Illinois adult-use cannabis sales break another record in July (CRLBF, GTBIF)
Illinois’s budding recreational market hit a new high in July with $60.9M in sales, a 28% sequential increase from June and a 55% increase from January’s sales. In-state residents contributed 73% of recreational sales, while out-of-state residents contributed 27%. Year-to-date, just over $300M of marijuana has been sold for adult-use in the state.
In 1H20, Illinois gained $52M in cannabis tax revenue. The economic success of adult-use sales is especially attractive with state coffers severely depleted nationwide due to the coronavirus pandemic.
Cresco Labs (CRLBF) recently announced that it would be opening its 9th dispensary this August in Schaumburg, Illinois under its national Sunnyside retail brand, bringing its total number of dispensaries nationwide to 19.
Green Thumb Industries (GTBIF) opened its 8th retail store in Illinois at the end of May 2020. The company has 48 total retail locations nationwide.
Illinois continues to be shaping up as one of the best adult-use markets (12.8M people, of which 9.4M are over 21) with projections of $1B in total revenue by 2024.
Both Cresco Labs (CRLBF) and Green Thumb Industries (GTBIF) are Hedgeye Cannabis Best Idea LONGS.
Massachusetts ends quarantine of cannabis vape products
On Monday, the Massachusetts Cannabis Control Commission announced that dispensaries statewide could resell quarantined cannabis vape products, as long as dispensaries submitted them for retesting. In September 2019, the state banned sales of nicotine and cannabis vaping products due to vaping-related lung illnesses. The following month, the state quarantined all regulated vape products. Close to nine months later, the state will allow these shelved products for resale if they undergo testing for heavy metals and Vitamin E acetate. The November quarantine order was amended to allow new vape products provided they met new regulatory standards – however, vapes manufactured prior to December 12, 2019 were not allowed for resell.
The state’s cannabis commission, in yesterday’s amended quarantine order, stated that it failed to detect Vitamin E acetate in tested vaping products.
Aphria (APHA) signs a strategic supply agreement with Israel’s Cannadoc
Yesterday, Aphria signed a strategic supply agreement with Cannadoc, one of Israel’s largest medical cannabis producers.
Under the terms of the Agreement, Aphria will supply Canndoc with dried bulk flower over a two-year period, with the option to extend for two additional terms of two years each, and an option for an additional year after that if the parties agree to terms. During the first two-year term and each additional term, if applicable, the company will provide Canndoc with 3,000 kgs. of bulk dried flower, which will be processed into finished product, co-branded under the Aphria and Canndoc brand names, and sold exclusively within the Israeli market.
However, the agreement of 3,000 kgs over a two-year term should be contextualized in Aphria’s Q4 FY20 results – the company sold 12,557 kgs and produced 52,243 kgs in the period ending May 31, 2020. An average of 375 kgs per quarter heading to Israel does not put much of a dent in excess inventory, but it does give APHA a foothold in the world’s largest importer of medical cannabis flower.
APHA is a Hedgeye Cannabis Best Idea SHORT.
