RIV Capital Inc. (CSE: RIV) (OTC: CNPOF), one of the few “registered organizations” in New York licensed to sell medical marijuana through its Etain subsidiary, made clear that its approach to the Empire State’s recreational cannabis market is to compete on wholesaling and brand-building, not retail.
With just over $90 million in cash, the company is well on its way down that path.
Etain is poised to triple its cultivation footprint by the end of October with eight total cannabis greenhouse grows, and then it’ll double its total canopy footprint once more when it launches a newly approved indoor cultivation facility in Buffalo, CEO Mike Totzke told shareholders on a call to discuss the company’s latest financial results.
“Construction, which is well underway, is expected to be completed in mid-2024 with cultivation and manufacturing anticipated to commence shortly thereafter,” Totzke said, adding that the new facility will focus on “the production of high quality flower, enabling Etain develop our presence as a top tier wholesaler.”
That’s only the start. Etain also has several new product lines almost ready for market, Totzke said, and the company already has shelf space in 34 of the 38 operational medical marijuana dispensaries in the state.
The final – and arguably smallest piece – of the puzzle is Etain’s retail footprint, since the company will be limited under state law to three recreational marijuana shops. The first store is tentatively slated to open before the end of the year, with the second and third to open by the middle of 2024, Totzke said.
“Our first mover advantage in New York and track record of thoughtful yet strategic capital deployment provides us with a competitive edge to strengthen our presence as a leading operator in the state,” Totzke concluded, adding that New York is a “largely untapped growth opportunity.”
The wholesale approach in particular could be a concern for the 278 outdoor farmers who have been licensed to sell recreational cannabis in New York, since they still have more than half a million pounds of marijuana to sell through this year and a retail bottleneck with only 23 operational recreational stores and a dozen farmers markets for the product to reach customers.
Hopes that more shops would open in coming weeks were dashed when the judge overseeing a lawsuit from four military veterans issued a preliminary injunction and rejected the Office of Cannabis Management’s list of companies for exemption.