The company has followed others' business plans and went lean.
The company has followed others' business plans and went lean.
Net loss for the quarter rose due to lower gross profit and high one-time costs.
Nevada has officially joined the list of legacy cannabis markets facing double-digit sales slumps.
A report by data firm Headset posits that the state has likely reached its peak of consumer demand as overcrowded markets cool down from the lockdowns sales boost two years ago.
The report pointed to a nearly $100 million drop in total revenue last year, a precipitous fall after the state posted more than $800 million worth of annual sales through October 2021.
The findings come as the Sliver State tees up a statewide rollout of consumption lounges after last month announcing license winners.
Despite the price compression, however, the second smallest state market ranks toward the top of the list when it comes to cannabis sales per capita due to the “immense tourism industry,” wrote Dai Truong, managing director at Arlington Capital Advisors and author of the report “A deep dive of the Nevada cannabis market.”
Las Vegas sees roughly 40 million tourists annually and visitor volume in 2022 rose by 27% through October, according to figures released by The Nevada Cannabis Compliance Board (CCB) and the Nevada Department of Taxation (DoT).
When normalizing sales totals for population size, Nevada has the second most sales per capita behind Colorado. The 13.1% downturn in year-over-year sales sits with and behind Washington (-13.1%), Colorado (-16.2%), and Oregon (-17%).
“For context, the rest of Headset tracked markets combined have seen total sales decline 1.7% year over year,” Truong added.
And while the state shares many of the same category trends versus other markets across the country, customers seem to show a stronger preference towards flower (up 3.3%) and pre-rolls ( up 1.4%). In contrast, concentrates have 3.3% less of the total sales than the rest of the U.S. market.
That same trending decline does not apply to the ever-popular vape pens category, which has grown in the state by 5.1% in the last year and has absorbed most of the void created by flower’s 8.4% drop in total sales share.
When it comes to basket size, the state had lost 12.6% of its value since October 2021, falling nearly $10 on average.
On pricing, the report pointed to the decline in average item price (AIP) sharply declining between Oct. 2021 through Oct. 2022 by 12.2%, nearly in line with the 12.7% fall in AIP for the rest of the market in that same time period.
Still, “while Nevada is experiencing pricing compression along with the rest of the market, their AIP in October of this year is 16.8% higher than the rest of the U.S.,” the report said.
The average discount has grown 7% from 12.8% to 19.8% between October 2021 and October 2022. Lower item prices and higher discounts reduce already strained margins for retailers.
Furthermore, depressed prices and growing discounts “indicate lower profits for retailers that have seen units per basket stay relatively flat over the last 12 months.”
As the race toward national brand recognition churns along, the number of brands throughout the state’s dispensaries has also stalled “and even shrunk by about 6% with 353 distinct brands capturing a sale” in 2022 so far.
A maturing market is partly to blame, in addition to other economic headwinds created by an artificial spike in demand in 2020, as the brand count increased by 40% from 270 brands to 378 between 2019 and 2020.
The Daily Hit is a recap of cannabis business news for Dec. 1, 2022.
Colorado Cannabis Industry Enduring ‘Largest Downturn’ in its History
One of the most mature cannabis markets in the United States, Colorado, is going through a financial crisis. The statewide industry is suffering a major sales dip that has been trending downward for the better part of a year, and insiders expect business casualties in coming months. Read more here.
Dutchie Co-Founders Step Down, Board Names New Leadership Team
Cannabis tech company Dutchie underwent a major leadership shakeup this week. The co-founding duo of Ross and Zach Lipson stepped down from their leadership posts at the privately held Oregon business, and the board of directors has named a new chief executive officer, chief financial officer, general counsel, and a vice president of engineering. Read more here.
Radient Technologies Deep in Debt, Trying to Swim Upward
Alberta-based cannabis extract maker Radient Technologies Inc. (TSXV: RTI) posted second-quarter results showing it either needs more cash flow or financing to keep the ship sailing. The company said it has overdue liabilities concerning rent, wages, long-term debt, and leases. Read more here.
Can Publicly Traded Bonds Keep the Cannabis Industry from Getting Smoked?
