Florida-based multistate operator Cansortium (CSE: TIUM.U) (OTCQX: CNTMF) reaffirmed its plans to expand operations in its home state and other markets during its third quarter earnings call, despite multimillion-dollar losses this year and uncertainty over the Sunshine State’s proposed adult-use marijuana ballot measure next year.
CEO Robert Beasley said the company is still committed to plans for new cannabis cultivation facilities in the Florida cities of Tampa and Williston, which will ultimately give the company upwards of 133,000 square feet of new indoor cultivation canopy. The Williston property will also add 10 acres for potential greenhouses. Both should be operational sometime next year, with phased-in rollouts.
“The growth potential is really kind of held in reserve, and it allows for incremental growth,” Beasley said of the two properties.
Beasley added that he’s keeping a close eye on the adult-use ballot measure. If recreational legalization is torpedoed by the state Supreme Court – still a very real possibility – it’ll affect the company’s plans for how much new production capacity will make sense.
Beasley said it’s a fool’s errand to try and predict what the justices will do about the Trulieve-backed ballot initiative, and so the company isn’t taking for granted that the state will convert to a recreational marijuana market.
“I was a trial lawyer, and I did somewhere around 30 arguments in front of higher courts. And I was never able to extrapolate the questions or the tone of the judiciary to the result,” Beasley said. “Maybe the justices intended that way for us to guess (the) tone and nature of the questions and try to extrapolate results.
“I think that’s a hazardous game to play, and I wouldn’t want to play it,” he said.
He added that he thinks the ballot measure still stands a “fairly mediocre chance of being successful” with the high court.
But for the long term, Beasley said, “we need to diversify” in order to keep growing, and the company may “need to staff up” in order to expand appropriately into different geographical regions in the U.S., such as New England.
That is the plan, however, because Beasley sees weakness in being over-reliant on the company’s home state. Expanding nationally will help “offset kind of what I call our Florida dependence,” he said.
With Cansortium’s $15.4 million in losses thus far for the calendar year and its $60 million debt load, the question may be where the company obtains capital necessary for such expansion deals, even if it does target distressed businesses for acquisition.