Verano Earnings
VRNOF is a USA Long.
We will be publishing the date for a VRNOF Black Book Shortly. 3Q21 revenues were $207 million compared to $199 million reported in the second quarter and $101 million reported in the same period one year ago, representing 4% sequential growth and 106% year over year. Gross profit increased 33% sequentially, excluding the impact of biological assets, to $133 million, or 64% of revenue, compared to $100 million or 50% of revenue reported in 2Q21. Third-quarter adjusted EBITDA was $111 million or 54% of revenue compared to $81 million or 41% of revenues in the prior quarter. Third-quarter EBITDA on an unadjusted basis was $107 million or 52% of revenues. SG&A expense was $32 million or 15% of revenue. Net income, excluding the impact of biological assets, net income was $15 million in the third quarter of 2021, compared to $32 million reported in the second quarter of 2021. Cash flow from operations was $68 million, and Free Cash Flow was $35 million.
The company also provided operational updates on its assets by the state. In Florida, their largest market, the company added four new dispensary locations. With adult use commencing in CT soon, the company had announced its acquisition of two active dispensaries and a 217,000 sq. Ft. cultivation facility. In Ohio, Verano has maxed out its footprint at five active locations with the acquisition of Mad River Remedies in Dayton. Florida, Illinois, Pennsylvania, and Ohio are their largest markets in that order. All of these markets are high-margin underpenetrated markets. The regulatory setback in PA has been an issue for several companies.
CT Before NY
Connecticut, whose market is expected to be small compared to New York's massive market, is expected to be commencing adult-use sales sooner than NY. State regulators said they are aiming to launch by year-end 2022. New York regulators have delayed the start of adult-use sales to mid-2023. We estimate that the CT market will be $700 Million at maturity. Before NY cannabis sales start, NY residents will likely flock to CT to purchase their legal cannabis. CT sales will be revenue accretive for Acreage Farms, which has 7.5% of its assets contained in the state. Several other players have entered the CT market, including Green Thumb Industries and Greenrose Acquisition Corp, a SPAC which acquired Theraplant in March.
AdvisorShares New ETF
Advisor share's new ETF named Poseidon Dynamic Cannabis ETF will begin trading today, November 17. It will trade under the ticker PDSN. The ETF will be sub-advised by Poseidon Investment Management, one of the first firms dedicated to investing exclusively in the emerging cannabis industry. "PSDN's portfolio is diversified across subsectors of the cannabis industry and dynamically managed to tactically overweight or underweight specific countries, subsectors, or individual companies. PSDN may seek to take advantage of specific market opportunities by intelligently using leverage to maximize potential returns." Unlike the MSOS, this ETF will focus on the global cannabis market rather than US-based MSOs.
