The Florida Marijuana Market – Weekly Recap (February 21st, 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

Weekly marijuana-related news flow appears to be at a minimum in the state of Florida this past week. With Benzinga’s Cannabis Capital Conference today and tomorrow taking place in Miami, hopefully, some positive news emerges.

Trends in the Florida Marijuana Market

This week 2 new dispensaries were added, while the patient count increased by 0.91% compared to 0.95% last week, adding 2,872 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 broke higher. Total sales increased 8%, reaching a new all-time high of 94.5 million mg THC, while sales per patient increased by 7% week over week.

If consumption rates continue to increase at similar rates even as new patients are added, investors can expect great things from the players with a meaningful market share.

Total sales and sales per patient of flower sales saw an even larger increase of 14%, continuing to push through all-time highs. Similarly, sales per patient increased by 13%.

Notably, last week’s sales slowed due to an off week by Curaleaf, giving the appearance of higher growth rates.

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

Marijuana Concentrate Consumption

Source: Florida OMMU.

Marijuana Flower Consumption

Source: Florida OMMU.

Weekly Competitive Analysis

Trulieve pushed upward in flower sales, with a gain in market share of 6.9%, pushing their control to 57%.

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 impressive growth.

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

This week, Trulieve continued to push upward in flower sales, with a gain in market share of 6.9%, pushing their control to 57%.

Curaleaf appears to be regaining market share in flower sales after substantial losses last week. However, considering flower sales are still less than half of what they were, it’s unclear how many weeks it will take to recover.

The remaining players mostly saw smaller losses in extract and flower sales. The table below summarizes the changes.

Clearly these companies are struggling to find an answer to Trulieve’s stranglehold on the market.

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.

Week Over Week Absolute Changes in Market Share

Dispensaries Extract Sales Flower Sales 
Trulieve -0.17% 0.24% 6.92%
Surterra Wellness 0.29% -1.09% -0.93%
Curaleaf -0.11% 1.84% 1.79%
Liberty Health Sciences -0.09% -0.08% -0.38%
Fluent 0.36% -0.03% -0.68%
VidaCann -0.05% -0.12% -0.21%
AltMed Florida (MüV) -0.06% -0.18% -2.58%
GrowHealthy (iAnthus) -0.05% -0.34% -1.91%
Others -0.12% -0.24% -2.02%

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 [stock_market_widget type="inline" template="generic" color="default" assets="TRUL.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] and Curaleaf [stock_market_widget type="inline" template="generic" color="default" assets="CURA.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] punch above their weight in extract sales, while Trulieve dominates 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 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 21st

Source: Florida OMMU.

As noted above, Curaleaf continues to have lower than average flower sales. As they recover, they will likely show weeks of considerable “growth”. This graph also highlight’s Trulieve’s impressive growth in flower sales, largely at the expense of the other players.

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.

Even though the Florida marijuana market has been on a tear in 2020, the players in the space have largely struggled on a YTD basis. As the positive results flow through to financials, this could lead to increases for the players capturing an outside portion of that growth.

Weekly and Yearly Stock Performance

Source: Florida OMMU.
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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 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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