Market share trends in Florida (TCNNF, CURLF, GTBIF)
The Florida Office of Medical Marijuana Use (OMMU) releases updated cannabis data every Friday.
For the week ending September 24th, the number of qualified patients in Florida’s medical marijuana program grew 1.1% WoW or 40.7% YTD to 420,743 qualified patients with active ID cards. Demand for THC weakened after exceptionally strong results last week – WoW, THC in mgs sold fell -8.7% to 122.8 million mgs. CBD in mgs sold declined -2.4% WoW to 3.7 million mgs, and flower in oz. sold grew 4.0% WoW to 45,879 oz. sold. One Plant was approved for another dispensary location, bringing its total to five. Statewide, there are 276 approved dispensing locations. As mentioned in an earlier note last week, COOKIES, a California-based cannabis brand and retailer, entered the Florida market by purchasing one of 22 approved MMTC licenses from Tree King-Tree Farm Inc. The private company expects to open its first retail location in 2021.
On a 12WMA, Trulieve’s THC in mgs sold per dispensing location dipped slightly by -81 bps. The company has hovered between 1.1M to 1.2M mgs since the beginning of May, with an overwhelming lead compared to other operators. AltMed Florida, while far below Trulieve’s efficiency, has been gradually closing that gap over the past few months. In terms of flower on a 12WMA, Trulieve had a meaningful uptick by 195 bps. On a 4WMA, continues to maintain a disproportionate market share, with 49.6% share of mgs THC sold, 36.1% of mgs CBD sold, and 51% of oz. in flower sold, at just 21.1% share of dispensing locations.
Trulieve is a Hedgeye Cannabis Best Idea LONG.
Florida’s medical marijuana marketplace is still in early stages with strong potential – the state’s medical marijuana program has yet to reach 2% of the population, edibles were just introduced to the market in August, and there’s a broad range of qualifying medical conditions, notably ‘severe and chronic pain’. The rising tide that is patient volume growth lifts all ships.
In Colorado, wholesale prices hit a three-year high (CCHWF)
According to a report released by Colorado’s Department of Revenue (DOR), the average market rate (AMR) for wholesale cannabis bud has hit a three-year high at $1,316/lb. The AMRs are calculated on a quarterly basis for use in levying excise taxes in the state; the DOR bases this calculation for Q4 using Q3 transactions originating from retail marijuana cultivators. The latest figure for a pound of unprocessed retail marijuana bud represents a sequential increase of almost 32%. The AMR for a pound of trim grew 16.7% sequentially. However, categories related to extraction/infused products fell sequentially. The AMR per pound of bud allocated for extraction and per pound of trim allocated for extraction fell 16.2% and 13.4%, respectively.
Wholesale supply in Colorado typically decreases as the summer ends and into fall, before the annual outdoor grow is harvested, which prompts a price increase. However, it’s possible the wildfires and inclement weather (the early freeze in September) are playing a role in depressing supply and raising the AMR for wholesale cannabis bud.
CPG giant Unilever partners with Canadian extractor Neptune (NEPT, UL)
Neptune Wellness Solutions, one of Canada’s largest cannabis processors/extractors, has partnered with Unilever in a distribution agreement in the U.S. and Canada. The company will distribute Unilever-branded products through the availability of its products in its warehouse systems. Aside from cannabis derivative products, Neptune also produces health and wellness products in the hygiene category; the company has Neptune-branded hand sanitizer products in retail chains like Costco and Home Depot. This agreement with Unilever supports the diversification of Neptune’s portfolio.
Based on Unilever and Neptune’s projections, the agreement could generate potential sales revenues of USD$65 million up to USD$137 million over the next 18 months. Neptune expects to receive first shipments of products into its inventory by the end of October 2020. The distribution agreement does not require any minimum annual purchase commitments. Acceptance of orders placed by Neptune are at the discretion of Unilever.
"This is the latest in a growing list of partners, including national retailers in the club store channel, International Flavors & Fragrances, and others," said Michael Cammarata, Chief Executive Officer and President of Neptune. "We believe these high-profile partners will help Neptune expand our distribution relationships and help us with our goal of bringing our own branded products to market."
