With five state cannabis ballots on the agenda in the November 8 midterm elections, MariMed, Inc. (CNSX: MRMD) (OTCMKTS: MRMD) could see its total addressable market expand in at least two of them. Maryland Question 4, the referendum that would amend the state constitution by adding a separate article allowing possession of up to 1.5 ounces of cannabis, could expand adult-use sales stateside. On the eve of this historic vote—and with the release of third quarter financials on November 7—we invited Chief Financial Officer Susan Villare to give additional color on each event.
While the ballots have not ye been counted, the prospects of Maryland Question 4 approval look favorable heading into today’s vote. A recent poll by the Baltimore Sun found that around 63% of likely voters confirmed they support recreational cannabis legalization, with only 25% opposing it.
Another September poll from The Washington Post and the University of Maryland found even greater support. That survey suggested that 73 percent of registered Maryland voters favored legalizing recreational cannabis, while only about 23 percent opposed.
If today’s vote mirrors the consistent strength seen in the polls, we can expect to see Maryland’s topline get a material boost as legalization opens up next year. As CFO Susan Villare opines, sales at dispensaries that convert from medical-only to recreational can “double or triple” after conversion, as a general rule of thumb:
A lot of people speculate that usually they say it’s a double or triple what you’re seeing on the, you know, medical—so that’s kind of what we’re thinking… We’re poised to double, almost triple our grow. So soon as that’s passed we will be ready to go because we are selling out all the flower we have today, as well as all of our products. I mean, it’s great but we are now running three shifts to keep up with just the medical (demand in Maryland).
Should Maryland Question 4, expect more additions beyond the company’s flagship Panacea Wellness dispensary in Annapolis in due course. The dispensary is the eighth retail location across four states that MariMed either owns or manages, along with an exiting 180,000 square foot cultivation and processing facility in Hagerstown.
Under current state regulations, MariMed can legally own up to three additional dispensaries.
As well, MariMed recently entered into an agreement that will bring its portfolio of cannabis-infused edibles to Missouri. As part of the agreement, the company will develop and manage a production kitchen to serve the wholesale market.
Missouri Amendment 3, the cannabis legalization initiative, is on the ballot in Missouri as an initiated constitutional amendment and is expected to pass.
Regarding third quarter 2022 financial results, the company posted a noble performance given the well-known consumer spending and pricing headwinds facing the industry. MariMed grew gross margin sequentially to 48% from 45%, GAAP net income improved to $2.7 million from $1.8 million, and Adj. EBITDA rose 46% when compared on a year-over-year basis.
Overall, it was the eleventh straight quarter of positive Adj. EBITDA for the company. Susan Villare provides additional color on the numbers and operational prowess of the company.
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