The Florida Marijuana Market – Weekly Recap (March 6th, 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.

Trends in the Florida Marijuana Market

This week 1 new dispensary was opened, while the patient count increased by 0.76% compared to 1.27% last week, adding 2,438 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 jumped in a meaningful way. Total sales hit an all-time high with a 12% increase, while sales per patient jumped 13% to 322 mg THC per patient (second-highest all-time).

This jump appears to come at the expense of flower sales. Total flower sales and sales per patient saw their second consecutive weekly decrease, each recording a 9% drop.

Regardless of how the market is performing, it appears consumers still have healthy demand for THC products.

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 impressive growth.

This past week, one new dispensary was added, and overall changes to market share were relatively insignificant.

Trulieve dropped 6% in share of flower sales after multiple weeks of dominance. Liberty Health appears to be the main beneficiary, with Surterra and Curaleaf also seeing small gains.

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 -0.08% 0.99% -5.99%
Surterra Wellness -0.07% -0.60% 1.20%
Curaleaf -0.05% -0.92% 1.22%
Liberty Health Sciences -0.04% -1.06% 2.26%
Fluent -0.04% 0.31% -0.02%
VidaCann -0.02% -0.72% -0.02%
AltMed Florida (MüV) -0.03% -0.42% -0.08%
GrowHealthy (iAnthus) -0.03% 2.38% 0.14%
Other 0.37% 0.04% 1.30%

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.

As evident by the charts, there are only 1-2 players in each vertical that operate above unity in terms of efficiency. Further, the above graphs illustrate how insignificant some players are in either the extracts or flower space.

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 March 6th

Source: Florida OMMU.

The biggest jump was from iAnthus subsidiary GrowHealthy, which generated extract sales of over 6,000 mg of THC, more than doubling their 4-week rolling average.

Curaleaf appeared to have a solid week, however, it was largely par for the course — sales simply returned to normal levels after 2 weeks of a significant sales drop off. In contrast, Fluent appears to be struggling with the second week of sales well below average.

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.

As expected with the continued market meltdown, all names were down last week, and continue to fall further on a YTD basis.

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
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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