Kim Barker

Good morning California Cannabis Industry, Today, in the economic evolution of cannabinoids (both cannabis and help), there's one question remaining: WHO WON THE RACE TO THE BOTTOM?  I'd love to hear your thoughts.  

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As the cannabis industry matures, we are starting to get reliable data. This can help make decisions based on real sales figures and not predictions. 10 years ago, there was only one state with adult use sales (#colorado) and a handful of states with medical seals. Now there is 24 sates with adult use sales and an additional 15 states with medical seals. At the moment #california leads with total seals but #michigan leads with per capita seals. #florida leads in medical seals. #missouri with a relatively small population and only 17 months since they launched their adult-use market, is already in fifth place. Thank you Debra Borchardt from Green Market Report for the financial update. #cannabisindustry #cannabiscommunity #cannabisnews #cannabiseducation #cannabispolicy #cannbislaw https://lnkd.in/gc96gcCh

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Tier One Earnings Analysis: So Far, So Good With four of the top five plant-touching US cannabis companies reporting, the "tier-one" MSO earnings have largely been better expected. On average, the group exceeded revenue expectations by 2.27% and adjusted EBITDA consensus by 9.15%. Curaleaf modestly missed consensus analyst expectations, while Green Thumb Industries (GTI), Trulieve, and Verano beat on revenue and adjusted AEBITDA. The first quarter is typically the softest and we saw revenue for the four tier ones that have reported sliding on average by 1.43% Q/Q while adjusted EBITDA improved 0.79% sequentially. Trulieve showed the strongest sequential improvements in both categories, while Verano saw the biggest Q/Q revenue and adjusted EBITDA decline. Year-over-year, average revenue for this group grew by 3.65%, and adjusted EBITDA jumped by 13.52%. Green Thumb Industries (GTI) had the biggest revenue expansion, +11.00%, and Verano was the only operator with negative revenue growth, -2.60% Y/Y. Trulieve AEBITDA growth of 35.50% was the best, while Verano was the weakest, with AEBITDA contracting 5.00%. Tighter SG&A controls have helped drive the broadly better AEBITDA results. We'll refresh the data after Cresco Labs reports on Wednesday, but for the tier ones: so far, so good.

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The cannabis companies that ‘WIN’ in 2025 and beyond will have these five things in common: 1) They understand the scale that they are trying to achieve and their entire operation is appropriately focused based on that scale. -Local companies need to market and connect locally (in an extremely authentic way) while focusing on profitable, sustainable revenue streams that are mostly consumer driven. -Statewide companies need to do the hard math and modeling to understand what realistic growth means for them. Set specific growth targets based on achieveable modeling. Too many statewide brands operate, market and spend like a national brand, and it will cost them in the end. -National brands must focus on lean profitability and maintain a highly targeted approach to their spending, despite a world that may seem like it has limitless customers. 2) They don’t try to do it all. Developing mastery and economies of scale in specific sectors, while building strong partnerships in the rest of the market, is the model for success in the years to come. The great companies from 2025-Federal Legalization will seek out expansion via truly strategic partnerships (and careful aquisitions) while the mediocre companies attempt to do it all themselves. The largest, best capitalized MSOs will be buying up statewide and regional businesse with lean, focused, positive-cashflow operations, which solve specific problems in their infrastructure. 3) They are building a business that is designed for the New World of Cannabis, and the Era of Commercialization. -We aren’t trappers anymore. -Hitting licks can only take you so far. -Weed is a CPG product. -THCA is sold openly online and in gas stations. -D9 Bevs and Gummies are sold in some of the deepest red states. -Weed by mail is probably here to stay. -Mushrooms are legal in various cities and states. -Consumer trust in a brand is the most valuable asset in the industry. No matter their scale, the companies that win in the next five years will integrate themselves into the new ways consumers interact with and purchase cannabis…. (Online, DTC, Low-Dose, Mixed Nootropic, Bev, Smoke Shop/Gas Station, Mass Market, Seshes, N.A. bars/lounges, add-on dispensary licenses) 4) They build continuous feedback loops with their customers. The great brands and companies that succeed into the 2030’s will have a deep, data-based understanding of their consumers at all levels. Brands must understand the buying criteria of the stores that carry them as well as the buying criteria of the consumers that drive sell-through. The very best will encourage a rewarding consumer engagement loop that directly influences operational decision making. 5) They just don’t quit. (In fact, they continue to innovate, pivot, and understand that at the end of the day, their business is change). A lot of cannabis operators will quit in the next five years. In all business, but especially in cannabis, sometimes it’s just about being there tomorrow.

