Florida-based Cansortium (CSE: TIUM.U) (OTCQB: CNTMF), which does business as Fluent, has finalized its megamerger with New York-based RIV Capital, (CSE: RIV) (OTC: CNPOF), creating a new multistate operator that has a footprint in four states with 42 operational dispensaries.

The move gives Cansortium immediate access to New York, one of the fastest-growing legal marijuana markets in the nation, along with its existing portfolio of cannabis shops and grows in its home state, Pennsylvania and Texas. The company now owns eight total cultivation and processing facilities, which it said in a press release would allow it to bolster the Fluent brand even more going forward.

The company reportedly has $33 million in the bank with which to finance further acquisitions, it said in a Thursday announcement.

Another major winner in the deal is Scotts Miracle-Gro, which has a sizable stake in RIV Capital through its subsidiary The Hawthorne Collective. Existing shares will be converted into 1.245 shares of the newly formed Fluent, eliminating $160 million in company debt.

Shareholders of Cansortium will own 51.25% of the new Fluent, while shareholders of RIV Capital will own 48.75%, the company said. The company will continue trading under Cansortium’s existing ticker symbols on the Canadian Securities Exchange and the Over-The-Counter markets.

Cansortium CEO Robert Beasley will continue to lead the new company, and RIV Capital interim CEO David Vautrin will serve as the new company’s chief commercial officer.

Beasley said in the release that Fluent intends to scale up wholesale operations in New York to boost its Moods brand of marijuana products and “gain additional shelf space in dispensaries across the state,” which he said has “immense potential.”

The merger could prove key to the long-term prospects for both Cansortium and RIV Capital. Cansortium posted an $11.7 million net loss for the third quarter of 2024, and RIV Capital reported a $63.4 million net loss for the same period.

“Looking ahead, we remain focused on sustainable, long-term growth and will continue to drive efficiencies across all areas of the business to achieve our profitability and cash generation goals,” Beasley said.

Even though a measure to legalize adult-use cannabis in Florida failed, Planet 13 Holdings (CSE: PLTH) (OTCQX: PLNH) is pushing ahead with expansion plans states. And the competition is expected to heat up after state regulators continue to fill the licensing pool.

The Florida Department of Health issued intent-to-approve letters to 22 new medical marijuana operators last Tuesday, nearly doubling the number of licensed companies in the state.

“We’ve operated in (other existing) adult-use markets that are very hyper-competitive,” Jeff Trappe, who oversees Planet 13’s Florida operations, told Green Market Report. “I think the new operators will help raise some of the standards that the market would like to see overall. For us, it helps us keep a benchmark of where we can improve.”

While new entrants like California’s STIIIZY and Star Buds still must post $5 million bonds before they begin operations, Planet 13 – which maintains a relatively strong balance sheet compared to competitors – is already scaling up its existing footprint.

The Las Vegas-based company will add indoor cultivation to complement its existing greenhouse operations in Jacksonville, according to Trappe. The expansion aims to round out the company’s product portfolio in the medical-only state.

“We currently only have greenhouses, so we’re bringing in an indoor component,” Trappe said. “Most of the other operators here have a full product offering.”

The moves follow Planet 13’s May acquisition of VidaCann, which provided an immediate footprint of 28 stores across Florida. The company has since opened new locations in Port Orange and Ocala under the Planet 13 brand, with plans to reach 32 total stores by year-end.

Management sees significant upside in its retail network. CFO Dennis Logan told investors on an Nov. 8 earnings call that the planned expansion from 27 to 32 stores could double revenue if locations reach average sales figures in the state. The company also expects revenue improvements in the fourth quarter as summer growing challenges ease, though hurricane-related store closures may temper gains.

Rather than view the failed adult-use measure as a setback, Trappe said it provides time to refine operations.

“I kind of took it as a blessing,” he said. “It kind of allowed us to really get honed in on our quality control standards.”

He added that the company plans to build a new extraction laboratory to enhance its concentrate offerings, addressing a gap in its current portfolio.

Aside from product and retail expansion, management is also looking to differentiate itself through community outreach. The company recently completed a veterans program offering medical cards through a nonprofit partnership – a program that Trappe, a former Marine, called his “biggest passion project.” The company also organized hurricane relief efforts after storms affected several store locations.

“Some of the dispensaries in the years that I’ve been here, they’re very medicinal. Some of them kind of remind you of a hospital,” Trappe noted. “We’re just trying to normalize the cannabis experience with people so it can be kind of fun.”

The company recently launched lifestyle-focused marketing initiatives, including partnerships with UFC fighters, though Trappe acknowledged some organizations remain hesitant about cannabis-adjacent relationships in Florida’s conservative climate.

Planet 13 generated $32.2 million in revenue during the third quarter, with Florida operations contributing $10.5 million, nearly a third of total sales. Retail revenue from its neighborhood store network increased 25% sequentially to $15.4 million.

Florida’s medical cannabis market could very well reach $2.8 billion in sales this year, with 12% annual growth through 2028, according to BDSA. While adult-use plans are temporarily shelved, Planet 13 maintains long-term ambitions for large-format “superstore” locations in Miami, Orlando, and Tampa if recreational sales are eventually approved.

“I’m excited to see where Florida goes with it,” Trappe said. “The vote did show that the majority of Floridians are okay with cannabis. I think that number is going to increase.”

The Daily Hit is a recap of the top financial news stories for Wednesday, November 27, 2024.

On the Site

Nebraska state judge tosses legal challenge to medical marijuana ballot measures

While state officials are likely to appeal, the decision lets activists and supporters begin moving forward on the market.

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Colorado attorney general sues marijuana company for marketing its goods as hemp

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Florida issues long-awaited medical cannabis licenses after two-year wait

The 22 new medical marijuana licenses will nearly double the number of licensed operators in the state.

Read more here.

Earnings:

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