I am working on the cannabis business and asking a variety of questions. As I look at the margins, the first question is about taxes. How do you create an environment where everyone working for the company gets profits sharing, health care benefits, and we can give a piece of our EBIDTA back to non-profit organizations that are changing the lives of people who have formerly been incarcerated or teaching cannabis curriculum for those to work in the industry?
I read a handful of weekly cannabis newsletters. I particularly like Marijuana Moment. I rarely see profits from the largest cannabis companies that are publicly traded. Below is what I read last week.
Columbia Care Inc. reported quarterly revenue of $129.6 million and a net loss of $54.3 million.
Ascend Wellness Holdings, Inc. reported quarterly net revenue of $97.5 million and a net loss of $21.2 million.
TILT Holdings Inc. reported quarterly net revenue of $47.1 million and a net loss of $7.1 million.
4Front Ventures Corp. reported $28.4 million in quarterly revenue and a net loss of $6.5 million.
Auxly Cannabis Group Inc. reported CC$27.3 million in quarterly net revenue and a net loss of C$14.3 million.
The losses are significant. Why? Is it the markets aren’t kind of cannabis stocks? Is it increased competition as many others enter the industry as each state becomes legal? Are they all just crappy brands and products? Is it the shift from medical to recreational?
New Jersey legalized the recreational sale of marijuana this past 4/20 with twelve dispensaries. The first month brought in $24M in sales. The state racked up $4.6m in tax revenues in the first ten weeks—all impressive numbers.
What I am not reading is what the stores are making in profit after paying the Government to play in the space. I have heard that the businesses that run lean and mean can make up to 12% margins. Truth? Unclear. That is the data I would like to read.