Edibles approved for production and sale in Florida's medical marijuana market
Yesterday, Florida's Office of Medical Marijuana Use (OMMU) published emergency rules that authorized the production and dispensary sales of edibles by the state's licensed cannabis producers (TCNNF, CURLF). The emergency designation allows for the rules to take immediate effect. The cannabis director of Florida's Department of Agriculture, Holly Bell, said that her agency has so far given three kitchens the certification to produce and sell edibles. A single serving portion of an edible can contain at most ten mgs of THC.
The introduction of edibles could be a potential catalyst for well-positioned operators. Trulieve has been expecting edibles to come online this year, and management has been vocal on their preparedness for the opening of the edibles market in Florida. The company has a state-of-the-art, good manufacturing practice (GMP) certified 10,000 sq. Ft. kitchen slated just for edibles.
Below are comments from Trulieve's CEO Kim Rivers from their Q2 2020 Earnings Call (08/12):
"We have been anticipating edibles really, I mean, for a while now, to put it mildly. And we have our – we have a state-of-the-art 10,000 square foot kitchen ready-to-go, products formulated, not only with our own in-house brands but also with brand partners that have been announced across a number of product categories within the edibles lineup.
Additionally right, because of that – because of the greenhouse oil inventory that we have on hand and our ability to tap into that for our edibles products line, we believe that we are at a strategic advantage there concerning being able to launch and have that not impacted our availability of other products in other product lines.
With the question specifically on flower and whether or not we think that there will be impacts or cannibalization across segments, what I can tell you is that as I mentioned on the call, Florida particularly loves, loves, loves new and new market segments. Also, I can tell you that the – when we look at how quickly flower was adopted in in the State of Florida, flower came online in March of last year and we were quickly within three months, and I think it was within a quarter up to about a 50/50 product unit split between flower and oil. I don't see flower demand going anywhere. I do think that edibles at least initially will be an additive product. The question as to whether or not there's any degradation, I would think it would be a degradation potentially on the other oil categories versus flower. I expect flower consumption to continue to be fairly high."
Columbia Care (CCHWF) to close the acquisition of The Green Solution on September 1st
Columbia Care announced that it would complete its acquisition of The Green Solution (TGS), the largest vertically integrated cannabis operator in Colorado, on September 1st. Columbia Care is projecting that the acquisition will transition to a positive adjusted EBITDA in Q3 2020. The acquisition was first announced in November 2019 for $140M.
TGS's fully integrated operating portfolio includes 23 dispensaries and six cultivation and manufacturing facilities expected to generate approximately $88.5M in revenue and $18.5M in adjusted EBITDA in fiscal 2020. TGS supplies its own dispensaries along with its wholesale distribution network from its six operational cultivation facilities and one automated manufacturing facility. Once completed, the combined entity will establish Columbia Care as the largest operator in the $1.75B Colorado market, the second largest cannabis market in the world.
Through July 2020, TGS has unaudited revenue of $52.7M, a 29% YoY increase. The transaction increases Columbia Care's footprint to 95 facilities open or under development, including 73 dispensaries and 22 cultivation and manufacturing locations, covering 18 jurisdictions in the United States and the European Union.
Competition heats up in IL as Ascend Wellness (AWH) expands into Chicago
AWH, a private, vertically integrated MSO, announced that it plans to enter Illinois' largest cannabis market with an agreement to acquire a pair of well-known dispensaries in two iconic Chicago neighborhoods – Logan Square and River North. The agreement will allow AWH to take ownership of both MOCA - Modern Cannabis dispensaries following approval from the Illinois Department of Financial and Professional Regulation. The Logan Square location serves both medical and recreational customers, while the recently opened location in River North is just recreational. With this acquisition, AWH will have a total of 4 operating storefronts in the state. The company plans on adding two more retail locations in 2020.
Last week, IIPR announced that it had amended a lease with AWH at their cultivation center in Barry, Illinois, making available an additional $18M in funding for expansion of AWH's regulated cannabis cultivation and processing facilities at the property, including a new 90,000 square foot greenhouse facility and further production capacity enhancements for the existing 75,000 square foot industrial facility located on the property.
AWH also closed recently on a $68.2M funding round, and the company has set aside $41M for further expansion opportunities.
