You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
Over the next month, the leading American cannabis companies will be reporting their 4th quarter financial results, beginning with Green Thumb Industries on March 1st and Curaleaf on March 3rd. Several companies will be introducing guidance for 2022, including Curaleaf, Trulieve and Verano among the largest five. GTI has never provided guidance, and Cresco typically hasn’t done so. Ayr Wellness and Jushi have already provided their outlooks, and we anticipate that Ascend Wellness and Columbia Care could do so as well. We expect TerrAscend will again provide a full-year outlook, but perhaps it will wait until it closes the GAGE Growth acquisition to do so.
As we have discussed previously, the timing of New Jersey commencing adult-use sales is a major factor in terms of potential revenue in 2022 for many of these companies, so we could see guidance with asterisks from some operators. Further clouding the crystal balls has been a recent trend of sluggish cannabis sales across many states. For these reasons, analysts have already been revising their expectations lower. In the table below, we share the current 2022 revenue and growth projection, according to Sentieo, and also show how it has changed since the end of November for each of the ten largest companies by market cap:
The average projected growth is quite robust at 61%, some of which is from acquisitions, but eight of the ten companies have seen declines since the end of November. The average decline of 3% is modest. We note that the analyst revenue consensus for Ayr Wellness is below the company’s guidance of $800 million provided in November, while the estimate for Jushi is consistent with the range of $375-425 million that the company reaffirmed in November.
Given the factors discussed above, we view the current consensus numbers as likely a bit too high. With that said, we believe that investors are well aware of the recent sluggishness in cannabis sales and the delay in New Jersey. From our perspective, the valuations are low enough at this point to accommodate somewhat lower outlooks, especially from companies leveraged to New Jersey.
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Alan & Joel