Florida Tracker
Florida had an excellent week of sales which increased by 9% in THC and CBD sold. This past week, there were an astounding total of eight new dispensaries opened up. Trulieve opened three, Ayr one, VidaCann two, Harvest one, and Sanctuary Medicinals one. With these three new dispensaries, Trulieve's footprint is now 92 in the state. Trulieve's market share losses continue but have been decreasing. Verano is a new name that has gained market share in Florida and is the second-largest retailer in the state regarding THC and CBD sold. Florida's market remains strong as a whole but has seen an influx of supply. This will drive down margins in the coming quarters for all the operators in the state.
Colorado Governor Safe Banking
Colorado's Governor released the following statement to US Senator: “I am thrilled that you are bringing forward a long-term, comprehensive solution that deschedules cannabis while enhancing social equity pathways,” the governor wrote. “I hope that you will first focus your efforts on the two biggest barriers to the success of the cannabis industry: banking and IRS Code Section 280E.” The US Senate has been prioritizing CAOA over the Safe Banking Act in hopes of passing broader reform. This is even though Safe has a much greater chance of passing through the current senate. The Governor is also a supporter of the CAOA but also believes that banking needs to be prioritized. The Governor emphasized the importance of passing Safe because it is a public safety issue. After all, cannabis companies are cash-based. This makes them prone to theft and puts them at a disadvantage to other businesses. The Governor also highlighted the importance of repealing 280E, which prevents these businesses from deducting several business expenses. “Similarly, the cannabis industry has been stymied by 280E, which prevents these businesses from taking business-related deductions associated with the sale of cannabis,” he continued. “Congress must swiftly act to pass any measure, several which have been introduced in past sessions, to make an exception for legal cannabis businesses from 280E. While the CAOA would address this issue by descheduling cannabis, a narrow measure focused on relieving cannabis businesses from the detrimental effects of 280E would expeditiously solve this problem.”
KSHB/GNLN
Last week, KushCo Holdings (KSHB) announced that its stockholders overwhelmingly voted to approve the merger agreement with Greenlane Holdings (GNLN) at the special meeting of stockholders held earlier today; over 97% of votes cast voted in favor of the proposal. According to the merger agreement terms, KushCo will become a wholly-owned subsidiary of Greenlane in an all-stock, tax-free business combination. "Our stockholders have spoken loud and clear that they overwhelmingly support this merger," Nick Kovacevich, KushCo's Co-founder, Chairman, and Chief Executive Officer. "We believe they recognize the opportunity for us to create one of the industry's leading ancillary companies, with the right size, scale, strategy, and talent to capitalize on the significant growth opportunities ahead of us. While we are thrilled about achieving this milestone and receiving such a strong stamp of approval from our stockholders, we are committed to finalizing our integration planning process with our friends at Greenlane to ensure the best possible start as a combined company. On behalf of the entire organization, I am proud of the progress we have made over the past decade and look forward to starting this new decade on the front foot-one in which we strive to be defined by enhanced value for our customers, accelerated growth, stronger profitability, and increasing returns for our stockholders."
We have not previously written about either company, as the business models have been challenged, and both companies suffered over the past two years. A majority of KSHB/GNLN revenues come from the sales of vaporizers, which suffered during the vape crisis a few years back. Unfortunately, they continue to struggle and have not completely recovered, and the merger is an attempt to right the ship. However, we have our doubts about the Pro-forma business model and suggest that consolidation of the CCEL space will spell trouble for the new company.
