Market share trends in Florida (TCNNF, CURLF, GTBIF, CCHWF, LHSIF)
The Florida Office of Medical Marijuana Use (OMMU) releases updated cannabis data every Friday. This week’s date was released yesterday due to the Thanksgiving break.
For the week ending November 26th, the number of qualified patients in Florida’s medical marijuana program grew 0.1% WoW or 48.4% YTD to 443,917 qualified patients with active ID cards. Qualified patient adds slowed significantly, likely due to the Thanksgiving holiday. Despite most dispensaries closing for Thanksgiving Day, THC in mgs sold actually increased 1.8% WoW to 139.6 million mgs. CBD in mgs sold fell -5.4% WoW to 3.3 million mgs, and flower in oz. sold fell -16.5% WoW to 40,790 oz. sold.
Notably, Trulieve’s sales volume dropped across all categories. Compared to the prior week, THC in mgs sold fell -14.2%, CBD in mgs sold fell -30.8%, and flower in oz. sold fell -29.5%. This sales volume decrease translated to Trulieve’s market share this week contracting to 42.2% for THC, 31.3% for CBD, and 46.8% for flower. The sudden decrease comes as the company apparently transitioned to a new website and online system last week, which timed poorly with increased demand due to their Black Friday promotions and the holiday break. Patients took to Facebook, Twitter, Instagram, and Reddit to vent their frustrations at out-of-stocks, online orders being cancelled, long waits for in-person pickup, and difficulty reaching customer service. It seems that this week’s underperformance and debacle by Trulieve can be primarily explained by this new online platform incorrectly showing in-stocks for certain SKUs, failing to process a significant volume of online orders, and causing supply chain issues. Overall, this appears to be a one-off event produced by a technological issue not material to our long thesis for Trulieve.
Florida’s medical marijuana marketplace has strong potential – the state’s medical marijuana program still has a runway for population penetration, 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.
Cannabis Speaker Call with Clever Leaves CEO Kyle Detwiler this Thursday at 2PM ET (SAMA)
SAMA/CLVR is on the Hedgeye Cannabis LONG Bias List.
We will be hosting a conversation with Kyle Detwiler, the Clever Leaves CEO, on Thursday, December 3rd, at 2 PM. Per an announcement yesterday, Clever Leaves is expected to close its merger with Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA) around December 18th under the new ticker "CLVR."
Clever Leaves is a multinational operator and licensed producer of pharmaceutical-grade cannabinoids with its primary operations in Colombia. We are bullish on SAMA/CLVR and believe in the company's opportunity: the company is early stage, the global cannabis opportunity is significant, and Clever Leaves appears to be positioned for material revenue growth coupled with a very desirable cost structure in 2021 and beyond.
- The leader in low-cost medical-focused cannabis cultivation and extraction
- Thoughtfully constructed, a vertically integrated multinational operator (MNO)
- Pharmaceutical-grade, EU GMP-certified production authorized for export
- Purpose-built for significant growth, profitability, and operating leverage
- Talented and experienced leadership with operational and regulatory expertise
- Attractive valuation.
Kyle Detwiler Bio:
- Founded Northern Swan Holdings in 2017, which merged with Clever Leaves in 2019
- Co-founded Silver Swan Capital, an investment firm focused on niche and under-followed sectors Former Principal at Blackstone's Tactical Opportunities Fund
- A former investment professional at KKR focused on the oil and gas, energy, natural resource, and health care sectors
- MBA from Harvard Business School
Massachusetts regulators approve delivery regs
Massachusetts cannabis regulators voted 3-to-1 Monday to approve new delivery regulations for adult-use marijuana. Commissioner Jennifer Flanagan was the sole No vote. The new rules create two new license types: delivery operator and courier. Businesses participating in the state’s social equity program or have economic empowerment status will have three years of exclusivity on the new delivery licenses. Marijuana delivery operators will be allowed to buy products from cultivators and product manufacturers and sell them directly to consumers. Marijuana couriers will be entitled to deliver marijuana products from retailers to consumers but can’t sell products to consumers directly. The three-year exclusivity period will start when the first delivery licensee gets the go-ahead from regulators to commence operations. The regulations allow the commission to vote to extend the period of exclusivity “to promote and encourage full participation in the regulated marijuana industry by people from communities that have previously been disproportionately harmed by marijuana prohibition.” The Commonwealth Dispensary Association, representing about 80% of cannabis retailers in the state, expressed some concerns over the new rules. “To be clear, no one opposes equity, the creation of the delivery licenses will not meaningfully increase [social equity/economic empowerment] participation due to the capital and technology required to operate an online retailer.”
