, too.
“The adult-use opportunity in Florida is the most significant near-term catalyst for Trulieve,” Rivers said, touting that the campaign had gathered enough raw signatures for inclusion on the November 2024 ballot. As of publication, the state had not verified the signatures.
Rivers estimates that Florida, with its 22 million residents and 138 million annual tourist visits, could become a leading legal cannabis market, potentially reaching $6 billion in annual revenue.
Florida’s medical marijuana market is also set to expand following the passage of a bill that extends the renewal of marijuana prescriptions over telehealth and authorizes nearly a dozen additional licenses for Black farmers to enter the cannabis industry.
According to sources familiar with the matter, the new Pigford licenses will not reduce the number of licenses from a separate application process – which concluded during the last week of April – that offered an additional 22 licenses.
Chicago-based Verano, in contrast, reported a much smaller net loss of $9 million alongside a 12% increase in revenue to $227 million compared to the same period in the previous year. Verano’s gross profit was $109 million, equating to 48% of its total revenue.
During an earnings call, CEO George Archos expressed satisfaction with the company’s first-quarter performance, attributing the positive results to strategic positioning, particularly in the Florida market.
“In Florida, we recently took the number two spot in terms of ounces of smokable products sold while also preserving the pricing integrity of our catalog, a reflection of our higher-quality, all-indoor grown flower,” Archos told investors.
The company operates 66 MÜV dispensaries across Florida and plans to open more by the end of the year. Like Trulieve, Verano also sees potential in the possible legalization of adult use in Florida and anticipates strengthening its foothold in the medical market in the lead-up to the potential 2024 ballot initiative.
In addition to their retail operations, both companies are expanding their cultivation and processing capacities. Trulieve currently operates 186 retail dispensaries and more than 4 million square feet of cultivation and processing capacity across 11 states. Verano, meanwhile, runs operations in 13 states, including 126 dispensaries and 14 cultivation and processing facilities
