Analyst: How Do Virginia's Delayed Cannabis Sales Impact Important Deals For These Three MSOs?

Virginia is approaching its second anniversary of legalizing recreational cannabis without a framework for legal sales as yet established. A recent decision by GOP-controlled House members to strike down a push to legalize and set a framework in 2024 delayed initial plans.

Cantor Fitzgerald's Pablo Zuanic, a speaker at the Benzinga Cannabis Capital Conference in Miami April 11-12, says the move is one of the key factors that could impact the mergers and acquisition landscape in Virginia.

The Analyst

Zuanic said on Friday that considering the delays in place, he doesn’t see recreational cannabis sales happening anytime soon in Virginia. He is projecting sales to start in early 2025.

“We do not have line of sight on a new start date (1/1/25, at the earliest, but this is not confirmed),” he said in his recent note.

Other factors affecting future cannabis deals for three cannabis multi-state operators licensed in Virginia – Columbia Care Inc. CCHW CCHW CCHWF 3LP, Green Thumb Industries Inc. GTBIF GTII and Jushi Holdings Inc. JUSH JUSHF - is the state of medical marijuana market as well as Maryland going recreational this summer, Zuanic added.

In terms of the pending $2.1 billion Cresco Labs' CRLBF acquisition of Columbia Care and the fact that Virginia, along with New Jersey, is among Columbia Care’s top five states in sales, gross margins and EBITDA margins, the delay in recreational sales in Virginia could impact negotiations between the two companies, as well.

Still, Zuanic expects Columbia Care, which runs eight stores in Virginia, “should remain an attractive target for Cresco.”

Jushi has the “most attractive license,” running five stores, he added.

“We think the delay could put further pressure on Jushi Holdings (it is the only med licensee in northern VA), given the state of its balance sheet (see report), the potential impact on its IL border stores from MO going rec (see report), and increased competitive pressures in PA."

CCHWF Price Action

Columbia Care's shares traded 1.95% higher at $0.6219 per share at the time of writing on Monday.

GTBIF Price Action

GTI's shares traded 5.33% higher at $8.9 per share at the time of writing on Monday.

JUSHF Price Action

Jushi's shares traded 2.12% higher at $0.6531 per share at the time of writing on Monday.

Benzinga Cannabis Capital Conference

Come and meet Pablo Zuanic in person this April at the most successful cannabis business event in the world, the Benzinga Cannabis Capital Conference. 
This is the place where DEALS GET DONE, where money is raised, M&A starts, and companies meet investors and key partners. Join us at the Fontainebleau Miami Beach Hotel in Florida on April 11-12. Don’t miss out.
Secure your tickets now. Prices will go up soon.

Photo: Courtesy of Sigmund on Unsplash