The Cannabist Company Announces Corporate Restructuring

The TDR Three Key Takeaways regarding The Cannabist Company and Corporate Restructuring:

  1. The Cannabist Company’s restructuring aims to eliminate loss-making operations in Florida.
  2. Restructuring to improve The Cannabist Company’s Adjusted EBITDA by $20 million.
  3. Florida exit allows The Cannabist Company to concentrate on profitable regions such as the Northeast region. 

The Cannabist Company Holdings Inc. (Cboe CA: CBST, OTCQX: CBSTF) announced significant corporate restructuring and upcoming Florida divestitures as part of its continued business transformation initiatives. The Cannabist Company, under the leadership of CEO David Hart, is undergoing an overhaul of its operational footprint to position itself for long-term sustainable growth and profitability.

As part of the corporate restructuring, The Cannabist Company plans to divest its underperforming assets in Florida. Hart emphasized the importance of this move, stating, “As we have made clear since the beginning of 2024, under new leadership, The Cannabist Company will look very different by the end of this year in terms of our operational footprint, overhead expenses, and de-risked financial profile. Our focus is on building a better business, positioned for profitability and long-term sustainable growth.” The Cannabist Company’s Florida operations have been suboptimal, with an excess of cultivation capacity relative to its retail needs. By selling these assets, the company aims to eliminate loss-making operations and generate non-dilutive capital.

The Cannabist Company’s restructuring strategy includes focusing on markets with better growth prospects and strategic upside. Hart highlighted this approach, noting, “We are decisively leaning into the markets that are best positioned for growth and strategic upside, while also monetizing underperforming and non-core assets.” Specifically, the company will continue to capitalize on its strong asset base in profitable markets such as Virginia and New Jersey. Additionally, it is preparing for upcoming adult-use transitions in Ohio and Delaware.

The restructuring is expected to result in a potential $20 million annualized improvement in Adjusted EBITDA. Hart explained, “The significant corporate restructuring we’ve undertaken will simplify our business, reduce overhead expenses, and more appropriately align with our evolving operational footprint as we exit Florida and divest assets in other underperforming markets in the coming months. The steps we announced today are among the most critical in putting us firmly on the right path for success.” The Cannabist Company’s leadership is committed to taking necessary actions to ensure a more sustainable business model with better margins and a clearer path to free cash flow generation.

Anthony Varrell, co-host of “Trade to Black,” supports this strategic move. He remarked, “I think it’s a great long-term move. I think it’s a short headline that people are going to get caught up in and think of it as a net negative.” Varrell added that The Cannabist Company’s 14 dispensaries in Florida were underperforming, lacking the sales velocity of their competitors. He pointed out that continuing to invest heavily in this market would not have been prudent given the strong competition from established players like Trulieve. Instead, Varrell sees the divestiture as an opportunity for The Cannabist Company to focus on its well-positioned Northeast footprint, which is gearing up for the shift to adult-use markets.

Varrell also said on the financial aspects of the divestiture, estimating that the deal could range between $10 to $25 million. He emphasized the strategic timing of this The Cannabist Company move, stating, “This was a good time to get out. They were going to do it. The writing was on the wall.” Want to be updated on Cannabis, AI, Small Cap, and Crypto? Subscribe to our Daily Baked in Newsletter!

You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More