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Curaleaf Continues Search for Expansion Opportunities

The company has added five dispensaries in Florida and acquired three in Utah this year; more transactions are expected.

Curaleaf cannabis dispensary in New Jersey.
Curaleaf cannabis dispensary in New Jersey.
Courtesy of Curaleaf

Curaleaf

Company Profile:

Curaleaf Logo

Headquarters: New York, N.Y.

Operating States: 20

Employees: ≈ 5,500

Dispensaries in U.S.: 152 (as of July 12, 2023)

Cultivation Sites: 22

Cultivation Capacity: ≈ 4.2 million square feet

Wholesale Dispensary Accounts: ≈ 900

Geographic Focus: Highly populated states, high-growth markets with long-term potential, and European markets that show promise for reform.

Q1 2023 Financial Highlights:

  • Net Revenue: $336.5 million (14% increase YoY)
  • Gross Profit: $160.8 million (gross margin of 48%)
  • Net Loss: $54.4 million
  • Cash Balance: $115.8 million

States With Retail Operations: Arizona (16), Colorado (1), Connecticut (4), Florida (60), Illinois (10), Maine (5), Maryland (4), Massachusetts (4), Michigan (3), Nevada (7), New Jersey (3), New York (4), North Dakota (4), Ohio (2), Oregon (1), Pennsylvania (18), Utah (4), Vermont (2)

Additional State Operations: Kentucky, Missouri

Brands: Curaleaf, Select, Grassroots, Endless Coast, Find Flower, Plant Precision

2023 Expansion Highlights:

  • Launched adult-use cannabis sales at three Connecticut dispensaries (Groton, Hartford and Stamford).
  • Opened five medical dispensaries in Florida (Palm Beach Gardens, Clermont, Boca Raton, Boca Raton Glades, and West Palm Beach) for a total of 60 in the state.
  • Completed an acquisition April 10 of Deseret Wellness in Utah, giving Curaleaf three additional stores for a total of four in a state market of 15 total dispensaries.
  • Launched adult-use cannabis sales on July 1 at all four of its existing retail facilities in Maryland.
  • Terra Verde LDA, a Curaleaf International subsidiary in Europe, announced July 5 an acquisition agreement for the assets of Clever Leaves’ EU-GMP certified cannabis processing facility in Portugal.

Commentary:

Matt Darin, CEO (statement provided to Cannabis Business Times): “We have good representation in the states we want to be in, but we are always looking at opportunities to expand in strong markets like Arizona and Florida, where there are more retail license opportunities. We are being methodical about our cultivation where we are accelerating. As the market absorbs excess supply, we are reducing our focus on quantity and shifting to a quality strategy.”

Ed Kremer, CFO (from first-quarter earnings call): “Net capital expenditures in the quarter were $26 million. We expect CapEx spend to be front-half loaded and then decelerate in the back half of the year. We are prudently investing today in the future growth opportunities we see across the international and domestic landscape. We continue to expect 2023 CapEx to be approximately $70 million, or half of last year’s expenditures.”

Boris Jordan, Executive Chairman (from first-quarter earnings call): “[In addition to Connecticut and Maryland], New York is another important opportunity. This is a market where we have long held the No. 1 share position. Draft regulations came out [in mid-May], and while the [Office of Cannabis Management] has offered some concessions to the existing [medical cannabis operators], the industry is demanding more. The current regulations are hurting the hemp farmers and CAURD license recipients they were designed to help. These arbitrary rules only benefit the illicit market, which is thriving in the absence of legal competition. We, along with other market participants, are steadfast in our legal position and look forward to a quick resolution so the legal market can grow equitably and thrive. We are hopeful that we can begin selling in the adult-use market by quarter four in some form, which will be an important step towards elevating New York into a $5 billion market and the pinnacle of East Coast cannabis.

“Over the next two to three years, important Curaleaf states, including Florida, Ohio and Pennsylvania, are likely to convert to adult use. According to BDSA, these three markets combined are estimated to generate over $8.5 billion in sales by 2027, and we will be ready to capitalize.

“Beyond that, we have applied or will be applying for licenses in Texas, Alabama, Kentucky and North Carolina, which represent further growth opportunities that we are eagerly anticipating. We are committed to efficient expansion and highly profitable growth and believe that we are just beginning to tap into the possibilities of this rapidly emerging industry.”

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