What’s Next For Cannabis After Democrats Take the House and Senate?
In today’s Trade To Black podcast presented by Flowhub, Shadd Dales and Anthony Varrell watch cannabis news react to a sweeping set of midterm results for the Democrats, including Massachusetts voters rejecting Question 8 by more than 75%. Curaleaf Holdings (TSX: CURA) Chairman and CEO Boris Jordan joins the day after the company’s Q3 results, and Michael Bronstein, president of the American Trade Association for Cannabis and Hemp, breaks down Pennsylvania’s new Democratic trifecta.
Curaleaf posted record third-quarter revenue of $353 million, up 11%. U.S. revenue grew 8%, its third straight quarter of year-over-year growth, and international revenue rose 28% to $59 million. Adjusted gross margin was 49%, adjusted EBITDA was $78 million (a 22% margin), and cash finished at $105 million. Operating cash flow was $22 million, which management attributes to timing, and Curaleaf is still targeting about $150 million for the year. Jordan credits efficiency gains for offsetting price compression. He sees a friendlier Florida governor and a crackdown on the state’s estimated $3 billion hemp market as major opportunities.
In Germany, Jordan says flower prices fell from about €3 a gram in August to under €1 in October. He blames year-end dumping by some Canadian producers and imports falsely certified as EU-GMP. He expects German regulators to address the problem this quarter.
On Organigram’s C$7.80-per-share deal for Aurora, backed by British American Tobacco, Jordan says Curaleaf won’t raise its bid unless Aurora grants it due diligence, and he calls the rival deal dilutive. He says Curaleaf has other options if it loses. He also expects a recommendation from Judge Derek Julius within two to three weeks of the stay lifting.
Green Thumb’s results also landed during the show: revenue of $324.4 million, adjusted EBITDA of $89.4 million and operating cash flow of $58.3 million.
Bronstein notes that Democrats flipped Pennsylvania’s state Senate for the first time in more than three decades, which is promising news for cannabis. He argues that Senate Republicans, not Governor Josh Shapiro, were the real obstacle to legalization, pointing to Shapiro including it in three budgets. Jordan is more skeptical of the governor’s commitment. Bronstein expects legalization bills to move in the spring ahead of budget season.
Bronstein also points to Illinois Gov. JB Pritzker urging Democrats to let the federal hemp THC ban take effect, and expects a loud fight in the lame-duck session. He credits Ryan Dominguez for leading the winning Massachusetts campaign.
Tune in for the full post-election breakdown.
