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Profits Still Elude Major Cannabis Companies In Second Quarter, But Strong Expansion Continues Apace

September 3, 2019

Numerous companies reported second quarter earnings in the past week, and while profits remain elusive, some key players are inching closer to profitability on rapidly expanding revenues.

Chicago-based Green Thumb Industries, whose brands include Rhythm, Beboe, and the dispensaries Rise and Essence, reported a second quarter net loss of $22.2 million and EBITDA loss of $9.4 million. But revenues were up 60% from the first quarter and rose 228% from the year-earlier period, reaching $44.7 million. Green Thumb’s brand portfolio, meanwhile, grew by 70% in the second quarter, driven by consumer demand and by entry into new markets. The company now operates in 12 states (up from nine in 2018), and capacity expansion continues in Pennsylvania, Illinois, and Massachusetts. On August 23, Green Thumb acquired Fiorello Pharmaceuticals, one of New York state’s ten vertically integrated cannabis producers. Green Thumb founder and CEO Ben Kovler is the great-grandson of Harry Blum, who built the Jim Beam brand in the 1960s.

Meanwhile, Origin House, the Ottawa, Canada-based cultivator and distributor acquired by Chicago-based Cresco Labs this past spring, reported a net loss of C$34.9 million ($25.9m) in the second quarter, but a number of developments point toward a rosier future. Revenue reached C$21.4 million ($16m), up 91% from the first quarter. While C$3.9 million ($2.9m) of that came from Canadian operations, growth was driven by sales of C$16.9 million ($12.7m) in California through Origin House’s new California distribution platform Continuum, which began handling Cresco’s brands in June. During the second quarter, Origin House also finalized its acquisition of Cub City, a California-based producer of “bespoke, exotic cannabis,” while doubling capacity at its FloraCal cultivation facility in Sonoma County.

Elsewhere, Wakefield, Massachusetts-based Curaleaf reported record pro forma revenue of $110.9 million and total revenue of $48.5 million in the second quarter, up 38% from $35.3 million in the first quarter. With a net loss of $24.5 million, Curaleaf ended with an EBITDA gain of $3.4 million. The company has one of the largest footprints in the U.S. market, with last month’s acquisition of Chicago-based Grassroots putting it in 19 states. Given the restrictions on interstate cannabis transportation, that sort of presence opens major possibilities moving forward.—Danny Sullivan

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