Despite pouring millions into the push for adult-use cannabis legalization, Florida’s cannabis market is showing signs of strain.
According to a recent report from Beacon Securities, financial backing for the legalization campaign has surged, yet dispensary sales have slipped during the third quarter of 2024.
Companies like Trulieve Cannabis Corp. TCNNF and Curaleaf Holdings Inc. CURLF are leading the charge with significant contributions, but the growing number of dispensaries and external factors, such as Hurricane Helene, have raised questions about whether the market’s fundamentals justify the hype.
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Turbocharged
The Smart & Safe Florida campaign, responsible for spearheading the adult-use legalization efforts, received a significant financial push in September.
According to the report by analysts Doug Cooper, Russell Stanley and Donangelo Volpe, Trulieve Cannabis recently added $9.5 million to its contributions, while Curaleaf contributed $1 million. To date, the campaign has raised over $100 million, with more than $24 million still available.
Diluted Growth
Per-dispensary sales in Florida showed signs of softening during Q3, impacted by an increasing number of dispensaries and temporary disruptions like Hurricane Helene.
The state saw a 4% quarter-over-quarter (q/q) rise in dispensaries, with nine companies adding a total of 26 new locations.
According to the report, Trulieve alone accounted for 12 of these openings.
Overall, flower sales volume in the state increased 3% q/q, while oil-based product sales dipped 1%, with both categories showing slower growth compared to the previous quarter.
On a per-dispensary basis, flower sales volumes slipped 1% q/q, while oil-based product sales fell 5%.
These figures likely reflect the increased competition from new dispensaries and effect of storm-related closures.
Top Players See Mixed Results
Trulieve, the dominant player in Florida, maintained its leadership position despite mixed results in both product categories. Its flower sales increased by 1% q/q, although the company lost 68 basis points (bps) in market share, now standing at 38%. In the oil-based product category, Trulieve’s sales remained flat, but it gained 50 bps in market share, increasing its lead to 31%.
Curaleaf, the second-largest operator in Florida, reported a strong 11% rise in flower sales volumes, boosting its market share by 79 bps to 10%. However, its oil-based product sales fell 2%, though it retained its second-place ranking with a 13% market share despite a slight loss of share.
Verano Holdings Corp. VRNOF had flat flower sales following sequential declines in Q1 and Q2, which were attributed to capacity upgrades. The company’s market share in flower sales slipped by 19 bps, landing at 7%, keeping its third-place ranking. Verano’s oil-based product sales dropped 8%, reducing its share by 68 bps to 9%.
Ayr Wellness Inc. AYRWF experienced strong growth in flower sales, up 12% q/q, which increased its market share by 51 bps to over 6%, ranking fourth in the state. However, its oil-based product sales declined 7%, dropping its share by 72 bps, though it maintained its third-place position with a 12% market share.
Smaller Players
- Cresco Labs Inc. CRLBF saw solid growth in both product categories, with flower sales volumes rising 7% q/q, raising its market share by 20 bps to 5%. The company’s oil-based product sales increased 6%, adding 23 bps in market share, taking it up to 4%.
- Green Thumb Industries Inc. GTBIF posted mixed results, with flower sales declining by 18% q/q, lowering its market share by 45 bps to 2%. However, its oil-based product sales surged by 26%, adding 48 bps to its market share, also reaching 2%.
- Planet 13 Holdings Inc. PLNHF managed to hold its ground in the oil-based products segment, with market share flat at 2% despite a 2% sales decline. However, the company’s flower sales fell 12%, reducing its market share by 47 bps to just under 3%.
Read Also: What Trump Learned About Marijuana That DeSantis Did Not And Why The GOP Might Become Weed-Friendly
Florida’s $100M Bet: What’s At Stake
With adult-use cannabis legalization on the horizon through Amendment 3, Florida’s market is set to see significant changes. According to BDSA data, total cannabis sales in Florida are projected to grow at a 12% compound annual growth rate (CAGR) from 2023 to 2028, reaching $4.5 billion by the end of that period.
However, legislative uncertainties surrounding the expansion of adult-use licenses add unpredictability to the market, with over 600 dispensaries already in operation and medical cannabis sales hitting $2.6 billion in 2023.
Hype-Worthy?
Pablo Zuanic‘s analysis paints an optimistic picture for Florida’s cannabis market, predicting a $6 billion valuation and significant growth for operators like Cansortium and AYR Wellness if adult-use legalization passes in November 2024.
Zuanic forecasts up to 400% growth for AYR and substantial upside for other major players, highlighting the potential market explosion. However, when compared to the recent Beacon Securities report, which shows slipping per-dispensary sales and slowing growth, the question remains whether the market fundamentals can sustain this anticipated boom.
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