The dust from 2022’s macroeconomic disruptions for the cannabis industry is finally starting to settle, as some of the nation’s largest multistate operators are looking forward to more favorable developments in 2023.
Florida-based Trulieve, Chicago-based Verano and New York-based Ascend Wellness reported their first-quarter financial results this week, with respective CEOs indicating the emergence of revitalized and/or stabilized growth strategies that were overwhelmingly put on pause in 2022.
At Ascend, which reported a record quarterly revenue of $141.2 million, interim co-CEO and President Frank Perullo pointed to Maryland’s forthcoming adult-use market, where sales are expected to launch on July 1, as reason for optimism in the months ahead.
On April 28, Ascend closed the acquisition of four dispensaries in Maryland from Devi Holdings, a deal that expanded the company’s footprint to seven states with a total of 31 operating dispensaries that are complemented by six cultivation facilities.
In addition to that outlook, Ascend generated positive cash from operations for the first quarter since the company’s inception.
“We were proud to generate nearly $6 million in cash from operations during the quarter,” Perullo said May 9 in prepared remarks for the company’s financial report. “Ascend’s balance sheet remains one of our top priorities and we are laser-focused on cash generation and committed to generating cash from operations for the full year 2023.”
Perullo, a co-founder of the company who has served as co-CEO since September, will transition to a strategic adviser role on May 15, when John Hartmann will take the permanent reins as the company’s chief executive, as decision that was announced May 9.
For the quarter, Ascend reported a net loss of $18.5 million. As of March 31, the company had cash and cash equivalents of $73.3 million and a net debt of $250.8 million.
At Verano, company officials reported first quarter 2023 revenue of $227 million, up 12% compared to the first quarter of 2022. That growth was driven primarily by strength from retail and wholesale adult-use sales in New Jersey, which launched its adult-use program April 21, 2022, and in Connecticut, which commenced sales Jan. 10, 2023.
Verano founder, CEO and Chairman George Archos also pointed to the company’s free cash flow (a non-U.S. Generally Accepted Accounting Principles (GAAP) financial measure) of $8 million as a highlight from the first quarter results, which were announced May 10. Also, Verano reported $17 million in cash flow from operations for the quarter.
In addition to the company’s expanding footprint, which now includes active operations in 13 states with 126 dispensaries and 14 cultivation and processing facilities with more than 1 million square feet of cultivation capacity, Archos said Verano delivered greater efficiencies that increased output across many key metrics.
“We remain confident in our ability to continue growing the business in a challenged environment, will closely monitor developments in Washington, D.C., on the reintroduction of SAFE Banking legislation, and look forward to leveraging our deep experience in transitioning markets as we approach the forthcoming launch of adult-use sales in Maryland,” Archos said May 10 in prepared remarks.
Verano’s gross profit for the first quarter of 2023 was $109 million, or 48% of revenue, and the company reported a net loss of $9 million. As of March 31, Verano’s current assets were $316 million, including cash and cash equivalents of $95 million. The company had a working capital deficit of $48 million and total debt, net of issuance costs, of $415 million.
At Trulieve, company officials reported $289 million in revenue for the first quarter, with 95% coming from retail sales. The company has an industry-leading network of 184 dispensaries in the U.S., which are supported by more than 4 million square feet of cultivation and processing capacity as of Mach 31.
In addition, Trulieve had $195 million in cash at the quarter’s end. CEO Kim Rivers said May 10 in prepared remarks that the company remains laser-focused on cash preservation and generation as she and her executive cohorts set the stage for the “next phase of accelerated growth,” which will include the opening of Trulieve’s first medical dispensary in Ohio this year.
“Trulieve’s scale and service, operational flexibility, and strong balance sheet are essential for success in the current environment,” Rivers said. “With increasing adoption and expanding state-level access to cannabis, the industry is well beyond the tipping point. Tremendous opportunities lie ahead for companies that can successfully adapt within evolving landscapes.”
Trulieve achieved a GAAP gross margin of 52% with gross profit of $150 million for the quarter. The company reported a net loss of $64 million for the quarter with an adjusted net loss of $21 million (excludes non-recurring charges, asset impairments, disposals and discontinued operations).
Trulieve exited the quarter with operations in 11 states, with 32% of its retail locations now located outside of its home state of Florida.