In 2021, cannabis companies racked up $1.65 billion in debt; in 2022, it skyrocketed to more than $5.62 billion of issued debt financing. Alarms are now going off because these loans are maturing, and payments are coming due. Since bankruptcy is not an option, what is the solution? Read more here.
Nevada Doles Out Consumption Lounge Licenses
Nevada picked 20 independent lounge licenses for businesses looking to build out new facilities for consumption lounges and sell product from other operators, with half of those licenses designated for social equity applicants. Read more here.
New York’s equity-focused rollout of its legal marijuana market relies heavily on a $200 million fund to support the state’s first retailers. Yet the team picked to raise and manage that money – an NBA Hall of Famer and a shoewear entrepreneur – have repeatedly failed to deliver on their biggest and boldest claims, including investing in entrepreneurs of color with a $100 million fund. Read the NY Cannabis Insider investigation here.
The Minnesota Department of Health will add irritable bowel syndrome and obsessive-compulsive disorder to the list of qualifying medical conditions for participation in Minnesota’s medical cannabis program. Under state law, the new qualifying conditions will take effect Aug. 1, 2023. Read more here.
CordovaCann Corp., a cannabis-focused consumer products and retail company, has forged a deal with Midwest retailer Jackson BevCo Inc. to facilitate the opening and operation of cannabis retail stores within or beside Jacksons convenience stores starting in 2023. Read more here.
The Cannabis Control Board randomly selected 20 operators in the random lottery.
The company took steps to shore up its cash position during the quarter.
The Daily Hit is a recap of cannabis business news for Nov. 1, 2022.
New York Regulators Roll Back Cannabis Testing Standards
New York cannabis regulators on Tuesday took a major step in easing testing lab safety standards for the upcoming recreational marijuana market, apparently in response to industry pressure regarding contamination thresholds. The Office of Cannabis Management notified licensed growers via email on Tuesday that “the Office has updated its Laboratory Testing Limits to remove the pass/fail limits” for bacteria, mold, and yeast. Read more here.
Nevada Receives 100 Cannabis Lounge Applications, Predicts Opening Early 2023
Nevada has taken another step toward becoming the first state with a solidly functioning cannabis consumption lounge industry that allows businesses both sell cannabis and have visitors smoke on-site. The state Cannabis Compliance Board announced Monday on Twitter that it had received a total of 100 consumption lounge applications before the submission window closed on Oct. 27. Read more here.
Hexo Reports $1 Billion Loss for Fiscal Year 2022
Hexo (Nasdaq: HEXO) reported net revenue for fiscal year 2022 of $191.1 million, up from $123.8 million from the fiscal year that ended July 31, 2021. Total revenue was $265 million, up 53% from the prior fiscal year. The net loss for the full year was an eye-popping $1 billion versus last year’s net loss of $115 million. Read more here.
Sol Global Continues Slow Exit from Cannabis
SOL Global Investments Corp. (CSE: SOL) (OTCPK: SOLCF) did not release any third-quarter revenue figures but instead noted its net losses. For the third quarter, the total loss from investments was $11.2 million versus a gain of $12.5 million for the same period in 2021. The company also reduced its stake in cannabis from 18% to 14% and is instead gravitating to companies like electric motorcycle company Damon Motors and robotic delivery company Kiwi Campus. Read more here.
Avant Brands Bids to Buy Flowr Corp. Subsidiary out of Bankruptcy
1000343100 Ontario Inc., of which Canadian cannabis producer Avant Brands Inc. (TSX:AVNT) (OTCQX:AVTBF) owns 50% of the issued and outstanding shares, has entered into a stalking horse purchase agreement to acquire all of the issued and outstanding shares in the capital of The Flowr Group Inc., a subsidiary of The Flowr Corp. A stalking-horse bid is the initial bid on the assets of a bankrupt company. Other buyers can submit competing offers following a low-end stalking horse bid. Read more here.
Cannabis Activists Push for Psychedelics Renaissance
As the psychedelics industry’s disagreements with the federal government on a variety of issues continue to rage, the fight to make things right between the citizens of this country and their duly-elected officials over a federally illegal plant has been taken up by some of the same activists who led the charge for cannabis. Read more here.
