The Florida Marijuana Market – Weekly Recap (February 14th, 2020)

Capital 10X breaks down the Florida marijuana market by looking at:

  • Weekly Market Moving News
  • Trends in the Florida Marijuana Market
  • Weekly Competitive Analysis

In a rapidly expanding market investors need to stay on top of who is growing like a weed and who is being squeezed out.

Weekly Florida Marijuana Market Moving News

Market moving news appears to be at a minimum this week. So instead, this week will be the Weekly Florida Marijuana Market Summaries.

Summary of Legislative Bills

Over the past year, much progress has been made on moving the Florida marijuana market forward. However, while bills have been filed, frustratingly none have been heard in committee. Here is a comprehensive list of Bills waiting to reach the committee for consideration:

  • Bill to waive the $75 medical card fee.
  • Bill to eliminate the vertically integrated business model.
  • Bill to allow marijuana retail facilities to sell products from companies aside from their own.
  • Bill to authorize patients to have more than one caretaker.
  • Bill to add sickle cell disease to the list of qualifying conditions for medical marijuana use.
  • Bill to allow for the expunging and sealing of records for cannabis possession charges.
  • Bill to protect employees who use medical marijuana.

Summary of Regulations

For any investors who consider themselves regulation buffs of the Florida marijuana market, this summary of regulations, committees, and government oversight is a must-read.

Anyone new to the Florida marijuana market should also consider reviewing the rules and regulations that affect the positioning and growth potential of the different companies competing in the space.

Trends in the Florida Marijuana Market

This week 7 new dispensaries were added, while the patient count increased by 0.95% compared to 0.94% last week, adding 2,968 new patients.

As expected, we continue to see increasing competition as the rate of dispensary additions outpaces the increase in new patients.

Growth of Florida Patient Count and Dispensaries

Source: Florida OMMU.

While patient count continues to grow, it will be important to watch consumption trends to see if patients are continuing to consume at their sky-high rates.

This week’s sales and sales per patient for extracts saw a small drop, which is expected given the strong recovery since the beginning of the year. As the patient count continues to grow, it will be important to see if the consumption per patient holds.

If the marginal patient additions consume less marijuana, it will indicate new patients are of lower value and drive down the overall economics of patient acquisition.

Total sales and sales per patient of flower sales also saw a comparable drop this week. However, this appears to be driven by an abnormal drop off in Curaleaf’s flower sales (82% decrease).

If Curaleaf had flat week over week sales, there would have been another week of record sales. This is a strong indicator of just how supply-constrained the Florida marijuana market still is.

With both extract and flower sales showing strong weekly numbers, clearly the market demand is very healthy.

Marijuana Concentrate Consumption

Source: Florida OMMU.

Marijuana Flower Consumption

Source: Florida OMMU.

Weekly Competitive Analysis

Now turning to the companies themselves, the following three graphs break down the market share of dispensaries, marijuana concentrate sales, and marijuana flower sales.

As a whole, investors looking to buy into the growing Florida market should look for companies with substantial market share. These players will capture an outsized portion of the market’s growth.

This past week, seven new dispensaries were added, however, the changes to overall market share were small. For the third week in a row, we saw big changes to the market share of flower and extract sales.

This week, Trulieve regained over 50% market share in both flower (+3.3%) and extract (+1.8%) sales for the first time since the week ending Dec. 20. After the addition of two new dispensaries this week, it will be interesting to see if it holds or increases further.

The most notable shift this week came from Curaleaf, who saw flower sales fall 82% week over week. This translated to a loss of 6.8% of market share, down to 1.6% of the market. While this is clearly an abnormally large shift, the root cause is unclear. Curaleaf investors should look to management for additional colour on what appears to be a material change (event).

Market Share of Dispensaries

Source: Florida OMMU.

Market Share of Marijuana Concentrate Sales

Source: Florida OMMU.

Market Share of Marijuana Flower Sales

Source: Florida OMMU.

Diving a little deeper, if you want to see the best return on your capital, you should invest in efficient operators. These will be the companies that generate a higher share of sales compared to their share of dispensaries.

Opening and operating dispensaries is very capital intensive. A company with a lot of stores but fewer total sales is using your capital inefficiently, signaling there are likely better investments.

The following graphs look at dispensary efficiency (x-axis) and market share (bubble size). Investors should look for companies that operate their dispensaries efficiently (highest ratio) while still capturing a meaningful portion of the total market (largest circle).

Market Share and Store Efficiency for Extract Sales

Source: Florida OMMU.

Market Share and Store Efficiency for Flower Sales

Source: Florida OMMU.

Companies with ratios greater than 1 are generating a higher proportion of total sales compared to their proportion of dispensaries — this signifies efficient operations. The size of the circle indicates how substantial their operations are relative to their peers. 

Invest in companies with higher efficiency and greater market share (large circle). For example, Trulieve and AltMed punch above their weight in extract sales, while Trulieve, AltMed, and Liberty Health dominate the flower category.

Investors can get a more detailed view of how a company’s sales are divided between extract and flower in the following graph.

Extract and Flower Sales Per Store

Source: Florida OMMU.

Wrapping things up, we wanted to look at how companies have been performing over the medium term. This last graph shows the change in total sales this week compared to the prior 4-week rolling average.

Any companies making significant gains could be up-and-comers to watch if you believe in the upside of the Florida market.

Sales Change for The Week Ending February 7th

Source: Florida OMMU.

As expected, Curaleaf saw a massive decrease this week compared to the prior 4-week average. Otherwise, the results were largely mixed company to company, with only Surterra and GrowHealthy increasing sales by more than 20%. Surterra’s increase could be partially derived from the new dispensary opened last week.

For any investors looking to buy into the Florida market, the following graph shows stock price changes on a year-to-date (YTD) and week-to-date (WTD) basis. Keep in mind, only Trulieve and Liberty Health offer largely pure-play exposure to the market.

Weekly and Yearly Stock Performance

Source: Florida OMMU.


iAnthus Capital Holdings was a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Evan Veryard
Evan Veryard has a Bachelor's of Chemical Engineering from McGill University and a MaSc. of Chemical Engineering from RMC. He has over 6 years of research experience focusing on industrial materials. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

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