In the fourth quarter of 2023, senior analyst Pablo Zuanic of Zuanic & Associates delved into the cannabis sector’s terrain with a report titled “4Q23 Trends in Key States.” This exploration provides an indispensable vantage point into the performances and trending patterns that are shaping the industry’s major players.
Market Movements And Regional Insights
While most states experienced stagnant or declining sales in 4Q23, notable growth was witnessed in Connecticut, Ohio, Illinois, Maryland, and Rhode Island. Companies like MariMed MRMD, Verano VRNO, and Green Thumb Industries GTBIF flourished owing to their diversified state presence.
Price stability emerged in various states, but the accelerated licensing pace led to diminished revenue per store, notably in states with store caps such as Illinois, Massachusetts, and New Jersey. Notable resilience in retailer economics was observed in states like Nevada and Pennsylvania.
The report spotlights the performance divergence of MSOs in Florida, with Trulieve TCNNF demonstrating steadfast volumes, Cresco Labs CRLBF achieving over 30% growth, and AYR Strategies AYRSF encountering significant downturns.
Catalysts And Regulatory Dynamics
The sector eagerly awaits the DEA’s response to the HHS’s rescheduling recommendation, a potential game-changer for the market, compounded by potential political shifts.
Zuanic highlighted the queries surrounding potential “unforeseen catalysts” in cannabis rescheduling, such as former President Trump’s stance, President Biden’s promises, and MSOs pursuing tax refunds.
Speculations concerning former President Trump’s support for rescheduling and President Biden’s potential federal cannabis legalization vow enhance the sector’s dynamic ambiance.
Regional Analysis And Business Performance
Divided Dynamics in State Markets
Arizona’s market, presided over by Trulieve and Curaleaf CURLF, with a 6% yoy sales dip and low wholesale prices, tends to favour retailer consolidation.
Challenging Journey in California
California faced a 12% yoy sales decline, impacting key players like GlassHouse GLASF, Gold Flora GRAM, and StateHouse STHZF.
“Prices are starting to stabilize recently, with wholesale leading the way. This has squeezed retailer spreads, though companies like Gold Flora and StateHouse are less affected due to vertical integration. Headset reports average flower retail prices at $5.23/gram in 4Q23, down 2% quarterly and 14% annually,” Zuanic revealed.
Colorado’s Unsteady Terrain
While sales in Colorado declined in the low teens, reduced price pressure indicates market consolidation, with Schwazze SHWZ eyeing expansion.
Nevada’s Steadfast Stance
Stable sales and high wholesale prices bolster major operators like AYR, Curaleaf, and Green Thumb in Nevada.
Prospective Conclusions And Strategic Impacts
Pablo Zuanic’s report paints a vivid picture of the complexities and evolutionary trajectory of the cannabis industry, heavily influenced by regulatory transformations and market dynamics. As the sector navigates these shifts, the ability to adapt and capitalize on specific state opportunities will be pivotal for companies, especially with the imminent DEA decision and potential political developments, presenting both challenges and growth prospects.
Photo: AI-Generated Image.
