In the largest legal weed market in the world, StateHouse Holdings Inc. STHZ STHZF has rapidly positioned itself as a leader.
California, which has always been colloquially known as a weed capital, recently cemented its place in the global market by bringing in $5.2 billion in legal sales in 2021. StateHouse is the largest publicly traded California-focused vertically integrated cannabis enterprise.
Is StateHouse On The Rise?
StateHouse was created through the merger of four of California’s pioneering cannabis companies: Harborside, Loudpack, Urbn Leaf and Sublime. The acquisitions of Urbn Leaf and Loudpack were completed in March and April 2022, respectively, and dramatically increased StateHouse’s footprint across the state.
StateHouse is focused on expanding its retail store count. It recently announced the opening of new retail stores in San Francisco and Grossmont, California, while also acquiring full ownership of its store in Seaside, California, in May 2022.
Following the three acquisitions, StateHouse’s priority has been integration. The company said it completed the first phase of its integration in June 2022, which resulted in $10.3 million of annualized cost savings. It is now working to implement additional measures that are expected to result in $8 million to $10 million of additional annualized savings. All in all, between StateHouse’s recent acquisitions and cost optimization, the company is setting itself up for continued growth.
Vertical Integration, Optimization And Risk Management
StateHouse is vertically integrated, with cultivation, manufacturing, distribution and retail operations. The company owns two cultivating and extraction farms, one main manufacturing plant, four distribution centers and 15 retail stores, including one in Oregon.
The vertical integration model theoretically allows for a business to make its products at a lower cost while having greater opportunities to implement cost-saving measures across the value chain. Overhead costs are minimized, and a vertically integrated cannabis company has enhanced control over product quality, production and distribution efficiencies, and access to shelf space. It can also respond more quickly to consumer demands. If the Dime Bag brand is having a moment, StateHouse can mobilize production quickly and more effectively to meet consumer trends.
StateHouse Could Be A Solution In A Fragmented Market
Although California is the largest global cannabis market, the state’s legal weed industry has a hard time competing with its illicit counterpart. Local government opposition, high taxes and competition from unlicensed businesses have proved disadvantageous to established, legal companies. The market is highly fragmented and lots of potential remains untapped. StateHouse is confident that its scale, proven access to capital and vertical integration provide it with a unique opportunity to acquire assets across the cannabis value chain and become a household name in the market.
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