Billions Wiped of US Cannabis Companies’ Market Value Amid Mixed Financial Performance in Q3
US cannabis companies have endured a significant selloff in the days following the results of the election, seeing $2.6bn wiped off their collective market capitalization.
The selloff comes as a swathe of leading companies publish their quarterly results, with a number of companies reporting financial misses, which could exacerbate the situation.
According to Viridian Capital Advisors, the market cap of the 31 public cannabis companies it tracks plummeted after November 06.
As reported last week, this is primarily due to the failure of Florida’s adult-use cannabis bill, which Viridian suggests has significantly diminished the industry’s growth prospects.
This markdown might not have been entirely overblown. Assuming a fully rolled-out adult-use program in Florida would have doubled the state’s projected $2.1 billion medical sales in 2024, the lost sales would translate to a $630 million EBITDA loss.
Applying a conservative 5x multiple, this would result in a $3.15 billion decline in market cap, roughly in line with the actual loss. The impact of Florida’s failed ballot vote is particularly significant, as it challenges the industry’s overall growth narrative.
Curaleaf Holdings reported a quarterly loss of $0.07 per share, missing the Zacks Consensus Estimate of a loss of $0.06 by 16.67%. This marks the company’s second consecutive earnings miss, with revenues of $330.53 million also falling short of estimates by 4.42%.
In a bid to shore up its finances, Curaleaf has secured a $40 million credit facility from a major commercial regional bank. The new credit line, which carries a 7.99% interest rate, will be used to cover operational expenses in the United States and Europe.
The credit line may help alleviate some of the pressure on Curaleaf’s stock, which took a hit after Florida’s recent decision to reject recreational cannabis legalization.
Meanwhile, Verano Holdings reported its Q3 2024 financial results, with revenue totaling $217 million, a slight 2.6% decrease from the previous quarter.
The company achieved a gross profit of $109 million, representing 50% of revenue, while selling, general, and administrative expenses were $92 million, or 43% of revenue. Net loss for the quarter was $43 million, or 20% of revenue.
Verano also reported adjusted EBITDA of $64 million, equating to 30% of revenue, and generated $30 million in net cash from operating activities, with capital expenditures reaching $57 million for the quarter.
Trulieve, one of the hardest hit following the Florida vote after it almost single handedly bankrolled the legalization campaign, reported stronger Q3 2024 results, with revenue climbing to $284 million, a 3% increase from last year, supported by 95% retail sales. The company achieved a 61% gross margin, up from 52% in Q3 2023, underscoring improved operational efficiency and growing customer demand.
During the quarter, Trulieve invested $48 million to back Florida’s adult-use cannabis campaign and opened 15 new dispensaries in Florida and Pennsylvania.
