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Verano Broadens Vertical Operations in Limited-License States

The company expects to open six social equity joint venture dispensaries during the second half of 2023 in Connecticut.

Zen Leaf cannabis dispensary sales floor in Elkridge, Md.
Zen Leaf cannabis dispensary sales floor in Elkridge, Md.
Courtesy of Verano

Company Profile:

Verano Cannabis Brand 2Verano Cannabis Brand 2

Headquarters: Chicago 

Operating States: California (holds majority stake in pest remediation business). Active in: Arizona, Nevada, Arkansas, Florida, Illinois, Michigan, Ohio, West Virginia, Pennsylvania, Maryland, Massachusetts, Connecticut, New Jersey. Forthcoming: *Recently won organic license for vertical operations in Alabama’s medical program (Editor’s note: Alabama’s license scoring process is being disputed.)

Employees: 3,700+ 

Dispensaries: Current active footprint of 132 Verano-owned and affiliated dispensaries across 13 states (as of July 12)

Cultivation Sites: 14 (vertical operations in 11 of 13 states) 

Cultivation Capacity: 1 million+ square feet and expanding

Geographic Focus: Verano focuses on expanding vertical operations within limited-license states versus any specific geographic concentration. The company's footprint is an outcome of its preference for limited-license states that are primed for adult-use transition.

Q1 2023 Financial Highlights:

  • Net Revenue: $227 million (12% increase YoY and 1% increase versus the prior quarter) 
  • Gross Profit: $109 million (and gross margin of 48%) 
  • Net Loss: $9 million 
  • Cash Balance: $95 million
  • 2023 Guidance: $50 million to $75 million of free cash flow and a tightened capital expenditure range of $35 million to $50 million for the year

Brands: BITS, Savvy, Encore (edibles), Verano, On the Rocks, Holy Union, Avexia, MÜV, CT Pharma (Connecticut only) 

Retail Banners: Zen Leaf, MÜV 

States With Retail Operations (as of July 12):

  • Zen Leaf: Arizona (6), Arkansas (1), Connecticut (3 currently operational dispensaries, with plans to add 5 additional stores via Equity Joint Venture partnerships), Illinois (10), Maryland (4), Massachusetts (2), Michigan (1), Nevada (5), New Jersey (3), Ohio (5), Pennsylvania (17), and West Virginia (5). Total: 62 
  • MÜV: Florida (70)

Total Dispensaries: 132  

2023 Expansion Highlights:

  • Announced opening of eight new MÜV locations in Florida.
  • Announced opening of two Zen Leaf locations in Pennsylvania. 
  • Announced opening of one Zen Leaf location in West Virginia. 
  • Announced winning one of five vertical licenses to operate in Alabama (in a scoring process that’s now under review).
  • Launched adult-use sales in Connecticut in January and Maryland in July. 
  • Announced key leadership promotions to executive team, highlighting execution of strategic succession plan.

Other Notable Highlights:

  • Introduced On the Rocks brand of solventless products in Pennsylvania and Illinois, with plans to further scale into additional core markets throughout 2023 including Florida, Arizona and New Jersey.
  • Plans to add additional MÜV dispensaries in Florida throughout 2023. 

Commentary:

In addition to launching adult-use sales in Connecticut earlier this year, Verano successfully launched adult-use sales on July 1 in Maryland.

"Verano is no stranger to the introduction an adult-use program to an existing medical market. And after being through this many times before, most recently [in] Connecticut just months ago, we are ready and excited for what we expect to be a robust program launch [in Maryland]," George Archos, Verano CEO and founder, said in May during the company's first quarter 2023 earnings call. 

Verano also expects to open six social equity joint venture dispensaries during the second half of 2023 in Connecticut, which will allow the company to expand while supporting social equity efforts in the state, he said.

Florida and Illinois are also on Verano's list of states to expand in 2023. 

"We now have [70] MÜV dispensaries across [Florida], and with a few more planned openings for the year," Archos said. "[We] anticipate continuing to strengthen our foothold in this medical market in advance of a potential adult-use ballot initiative."

 In Illinois, the company is optimizing canopy and production to meet demand.

"This decision is driven in large part by the slower than anticipated pace of new dispensary openings," Archos said. "Despite these delays, we continue our efforts to streamline operations, increase yields and introduce new brands and products." 

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