Cannabis earnings reflect US weed sales as prices continue to decline | Media Pyro

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By Bill Peters

Curaleaf’s executive chairman cites ‘unexpected revenue impacts in Florida and New Jersey’ as the US pot maker’s revenue growth slows, further eroding prospects.

Declining prices for legal weed in the US will hang over the third quarter results of drug maker Curaleaf Holdings Inc. and Acreage Holdings Inc. on Monday, and both said the money was being pulled in one direction.

Curaleaf executives, during the company’s earnings call on Monday, said they have cut hours in stores and cut expenses elsewhere. And they said that as customers continue to visit Curaleaf dispensaries, they are beginning to look for ways to increase their budget, as inflation and inflation are increasing. worry that is hard to spend money.

“We continue to trade between our mid-range products, while maintaining our bottom-line costs,” Chief Executive Officer Matt Darin said on the call. However, he said the “price floor” will be closer to California, one of the largest legal markets in the country.

However, executives are projecting fourth-quarter sales of $353 million to $355 million, below FactSet forecasts of $369 million.

Curaleaf reported a loss of $54.7 million, or 7 cents a share, compared with a loss of $56.9 million, or 8 cents a share, in the same quarter last year. Sales came in at $340 million, compared to $317 million in the prior quarter. Sales grew just 1% from the previous quarter.

Analysts polled by FactSet had expected a loss of 3 cents a share on revenue of $337 million. Shares closed 3.4% lower on Monday.

CEO Boris Jordan, in Curaleaf’s financial filing, said there were “unexpected financial impacts in Florida and New Jersey.” During the call, he highlighted the legal restrictions in New Jersey and the effects of Hurricane Ian in Florida, which closed pot shops.

Curaleaf — one of America’s largest drug manufacturers, with multiple dispensaries and brands of operations in 22 states — has opened new stores in states like Arizona, Florida and Pennsylvania. in recent weeks. But the U.S. legal drug industry has been hit hard by falling weed prices, as illegal producers continue to grow and the market continues to suffer from lower profits, as it is being reconsidered. consumers to their shopping activities in a world of rising prices for basic things like groceries. and gasoline.

Acreage Holdings (ACRG) saw its earnings increase on Monday. Sales jumped 28% year over year to $61.4 million in the third quarter, but that figure was the same as the previous quarter.

The company lost 20 cents per share, compared with a loss per share of 12 cents in the same quarter a year ago. Gross margin was 35% in the quarter, compared to 49% a year ago.

“Cost increases due to inflation and price reductions due to competition negatively impacted margins during the quarter,” Acreage Holdings executives said in their earnings release.

Ben Kovler, CEO of Curaleaf competitor Green Thumb Industries Inc., citing data from the BDSA, recently told MarketWatch that drug sales in the United States have increased by 3%, while increased sales of units 22%. The gap between revenue and the amount of goods sold — which indicates low prices — has made it harder for regulators in many states to manage their own costs.

For more: Amidst the rise in inflation, one thing is on the decline — cannabis

Ahead of Curaleaf’s earnings, some analysts also said rising prices elsewhere could hurt the legal weed market.

“Based on our review of government trade data in the US, we found that in Q3 / 22, sales of end users increased at the trade level, on average, by 1.2% . MSO participation is limited to declining in many cases,” Canaccord analyst Matt Bottomley said in a note last month.

“As the main event in Q2, we believe that the increase in consumer spending will continue to grow as the price of food, transportation and other mindless food types and demand a larger share of the budget from consumers,” he continued.

Curaleaf said voters in five states are set to vote Tuesday on marijuana reform measures. Voters in Maryland and Arkansas will decide whether to legalize recreational activities. In Missouri, they will vote on a measure that could eliminate state restrictions on personal use. North Dakota and South Dakota will also vote on ratification measures.

Nineteen states allow the sale of recreational drugs. Most states have legalized marijuana for medical or recreational use.

Curaleaf’s stock is down 38% this year. By comparison, the S&P 500 index is down 20.9%.

-Bill Peters

 

(END) Dow Jones Newswires

11-07-22 1928ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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