(This story has been updated to show that CannCure Investments, a holding of Toronto-based Sol Global Investments, operates One Plant in Florida.)
Florida medical marijuana juggernaut Trulieve has defied expert predictions, increasing its market share back above 50% a year after the state lifted its ban on smokable products and more competition flooded the market.
The gains come at a time when demand is strong, despite economic fallout from the COVID-19 pandemic: Smokable flower sales alone have spiked by 30% in the past two months, according to state data.Industry experts said Trulieve’s market share gains might reflect the depth of cash-flow issues experience by other multistate operators or their inability to invest in the cultivation, processing and retail facilities needed to meet the additional demand.
“For a while it looked like Trulieve’s market share would drop because there’s no way you can maintain a 50% market share” with that kind of competition, said Andrew Livingston, director of economics and research in the Denver office of the Vicente Sederberg cannabis law firm.
In fact, Trulieve’s share of the smokable market did decline to 45% by last fall as MSOs aggressively expanded their footprints in the lucrative, $500 million-plus market.
Many MSOs had spent tens of millions of dollars acquiring licenses in anticipation of being able to sell smokable products and recreational marijuana being legalized.
“But Trulieve’s all-out attention to Florida has allowed it to continue to expand and build its war chest in a way that other MSOs have not because they’ve been spread too thin,” Livingston said.
Livingston, who analyzed the Florida state sales data, noted these developments:
- Most MSOs are in a holding pattern, adding no new dispensaries since the Jan. 1.
- At least one is retrenching. Los Angeles-based MedMen Enterprises recently shuttered at least temporarily five of eight dispensaries.
- Only a few operators are expanding, most notably Sarasota-based AltMed Florida and New York-based Columbia Care.
For the week ended April 30, Florida health department data showed that Trulieve had a 52% share of Florida’s smokable market, followed by Liberty Health Sciences, 12%; Surterra Wellness (Parallel), 9%; AltMed (MüV), 7%; and Curaleaf, 5% (see chart).
Trulieve has added four dispensaries since the beginning of the year, bringing its total to 46, according to state data.
A ‘boom time’ for medical cannabis
Florida medical marijuana operators face the same safety and health issues during the coronavirus pandemic as companies elsewhere in the country, such as ensuring that employees have personal protection equipment in all facilities, noted Jeffrey Sharkey, president of the Medical Marijuana Business Association of Florida.
“It’s been challenging for all of them, but they seem to be meeting the demand,” Sharkey said. “They’ve managed it.
“Everyone sees it as a boom time.”
But no one is experiencing the boom as much as Trulieve.
“Trulieve has a huge retail footprint, a massive cultivation production facility, they’re selling a lot of flower, obviously, and they have really fine-tuned their supply-chain logistics, providing a lot of product and SKUs,” Sharkey said. “They really ramped up.”
(Trulieve’s market share of product sales by milligrams also exceeds 50%, according to weekly updates published by the state).
What strikes Livingston most is how many companies have “flatlined” in comparison, meaning they have remained static and haven’t increased their footprints.
Harvest Health & Recreation, MedMen, Green Thumb Industries, VidaCann, Curaleaf. None of those MSOs have added dispensaries since the first of the year, according to state data.
“Dispensary expansion among MSOs is just not occurring,” Livingston said.
There are exceptions.
AltMed, which brands its dispensaries MüV, has increased from 12 to 19 dispensaries since Jan. 1.
Columbia Care has more than doubled from six to 13 dispensaries.
The easiest explanation for why multistate operators aren’t taking advantage of increasing product demand is lack of capital, Livingston said.
“You see more and more businesses talk about their core assets” or efforts to maximize cash flow from their strongest operations, he added.
“These businesses have been conserving cash and not expanding in Florida in the same way they did in 2018-2019.”
Trulieve’s flower sales per store jump out
That might seem counterintuitive given that Florida is a lucrative, growing market and costs less to operate in compared to many other markets, such as California.
“But you have to look at sales per storefront, you have to take into consideration the cost of those sales,” Livingston said.
What has always set Trulieve apart is its staggering sales per storefront.
These numbers, compiled by Livingston from state data, pop out:
- Trulieve has sold an average of 314 ounces of flower per store every two weeks since the beginning of the year.
- Everyone else? An average of 75 ounces.
In other words, Trulieve’s smokable flower sales are quadruple its competitors’ on a per-storefront basis.
AltMed, the closest to Trulieve in the past year, has experienced some decline in per-store sales as it has expanded its retail footprint.
There does appear to be room for new entrants.
One Plant, which has three operating dispensaries, up from one at the beginning of the year, has enjoyed strong sales per store, averaging 237 ounces of flower sold every two weeks.
CannCure Investments, part of Toronto-based Sol Global Investments, operates One Plant in Florida.
According to One Plant’s website, another seven dispensaries are “coming soon.”
Financially troubled MedMen is perhaps the clearest example of an MSO that had big plans to capture market share in Florida but has since lost large amounts of money and is now retrenching.
MedMen paid $53 million for its vertically integrated license in mid-2018.
The company launched delivery-only service, then started building its retail footprint after Florida lifted the ban on smokable products.
MedMen spent millions of dollars building out facilities and, as recently as last fall, said it would have 12 dispensaries open by the end of 2019.
Yet Livingston calculates MedMen has sold less than $10 million in medical marijuana products since opening its first dispensary in June 2019. He made his estimate based on state sales data and a generous product price average.
MedMen’s market share has averaged 0.8% since the first of the year, Livingston said.
“MedMen clearly has lost a lot of money,” he said.
Market looks bright – for those that can take advantage
For operators that have money to invest, Florida’s marijuana market looks poised for strong growth in the future.
Sharkey expects that rules allowing edibles will be completed by year-end.
Then there’s the possibility of a recreational marijuana initiative passing as soon as 2022, although the issue is controversial and the subject of a state Supreme Court battle.
Adult-use marijuana would again open the sales floodgates.
But if today’s market is an indication, one big question looms: Which competitors will be in position to take advantage of those opportunities and carve into Trulieve’s dominance?