SNDL Acquires Zenabis Business
SNDL Inc. (Nasdaq: SNDL) announced today that, in the context of proceedings pursuant to the Zenabis Group’s filing under the Companies’ Creditors Arrangement Act (Canada), it has successfully closed its acquisition of the Zenabis Business, pursuant to an approval order of the Québec Superior Court. Read more here.
Marijuana remains in a legal gray area in Virginia 16 months after the state legalized the possession and use of marijuana for recreational purposes. But the state has not established a legal means of acquiring the product for nonmedicinal uses. Read more here.
When Massachusetts lawmakers passed a package of reforms to the state’s marijuana business laws over the summer, their intent seemed clear: To crack down on municipalities charging cannabis operators unjustified “impact” fees, which are ostensibly meant to offset the negative effects of a marijuana business. But now, with the law scheduled to take effect next week, there is widespread disagreement over its implementation — and a likelihood that many cities and towns will for the time being continue to collect impact fees that exceed the new legal limits. Read more here.
Nevada has taken another step toward becoming the first state with a solidly functioning cannabis consumption lounge industry.
The Daily Hit is a recap of cannabis business news for Oct. 27, 2022.
Trulieve Worker Death Could Spur Changes in Massachusetts Cannabis Industry
The death of a Trulieve employee at a Massachusetts product manufacturing facility in January may lead to significant shifts within the state’s cannabis industry. That could include additional industry oversight, momentum for unionization efforts, and perhaps more yet-unforeseen shifts such as the founding of a state-run testing lab to act as a check on privately owned marijuana labs, sources told Green Market Report. That doesn’t include the still-unclear blowback for Trulieve (OTC: TCNNF) (CSE: TRUL) itself. Read more here.
Florida Chills Plan to Sell Cannabis at Circle K Gas Stations
Investors and others bullish on the news that Green Thumb Industries (OTCQX: GTBIF) would start selling medical marijuana out of stores attached to Florida Circle K gas stations next year may have to curb their enthusiasm. The state’s Department of Health told Green Market Report that the project “has not been approved by the state.” Read more here.
Verano Refinances Debt Extending Maturity Dates
Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) has entered into a credit agreement to refinance its existing $350 million credit facility, extending the maturity date to Oct. 30, 2026. Refinancing comes amid the company’s new legal battles with its spurned acquisition of Goodness Growth. Read more here.
Dozens of Michigan Cities to Vote on Fate of Cannabis Businesses
Marijuana is on the ballot next month in at least 32 communities across Michigan. The vast majority are asking voters whether the community should allow marijuana retailers and growers to operate. The state’s marijuana industry has suffered a massive blow in recent months due to oversupply of product, collapsing prices more than 45% in the last year. Read more here.
A Clark County District Court judge has ruled in favor of local cannabis advocates and declared that the Nevada State Board of Pharmacy is no longer authorized to govern cannabis and must remove marijuana, cannabis, and cannabis derivatives from the controlled substances list. Read more here.
Bloomios Inc. (OTCQB: BLMS), a white-label and private-label manufacturer and wholesaler of hemp-derived nutraceutical, cosmetics, and pet products, has acquired Infusionz, a wholly owned subsidiary of Upexi (NASDAQ: UPXI). Moving forward, Bloomios will manufacture products retained by Upexi, and Upexi has provided significant financing to enable this transaction. The acquisition includes Infusionz’s portfolio of CBD gummy brands and customers, along with its associated order flow, product formulations, manufacturing operations, equipment, and sales team. Read more here.
Chemistree Technology Inc.
Chemistree Technology Inc. (CSE: CHM) (OTCQB: CHMJF) has negotiated the conditional sale of its Washington state subsidiary. The company executed a Share Purchase Agreement with an arms-length party, whereby the company under certain circumstances would sell 100% of its Washington Assets via the sale of subsidiary, Chemistree Washington, to the other party in exchange for consideration of $500,000. Read more here.
Company says being a public stock is too expensive.
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