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In the first quarter of 2024, with federal cannabis-reform efforts not yielding any practical changes, Curaleaf made a strategic decision to enter the hemp market. This is a trend we are starting to see. Cannabis can only be sold in the state it was produced and only allowed to be sold through dispensaries (in a hand full of states such as #california it could be sold through a delivery service). Intoxicating products that derived from hemp, are legal to ship across state lines, are available via e-commerce and mainstream retail channels. As well the producers of the products do not need to comply with burdensome licensing requirement and predatory taxation. A lot of politicians say that they support small businesses, but for small cannabis businesses to be able to properly compete, they need to have access to the same distribution channels as #hemp. Thank you Chris Roberts from MJBiz for the market update. #cannabisindustry #cannabiscommunity #cannabisnews #cannabiseducation #cannabispolicy #cannbislaw https://lnkd.in/gJHjPYgG

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I’ve been describing the ‘race to the bottom’ in cannabis as a ‘race to reality’ - but hearing Mike DiLaura (HOD) Ankur Rungta (C3) and Aric Klar (Quality Roots) speak at the • Derek Dickow event this past week had me thinking differently: If we wanted to stop ‘beating eachother up’ and incentivizing a race to the bottom, what would that look like? (In lieu of some kind of corporate price fixing or government mandated minimums…) I think it comes down to three main things: 1) Brands continuing to focus on delivering value with better products, instead of with lower prices. 2) Retailers maintaining price stratification with brand diversity, while running promotions which drive consumers upward vs downward. 3) Retailers choosing not to stock poor quality, whitelabel, here-today-gone-tomorrow brands. We consider Road Trip an important anchor point in pricing for the industry in Michigan. At the top of the ‘economy preroll’ segment, priced between $2-2.50 retail per 1g preroll, we serve as a crucial pricing benchmark which bifurcates cheap, outdoor prerolls at $1-1.50 retail and full-flower indoor prerolls at $4-8. Filling this price gap with dependable, flavorful, quality product has shown a consistent conversion of ‘lowest price preroll’ buyers to Road Trip in multiple retail chains, both to the benefit of the consumer, who is willing to pay a bit more for a better experience - but hasn’t been able to, and the retailer, who achieves more profit per preroll sold. Not filling this segment with quality product exacerbates store-level and industry-wide compression toward a $.25 wholesale outdoor preroll ($.50 retail) and a $1 wholesale full-flower preroll ($2 retail). This shift could cost single stores tens of thousands of dollars on a weekly basis. This type of stratification also creates opportunities for increased retail profit via less overbearing upsells and strategic bundle pricing. While we are commited to delivering the best value to our customers, (and while we are certainly still at the mercy of commodity pricing…) we also hold a responsibility to our retail partners to do our best to preserve their profits. What that means to us is delivering more value NOT by lowering our prices, but by creating better products, producing more impactful marketing, and building a loyal community around our brand.

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The cannabis industry has entered into a new stage. Gone are the startup days, we now live in the mature growth era. We’ve gone from low cost producer, to EBITDA, to now free cash flow. With Free Cash Flow and EBITDA margins improving, MSOs with excess cash flow can now pay down debt. However, companies continue to increase their debt and become more leveraged in the cannabis space. So why is that, and how do we measure company leverage? Here are 4 things: 1. Financial Leverage: It indicates the degree to which a company is using debt to finance its assets. Higher ratios suggest more leverage and potentially higher financial risk. 2 Risk Assessment: It helps in assessing the financial stability and risk profile of a company. Companies with lower ratios are generally considered less risky. 3 Comparability: It allows for straightforward comparisons between companies in the same industry by focusing on their leverage and financial health. 4 Creditworthiness: It provides an insight into the company’s ability to meet its obligations. A lower ratio indicates better creditworthiness and financial stability. Check out our list of companies and where they rank in our latest story written by our lead analyst William McNarland, CFA. Seth Yakatan Kyle Kazan Bruce Linton Jesse Channon Anthony Coniglio Dan Ahrens Mackenzie Peterson Charlie Bachtell Graham Farrell Rob Crocker Sofie Mikhaylova Michael Boughner Tyler Beuerlein Emily Paxhia #debt #finance #economics #safebanking #stocks

