The cannabis industry in Florida is on the cusp of a significant transformation, with voters set to decide on adult-use sales in the upcoming November election. Amidst this crucial period, The Cannabist Company has recently announced its exit from the Florida market, which they believe will generate approximately $10 million in annual cost-savings.
The Cannabist Company’s Florida Exit
In a press release on Monday, The Cannabist Company, formerly Columbia Care, announced their exit of the Florida cannabis market, in it is a series of initiatives that the company believes are designed to boost profitability and enhance its margin profile.
The restructuring, which includes labor and non-labor reductions, is expected to generate approximately $10 million in annual cost savings. One of the most significant steps in this restructuring is the planned divestiture of The Cannabist Company’s entire asset portfolio in Florida.
This includes 14 retail locations, three cultivation and manufacturing facilities, and the company’s license in the state. The Cannabist did not disclose how many people it laid off in Florida after deciding to sell its assets.
Overall, Florida represented less than 5% of The Cannabist Company’s total revenue in the first quarter of 2024. The company reported a net loss of nearly $19 million for 2023, with $4.8 million in losses from its Florida operations in Q1 2024. CEO David Hart cited the lack of commercial optimization of their asset base in Florida as a key reason for the exit.
“Our focus is on building a better business, positioned for profitability and long-term sustainable growth. We are decisively leaning into the markets that are best positioned for growth and strategic upside, while also monetizing underperforming and non-core assets.”
“In Florida, for example, our asset base is not commercially optimized, with more cultivation capacity than our retail locations require. Our retail footprint and cultivation and manufacturing capacity are better suited to balance other operators’ portfolios, meanwhile we will eliminate loss-making operations and bring in non-dilutive capital,” said David Hart, CEO, The Cannabist Company.
The Cannabist Company Future Plans Outside of Florida Market
Despite exiting Florida, The Cannabist Company says it remains committed to its operations in more profitable markets. The company plans to capitalize on its strong asset base in states like Virginia and New Jersey while preparing for upcoming adult-use transitions in Ohio and Delaware.
“We will continue to capitalize on our strong asset base in profitable markets such as Virginia and New Jersey, and we are actively preparing for upcoming adult use transitions in Ohio and Delaware. The significant corporate restructuring we’ve undertaken will simplify our business, reduce overhead expenses, and more appropriately align with our evolving operational footprint as we exit Florida and divest assets in other underperforming markets in the coming months.”
“The steps we announced today are among the most critical in putting us firmly on the right path for success, representing potentially $20 million annualized improvement in Adjusted EBITDA. Our leadership team is committed to taking the necessary, and often difficult, actions to deliver a more sustainable business with better margins, and a clearer path to free cash flow generation.”
CEO David Hart emphasized the company’s commitment to building a business positioned for profitability. The steps taken, including the exit from Florida, are expected to result in a $20 million annualized improvement in adjusted EBITDA, an attempt at setting the company on a clearer path to free cash flow generation.
MSO’s Ramping Up Donations In Order To Get an Adult-Use Market
The Cannabist Company’s exit from Florida occurs just months before the state’s voters decide on adult-use cannabis sales. If approved, the Florida cannabis industry is poised for substantial revenue growth.
This has led many to question why the company couldn’t wait to capitalize on the potential influx of thousands, if not millions, of new customers that may enter the market following voter approval. Is this a sign they don’t believe it will pass or that it just wasn’t worth them losing money for the rest of the year and instead focusing on other markets?
While The Cannabist Company is pulling out, other MSO cannabis companies are ramping up their presence in Florida. Companies like Trulieve, Verano, Curaleaf, Green Thumb Industries, and Cresco Labs have made significant contributions toward the state’s adult-use legalization campaign, in order to get voters to approve adult-use cannabis.
