Acreage, MedMen Look To Contain Costs As Revenues RiseMarch 3, 2020
U.S. cannabis players MedMen and Acreage Holdings announced earnings this week that underscored the distinct conditions of the various legal markets across the country.
Acreage Holdings, headquartered in New York and a major presence in Massachusetts’ recreational market, reported results for the last quarter and full year of 2019. Acreage is considered one of the largest cannabis companies in the U.S., boasts luminaries like John Boehner on its board, and has an acquisition agreement with Canopy Growth, yet its fourth quarter revenue was $21.1 million. For comparison, Canopy’s revenue for the same period was $93.4 million. While Acreage’s Q4 revenue doubled from the same period a year before, even its full 2019 revenue of $74.1 million (+251%) couldn’t match that one quarter of Canopy’s.
Acreage is also struggling to control its losses until revenue catches up—whereas Canopy’s net loss in Q4 was nearly even with revenue at $93.7 million, Acreage logged $50.6 million in losses, far more than its revenue. Nonetheless, Acreage’s underlying business seems healthier in EBITDA terms, where it took a pro forma adjusted loss of only $15.8 million in the fourth quarter. Acreage saw its biggest gains in its core New England market but also grew its presence in the Midwest and Mid-Atlantic. It remains mostly absent from the West Coast.
MedMen on the other hand operates primarily in California, where it drew in $32.4 million in the last quarter of 2019. Factoring in its presence in other states, which include Nevada, Florida, Illinois, and New York, total revenue for the quarter reached $44.1 million. The company reported an adjusted EBITDA loss of $35.1 million for the quarter, partially a result of aggressive cost cutting that will save the company approximately $46 million on an annualized basis. Despite the strong revenue, MedMen has struggled with a cash crunch that saw CEO Adam Bierman step down recently.
Up north, Canadian producer Tilray saw an 8% decline in cannabis sales to $46.9 million for the last three months of 2019. Much like its competitors, the worst news was its net loss, which ballooned to $219.1 million. It attributed $112.1 million of that figure to an impairment related to its agreement with Authentic Brands Group.—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.