The Cannabist Co. Holdings, formerly Columbia Care, announced June 17 that it plans to part ways with Florida’s medical cannabis market just months before citizens vote on an adult-use ballot measure this November.
The New York-based cannabis company is actively divesting its entire Florida portfolio, including three cultivation and manufacturing facilities, 14 dispensaries and its vertically integrated license.
This move comes after Florida represented less than 5% of Cannabist Co.’s total revenue in the first quarter of 2024 and after the company reported $4.8 million in net losses from its Florida operations in Q1, according to the company’s balance sheet. It also reported nearly $19 million in net losses for 2023.
The Cannabist Co. Holdings, formerly Columbia Care, announced June 17 that it plans to part ways with Florida’s medical cannabis market just months before citizens vote on an adult-use ballot measure this November.
The New York-based cannabis company is actively divesting its entire Florida portfolio, including three cultivation and manufacturing facilities, 14 dispensaries and its vertically integrated license.
This move comes after Florida represented less than 5% of Cannabist Co.’s total revenue in the first quarter of 2024 and after the company reported $4.8 million in net losses from its Florida operations in Q1, according to the company’s balance sheet. It also reported nearly $19 million in net losses for 2023.
In addition, Cannabist Co. implemented a corporate restructuring on June 13 that’s expected to save roughly $10 million annually, according to the company. The restructuring included both labor and non-labor reductions. The company did not specify how many positions were impacted.
Cannabist Co. CEO David Hart said the company’s focus is on building a business that’s positioned for profitability and long-term sustainable growth.
“We are decisively leaning into the markets that are best positioned for growth and strategic upside while also monetizing underperforming and noncore assets,” he said in a press release. “In Florida, for example, our asset base is not commercially optimized, with more cultivation capacity than our retail locations require. Our retail footprint and cultivation and manufacturing capacity are better suited to balance other operators’ portfolios; meanwhile, we will eliminate loss-making operations and bring in nondilutive capital.”
Cannabist Co. has letters of intent in place for multiple transactions for its divestitures in Florida and $2.75 million of deposits in escrow, according to the company. The final terms of the transactions will be announced at a later date. The company expects the impacts on its business to be accretive to both margins and earnings before interest, taxes, depreciation and amortization (EBITDA).
Currently, Cannabist Co. is one of 20 vertically integrated operators with up-and-running medical cannabis dispensaries in Florida. The company’s 14 stores represent 2.2% of the state’s retail market (648 stores), according to the Florida Office of Medical Marijuana Use.
While Cannabist Co. is exiting Florida, other companies are ramping up their presence, including 33 new store openings this year in the Sunshine State. In addition, many fellow multistate operators have made significant contributions toward the state’s adult-use legalization campaign, including Trulieve ($54.3 million), Verano ($2.3 million), Curaleaf ($2 million), Green Thumb Industries ($500,000) and Cresco Labs ($400,000), according to the Florida Division of Elections. Cannabist Co. did not contribute.
Regarding retail performance, when Cannabis Business Times took a deep dive into Florida’s medical market during the first 16 weeks of 2023, Cannabist Co. ranked 11th among 19 licensees in terms of the average flower sold per week per store (124 ounces).
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In addition to Florida, Cannabist Co. closed an underperforming retail facility in Trinidad, Colo., located near the New Mexico border, according to the release. The company still has 22 dispensaries in Colorado.
Also, Cannabist Co. closed its New York medical cannabis dispensary locations in Manhattan and Rochester due to lease expirations but plans to search for new locations, according to the release. The company intends to grow its adult-use wholesale presence in the state.
As of June 2024, Cannabist Co. has licenses in 14 U.S. jurisdictions and operates 81 dispensaries and 23 cultivation and manufacturing facilities, assuming the closure of the announced divesture transactions.
“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,” Hart said. “The steps we announced today are among the most critical in putting us firmly on the right path for success, representing potentially $20 million annualized improvement in adjusted EBITDA. Our leadership team is committed to taking the necessary, and often difficult, actions to deliver a more sustainable business with better margins and a clearer path to free cash flow generation.”
Meanwhile, the CEO said the company will continue to capitalize in profitable markets, like Virginia and New Jersey, and is actively preparing for transitions to adult-use operations in Ohio and Delaware.
Cannabist Co. has 11 medical cannabis dispensaries in Virginia, representing roughly half the state’s retail market, with the ability to open one more location. It also expects to open its third adult-use dispensary in New Jersey in Q4 2024.
In Ohio, Cannabist Co.’s cultivation facility is at 85% capacity and plans to enter the second half of 2024 at 100% capacity, aligning with the state’s adult-use sales launch. The company also intends to convert its five existing Ohio retail locations to adult-use sales and add three more stores under the state’s adult-use program.
And in Delaware, Cannabist Co. is one of six vertically integrated medical cannabis licensees. When the state launches its adult-use marketplace, the company plans to begin adult-use sales at all three of its retail locations and increase its cultivation and manufacturing capacity.