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🚨 Insightful DEA Report: Illicit marijuana flowers average a THC potency of 16%. 🌿💨 This statistic underscores a significant advantage of purchasing from licensed dispensaries—quality and safety. Unlike the unregulated market, dispensaries offer products that are tested, compliant, and consistent in their THC content. This not only ensures a safer consumer experience but also supports the legal cannabis industry committed to high standards. Why risk the unknown? Choose quality, safety, and reliability every time with dispensary-bought cannabis. Let's advocate for more informed consumer choices and support regulations that emphasize these benefits. Stay informed and choose wisely. #CannabisIndustry #ConsumerSafety #DispensaryQuality #THCPotency #RegulatedCannabis

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Let’s compare wine and cannabis consumption: Only 2% of wine drinkers typically spend $100+ on wine. Conversely, jug wine accounts for a whopping 44% of the market. When I say “Cannabis is corn, dispensaries are gas staions,” what I often hear back is: “Cannabis is like wine, not tortilla chips! There’s a stratified market with a high end!” Well when you dive into the numbers, wine is not as stratified as you might think… Only 7% of wine sells for $21+ per 750ml! The vast majority (77%) sells for under $10. Why do people think cannabis will be different? **Wine data based on 2020 data compiled by SFSU - so the numbers would need to be adjusted for 2024**

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A new set of criteria for qualifying for a public convenience and advantage waiver was proposed at today’s Cannabis Control Board meeting. The criteria include the following: 1. Distance from Other Retail Dispensaries: The proposed location must be at least: - 1,000 feet from any existing retail dispensary in jurisdictions with a 1,000-foot minimum distance requirement. - 2,000 feet from any existing retail dispensary in jurisdictions with a 2,000-foot minimum distance requirement. 2. Geographic, Structural, or Topographic Barriers: The existence of barriers (such as waterways, major roadways, highways, or significant travel distances) that separate the proposed location from existing dispensaries. 3. Travel Distance: The actual distance between the proposed location and existing dispensaries, as measured by pedestrian or vehicle routes. 4. Unique Factors of the Proposed Location: Factors that may justify the location, such as: - High consumer demand for additional retail dispensaries or microbusinesses. - The presence of illicit or former illicit cannabis dispensaries near both the proposed and existing locations. - Other relevant factors that may support the need for greater access to adult-use cannabis in the area. 5. Notification to Local Authorities: The licensee must send a notification to the local municipality or community board, informing them of their intention to request a waiver from the Board for not meeting the 1,000-foot or 2,000-foot minimum distance requirement. The municipality or community board will have 45 days to respond before the Board considers the application. Mr. Kagia mentioned that the Board would consider more than this information alone when deciding to grant a waiver and that it would be up to their discretion. Chairman Wright raised concerns about the 45-day period, and the Board voted to approve the criteria with an amendment for licensees who have already received municipal support.

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From the article: "California cannabis brands and retailers are implementing new initiatives for vape packaging and disposal in response to a state law that went into effect July 1. New requirements under California Business and Professional Code 26152.1, include: * A ban on using the term “disposable” to describe marijuana vape products in advertising, labeling and marketing. * Mandating that THC oil, vape pens and batteries be disposed of at hazardous waste collection facilities or other approved business. ... Florida-based cannabis business attorney Dustin Robinson questions the impact of the law, not its merits. 'From a practical perspective, consumers and others will likely continue throwing the vapes in the trash until there is a widespread and convenient solution of electronic waste disposal,' he told MJBizDaily via email. 'Without a program of consumer education and network of locations that can be easily accessed by consumers, these regulations, unfortunately, are nothing but words on a packaging label with no practical way for them to influence the very behavior they are trying to change.' ” I have to agree with Dustin Robinson. While I think the industry really needs to address its multitude of sustainability issues, and awareness is the first step, I just hope this doesn't end up being more costly regulations that don't achieve any real results.

