After years of rapid expansion – and, more recently, swift exits – some of the nation’s largest cannabis multistate operators have continued to streamline operations this year, according to MJBizDaily’s latest update on the operations of several of the nation’s largest MSOs.
Two of the country’s biggest MSOs, Florida-based Trulieve Cannabis and Chicago-based Cresco Labs, exited state legal cannabis markets in the past five months, reflecting ongoing efforts to strengthen balance sheets as the industry awaits widely anticipated federal reform and improved investor sentiment.
Pressured by a tough macroeconomic environment and the slow pace of federal cannabis reform, MSOs began exiting challenging state markets over the past year and aiming to “optimize” operations in more lucrative markets.
Cresco Labs exited Arizona and Maryland in recent months, a company spokesperson confirmed.
The company has retail operations in seven states, resulting in $191 million in revenue in the third quarter and offsetting divestments, according to Cresco’s latest earnings results.
It’s all part of the company’s “Year of the Core” mandate, Cresco CEO Charlie Bachtell said in a statement.
“Our third-quarter results demonstrate our ability to drive solid performance,” he said, “with strong gains to our margin and operating cash flow, by continuing to execute on a strategy where we win in our core markets and with our core stores, core brands and core products.”
Trulieve divested its three remaining California retail outlets this year, according to filings, and ceased operations in Massachusetts.
“By taking proactive steps to strengthen our balance sheet, streamline operations, and reduce inventory, we will exit 2023 as a leaner organization,” Trulieve CEO Kim Rivers said during the company’s third-quarter earnings call.
“With strong cash generation and a clearly defined strategy, Trulieve is best positioned for the coming wave of meaningful growth catalysts.”
A move by the U.S. government to reschedule marijuana would be the most meaningful of those catalysts – and could help spur more investor interest in the cannabis industry.
The industry is also optimistic that the SAFER Banking Act, which would protect financial institutions from federal prosecution if they serve state-legal marijuana businesses, will be passed by the U.S. Senate.
But the measure’s prospects in the House of Representatives are less certain after the recent selection of hard-right Republican Mike Jonson as the chamber’s new speaker.
Meanwhile, support for marijuana legalization among Americans is at an all-time high. (Full Story)