Cannabis companies are learning that to survive the pandemic, bigger isn’t necessarily better.
Specialized operations and a narrow geographic footprint are buoying cannabis providers such as Trulieve Cannabis Corp. at a time when the broader industry is struggling with falling demand and capital constraints. That’s a shift from a few years ago, when exuberance in the market pushed cannabis companies to expand their reach across the nation in a hasty land grab, which has left many onetime heavyweights overextended.
Companies with a broader reach got “punished” last quarter, said Joe Caltabiano, a cannabis entrepreneur who recently left the company he co-founded, Cresco Labs. With the industry shift, “you’re starting to see a separation of winners and losers.”
The shakeout is exposing the risks in the multistate strategy, including a patchwork of regulations and heavy costs to grow and process in different regions. Those are becoming bigger issues as stock values during the coronavirus pandemic remain well below their highs and consumers migrate to cheaper forms of raw flower.
Read more at bnnbloomberg.ca