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🌿 **The Art of Cannabis Selection: Why Terps Matter More Than THC** As someone who buys cannabis based on how it smells, how it burns, bag appeal, and price, I firmly believe that Terpenes (Terps) are more important than THC content. It’s easy to sell flower based on the lowest price or the highest THC percentage, but truly understanding and selling based on flavor and effects requires knowledgeable budtenders. This deeper level of expertise helps consumers make better choices tailored to their preferences and needs. At Erva Inc., we offer a wide variety of products to ensure we have something for everyone. Our commitment to quality and diversity in our offerings stems from our belief in the power of education and experience. We put our money where our mouth is and stand behind all of our products, ensuring each item meets our high standards for excellence. Let’s foster a market where terps and overall quality take precedence over just the numbers. Here’s to more flavorful, effective cannabis experiences! 🍃 #CannabisCommunity #TerpsOverTHC #QualityOverQuantity #CannabisEducation #ErvaInc #Wellness #FlavorfulCannabis

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47% of all the revenue growth in existing SKU's in the protein bar market came from Warrior® 📈 Yes, a certain high profile brand leveraged legacy IP to generate solid growth...but their existing SKU's declined so much they were seen in clearance outlets for 99p a bar 🤷‍♂️ Warrior® has by far the strongest "core" range of flavours on the protein bar shelf. Our core range all: ✅️ Sells well (highest UROS on IRI Circana) ✅️ Sells consistently (highest growth from existing SKU's) ✅️ And generates strong repeat revenue for retailers without having to spend hours adjusting planogram (highest frequency of purchase in protein bar market) Putting the core range of Warrior® products on your shelf is a "one and done", it's like buying rental property, kicking off recurring income day after day through sales, that no other brand can match. That's the facts - to learn more and see the data yourself contact us: [email protected] 🔥 Become a Warrior® 🔥 #Warrior #Protein #proteinbars #fmcg #sports #sportsnutrition #fitness #healthysnacking #healthy #lowcarbs #lowsugar #proteinbar #snacking #servicestation #forecourt #forecourtshow #forecourttrader #petrolstation #convenience #conveniencestore #grocer #proteinbar

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***SCORED CONTRACT WITH WALMART TO SELL PRODUCT IN THEIR RETAIL STORES IN U.S. MARKET: 7/5/2024. Serial entrepreneur, Dr. D. Anthony Miles CEO and founder of Miles Development Industries Corporation ® and CMO/Equity Partner of “Safe Drop®” secured a deal with Walmart. The company just signed a lucrative deal with the global retail giant, Walmart. They will be distributing the company’s product. They just signed a lucrative deal with the global retail giant, Walmart. They will be distributing the Safe Drop® product worldwide. The projected sales for Safe Drop® in 2024 is in the billions. The company’s CEO, founder and inventor, Bob Safstrom, the mastermind behind Safe Drop®. and Dr. Miles have secured a vendor contract with Walmart Inc. Safe Drop® will be sold in Walmart’s retail stores around the country. Also they will be selling “Safe Drop®” on Walmart.com. They are both very exited to have secured the deal with Walmart. This gives them the opportunity partner a global and dominant firm like Walmart.

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Cannabis startups are DEF a rollercoaster - 2 wks ago I was reeling from several gut punches... but today, things are looking bright: ✅ LOTS of new products in the pipeline that I'm SO pumped about... our Live Resin Vapes drop in NY before 710 and they're 🔥 🔥 🔥 . A bunch more new stuff I can't reveal them yet too… ✅ in NY, LIVE NUGS are in almost completely sold out - with most places re-ordering after < 2 wks selling a $100+ SKU! We’re getting a ton of inbound interest - shows that innovative products that deliver real value sell. Still early, but we should 2-3X our best month ever... NY as a market feels like it’s FINALLY getting its footing (hope I’m not jinxing us here). ✅ in CA, we've signed 4 MONSTER accounts since HoF and our new SKUs (esp Live Rosin Pre-Rolls and Live Rosin Vapes) are FLYING... it's painful for our cash flow to be scaling to meet demand, but feeling very positive about the turnaround in the most challenging state. About to sign up for the next big show in Sept… ❓thinking about expansion - though it's still early (wanna make sure our foundation & processes are solid in CA / NY)... but what potential partners should we be talking to in NJ for cultivation / processing / sales & distro? HMU via DM pls... None of this would be possible without our incredible team (Martin Mills, Cirona Labs, Peter Pietrangeli, Euphoric life , Lowell Farms Inc.) and our amazing retail partners. In general, I try not to get too high or too low - but feeling immensely optimistic about the state! Gotta celebrate the wins - as tomorrow I'm fully expecting to be punched in the face again LOL. BTW, in the rollercoaster analogy - which part is “good”? I assume it’s when you’re going downhill (despite Kevin Hart’s face)?! But then when we talk about life’s ups and downs or highs and lows - it’s the opposite right? Make it make sense?!

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