How Are Cannabis Industry Titans Driving Profits As Consumer Spending Falls?

Canadian licensed producers, leading U.S. multi-state operators (MSOs), private-sector operators, cannabis retailers, international exporters, accessory manufacturers and other cannabis-focused financial companies all got red-carpet treatment in the Big Apple at Canaccord Genuity's 7th Annual Cannabis Conference.  

In addition to company-specific presentations, which attracted fans and investors, day one kicked off two key-note addresses given by  Chris Birkett, VP of the Toronto Stock Exchange (TSX), Tony Dwyer, Cannacord’s chief market strategist and Tim Seymour of Seymour Asset Management.

Key Themes

Topics included operators leaning into core ops, free cash flow targets still trending in the right direction (are they?), lower consumer spending, keeping a close watch on the balance sheet and valuations driven by federal headlines such as the possible passage of the SAFE Banking Act and the ultimate headline everyone is waiting for - cannabis legalization. 

Who Was In The House? Impressive List

Canaccord Genuity's Matt Bottomley, CPA and analyst kicked off his informative fireside chats with 4Front Ventures FFNTF CFO Andrew Thut who highlighted the company’s low-cost production model that has allowed the company to achieve a leading brand market share in Washington.

They were followed by Daniel Neville, CFO of Ascend Wellness AAWH who delved right into the company’s impressive footprint across seven states that include 31 operating dispensaries and 245,000 square feet of canopy. He also sounded rather proud of the company's year-over-year revenue growth of 22%.

In a chat with Tilray TLRY CFO Carl Merton talked about the company’s operations as well as its recent acquisition of HEXO and the Montauk Brewing Company, the latter of which expanded its US beverage/alcohol portfolio and presence in the US, which will likely serve as an entrance point for the company to penetrate the cannabis ecosystem upon federal legalization. 

Trulieve’s TCNNF CEO Kim Rivers is concerned about the impact that ramping up its Jefferson County cultivation facility will have on margins both near and long term as well as consumer purchasing behavior within the current inflationary environment. She sounded optimistic about the potential market impact of Florida approving an adult-use program in 2024.

Verano Holdings VRNOF, which by the way houses more than 50% of its retail footprint in Florida, has shifted its focus from preserving and generating healthy cash flows to safeguarding its profitability, company CIO Aaron Miles told Cannacord’s Bottomley. The company’s overarching business strategy, which focuses on positioning itself as an early establishment in medical-only states with potential adult-use opportunities, is leading to its early successes within New Jersey’s adult-use market, where the company currently holds a Top 3 branded market share.

Sundial’s SNDL CEO Zach George also sat with Bottomley and talked about the company’s varying operating segments, including liquor retail, cannabis retail, cannabis production, and investment operations. George, who noted that Sundial currently operates a total of 197 active dispensaries in Canada, seemed pleased with the company’s investment portfolio that has now deployed more than C$500 million of capital to various investment vehicles, including exposure to a number of US MSO’s, such as Jushi Holdings JUSHF, SKYMINT Brands, Ascend Wellness, Parallel Inc., Columbia Care CCHWF, and AFC Gamma AFCG. 

TerrAscend’s TRSSF Jason Wild told Bottomley that New Jersey’s adult-use program is one of the company's key strategic priorities as it continues to ramp up its third retail location in the state. Wild also mentioned the company’s recent decision to apply for its shares to be listed on the Toronto Stock Exchange (TSX) while noting that it is currently undergoing an internal reorganization that will allow the company to remain compliant with the exchange’s regulations as a plant-touching company in the U.S.