Cannabis Q&A Today
Today at 2 PM ET, we will be holding our Cannabis Q&A. We will discuss several topics, including:
- Cannabis earnings
- The Start of NJ legalization
- NY is making progress on Social Equity, but much to be done
- The challenges in the CA market
- ...and much more
CLICK HERE at the time of the event for the webcast and materials.
TRSSF eyeing NY?
The 4Q21 earnings season is uninspiring for many names, and TRSSF is not immune. But is NY in the company's future? How many other MSOs are looking at NY?
If you have NJ, as a major new market for future growth, it has been nothing but a disappointment, but that looks to be ending soon. Terrascend reported 4Q21 adjusted EBITDA $11.9M vs. FactSet $13.4M and revenue of $49.2M vs FactSet $53.1M. Retail sales for 4Q21 totaled $24.8 million flat Q/Q and up 55% YoY. The year-over-year growth in 4Q21 was driven by the acquisition of KCR and growth at two New Jersey dispensaries. The gross margin for 2021 was 53.3% compared to 54.8% in 2020. And the adjusted gross margin for the full-year 2021 was 56.1% compared to 57.2% in 2020—a contraction of 110bps YoY, driven by the PA reset. The gross margin for 4Q21 was 42.3% compared to 43.8% in 3Q21. This sequential contraction is related to one-time non-cash write-downs of inventory in Canada and a step up in the fair value of inventory related to the acquisition of HMS Health in Maryland. Adjusted gross margin for 4Q21 excluding these one-time items was 49.8% vs. 46.2% for 3Q21 - the 360bps improvement sequentially was mainly driven by improvements in PA. The most interesting takeaway from the call was the indication of interest to enter the NY market.
The CEO commented on the call, "We are – when those – the news came out several weeks ago about the hemp operators being able to help jump-start the program, we were extremely excited. And you should assume that we have been essentially combing the phone books or the Yellow Pages, so to speak, for the last several weeks and meeting with and speaking to as many hemp operators as we can. So we think there is a real possibility to enter the New York market in that way. And it's made us sort of very happy that we waited and were patient and did not enter the New York market and have to sustain the substantial losses that the other operators have had to sustain over the last few years to make it to the finish line. We think that we are going to be able to enter the New York market in one way or another over the next couple of years.
IL Social Equity Market Expansion
According to a press release by State Regulators, applications for 55 more dispensary licenses will be opened to Illinois social equity applicants in" late summer or early fall of 2022." The announcement comes as advocates held yet another press conference Wednesday to complain there are no minority-owned cannabis dispensaries in the state and that"they have not been able to go into business due to destructive lawsuits and legislative delays."
