Cresco Labs enters the FL market by acquiring Bluma Wellness (One Plant) for $213M (CRLBF, BMWLF)
CRLBF is a Hedgeye Cannabis Best Idea LONG.
Following on the heels of Ayr Strategies and Verano Holdings, Cresco Labs has entered the Florida market by acquiring Bluma Wellness in a $213 million transaction.
Cresco Labs CEO Charles Bachtell commented, “With Florida, we will have a meaningful presence in all 7 of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition. We recognize the importance of the Florida market and the importance of entering Florida thoughtfully – we identified Bluma as having the right tools and key advantages for growth. Bluma is known for having best-in-class cultivation in the state of Florida, a differentiated retail experience, and omnichannel offering with effective delivery, a clear pathway to scale, and an incredible management team.”
Bluma Wellness Highlights
- Under its subsidiary One Plant Florida, Bluma Wellness has 7 dispensaries in the state and has plans to open 8 more.
- One Plant stores rank 2nd highest in per-store sales of smokable flower in Florida.
- One Plant stores derive 15% of revenue from home delivery (among the highest in Florida).
- 54,000 sq. ft. of cultivation space (with the planned expansion of cultivation capacity, a processing lab, and edibles kitchen).
- One Plant dispensaries act as delivery hubs supporting the fleet of 15 delivery vehicles offering 24-48 hour statewide service.
- As of 01/08/21, on a 4WMA basis, One Plant has a 2.1% share of approved dispensary units, 1.0% share of THC (mgs) sold, and 2.7% share of flower (oz) sold in the Florida medical marijuana market.
The state is a $5-$6B market with recreational cannabis. Florida has the potential to become a top 3 market in the U.S. – it’s the third most populous state with 21.48 million residents and second in tourism with over 131 million visitors in 2019. Visitors spend well over $100 billion a year, generating 10% of the state’s GDP. Florida's path to go recreational is likely through a voter referendum in 2022, with the earliest adult-use sales could come online being in 2023.
Aphria reports a record quarter in Q2 FY21 (APHA, TLRY)
Yesterday, APHA reported fiscal Q2 net revenues of C$160.5 million vs. FactSet C$153.3 million, beating consensus estimates by 5.2% and posting a sequential increase of 10.7%. Adult-use revenue grew 3.6% QoQ and 149% YoY to C$72.1 million. Net cannabis revenue grew 7% QoQ and 99% YoY to C$67.9 million. The company attributed the net revenue growth due to an increase in distribution revenues at CC Pharma in Germany and an increase in net cannabis revenue, and five days of contribution from net beverage alcohol revenue from the acquisition of SweetWater. Net loss was C$120.6 million, or a loss of C$0.42 per share, compared to a net loss of C$5.1 million, or a loss of $0.02 per share in the prior quarter.
Adjusted cannabis gross profit for fiscal Q2 was C$31.2 million compared to C$31.5 million in the prior quarter; adjusted cannabis gross margin fell -380 bps QoQ to 45.9%, primarily due to due to supply and demand and inventory that was liquidated below cost.
The average retail selling price of medical cannabis, before excise tax, decreased to C$6.96 per gram in the quarter, compared to C$7.38 in the prior quarter. The decline is a result of specific pricing programs offered to assist patients in need who have been negatively impacted by the COVID-19 pandemic, along with other promotional programs. The average selling price of adult-use cannabis, before excise tax, increased to C$4.29 per gram in the quarter, compared to C$4.15 per gram in the prior quarter, primarily related to sales mix.
APHA’s acquisition of TLRY is expected to close in Q2 2021.
Canopy Growth ups ownership in TerrAscend to 26.8% (CGC, TRSSF)
CGC & TRSSF are Hedgeye Cannabis Best Idea LONGS.
Yesterday, Canopy Growth announced that it had acquired the option to acquire an additional 1,072,450 common shares of TerrAscend, conditional upon some form of federal legalization in the United States. The company also announced that since it had last upped its ownership in TerrAscend from 13% to 21%, it had acquired beneficial ownership over 22.5 million common share purchase warrants – thereby raising its interest in the MSO by 10.9% on a partially diluted basis. Following this transaction, Canopy Growth currently has effective ownership of 26.8% in TerrAscend on a partially diluted basis.
As a result of this transaction, CGC has a better path to capitalizing upon legalization in the US, by its. Importantly, we suspect that Jason Wild, the Chairman of the Board of TRSSF, will be an important asset to CGC’s way forward in the U.S. With its investments in TerrAscend and Acreage Holdings, Canopy Growth has clear visibility into the U.S. market.
