Business

Ohio surpasses $11.5 million in adult-use marijuana sales over first five days

Published

4 months ago

August 16, 2024

This story was republished with permission from Crain’s Cleveland Business.

Ohio logged more than $11.5 million in non-medical marijuana sales across the first five days of adult-use business between Aug. 6 — when rec sales launched — and Aug. 10, according to data posted by the Ohio Division of Cannabis Control.

Industry operators indicate that sales were especially strong on the inaugural day and the following Saturday. Regardless of any ups and downs, that total sales figure points to an average of $2.3 million in rec sales per day across those first five days.

Medical marijuana sales over that same period totaled approximately $8.3 million, according to state data, or about $1.66 million per day on average.

Aug. 6 was a milestone day for Ohioans, who approved adult-use marijuana through a referendum last November. And despite severe weather that pummeled parts of the state that afternoon, patrons came out in force.

Andy Rayburn, CEO of Buckeye Relief and president of the OHCANN trade group, spent much of the first couple of days of the adult-use launch talking with customers in lines outside his Amplify dispensaries in Cleveland Heights, Bedford and Columbus. “The flow of people never stopped,” he said.

“The activity was strong at our dispensaries, and I think the scene I’m describing was common throughout the state with lines out the door most of the (first) day,” Rayburn said.

Jason Erkes, a spokesperson for Cresco Labs, a Chicago-based multi-state cannabis company — which is vertically integrated in Ohio with five dispensaries in the state operating under the brand Sunnyside — said that sales “exceeded our expectations.”

“Any way you look at it, Ohio had an incredible performance in the first week of sales that is on par or exceeds revenues for other adult use launches, like Illinois,” he said. “Some of our Sunnyside stores saw as many as 1,250 customers a day for the first week and sales that are more than double what we were seeing with patients before the conversion.”

The first five sales days in Ohio resulted in 138,466 total transactions across the 98 licensed dual-use dispensaries in the state, according to DCC data.

“Ohioans were clearly ready and excited for the historic end of cannabis prohibition in the Buckeye State,” said Trip McDermott, chief operating officer of Chicago-based Verano. “Since the start of adult-use sales, foot traffic and transactions have already increased two- to three-times across all five Zen Leaf dispensaries statewide in comparison to previous medical-only operations, and we expect to continue seeing robust activity at our stores and via third-party wholesale sales of our products for the foreseeable future.”

Prices were elevated, but that was to be expected for a new adult-use market.

DCC reports that a “day unit” of cannabis flower in that initial five-day period — which is one-tenth of an ounce, or 2.8 grams — retailed for $26.59. Add to that a 10% excise tax and an average sales tax across the state of 7.2%, and that item cost a little over $31 out the door.

That $26.59 price was about 20% higher than the average cost for the same amount of flower a week prior in the state’s medical-only market, which was right in line with expectations.

That price may seem expensive when compared with neighboring states like Michigan, where an ounce of flower commonly retails for $70 pre-tax and an ounce of shake may be as cheap as $25. Of course, Michigan is dealing with a saturated market, which is driving down prices there.

“I think there are some customers who will continue to go to Michigan dispensaries despite the poor quality of product that is available and despite the inconvenience of spending hours in the car and really blowing a whole day to do that when they can drive 10 minutes to an Amplify dispensary or elsewhere to get it done,” Rayburn said.

“Unless you’re buying thousands of dollars of marijuana products at one time, the question is, is it worth it? I think some people will still do that,” he added. “But Ohio’s prices will come down across next year.”

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Author: mscannabiz.com

MScannaBIZ for all you Mississippi Cannabis News and Information.

Business

Cannabis companies, big and small, collapsed in 2024

Published

8 hours ago

December 23, 2024

mscannabiz.com

As 2024 winds to a close, the year may well be remembered as one in which the U.S. marijuana industry got a serious wakeup call, with several big-name companies flaming out in spectacular fashion, while plenty of smaller operators also quietly closed up shop.

Even as more state marijuana markets continued their new rollouts – from New York to Ohio to Missouri – the sun set for the last time on several big marijuana names, including MedMen Enterprises, High Times, StateHouse Holdings and Slang Worldwide, all of which just a few years ago seemed poised to become national cannabis brands with impressive portfolios.

Instead, this year the bill came due for a lot of the industry. A few big-name cannabis failures kicked off the reckoning in 2023, such as the major distributor Herbl in California, which had such a web of connections and so much outstanding debt that its ripple effects went on for months. And when those bills arrived, a number of cannabis companies found they were unable to pay.

However, the big players were far from the only casualties this past year; there were also plenty of smaller businesses that went bankrupt or into court-appointed receiverships for various reasons, including Unrivaled Brands, Irwin Naturals, Delta 9 Cannabis and Revolutionary Clinics.

But it wasn’t all bad news for the industry. It’s also worth highlighting the high-profile turnaround of California-based cannabis delivery operator Eaze, which took a wealthy patron to save the business from its troubles.

Eaze even told shareholders in the fall that it was prepping to lay off all employees and close down by the end of the year, before its new owner, billionaire James Henry Clark, resuscitated the company with $10 million of his own money in November after buying the business at auction in August.

Here’s a rundown of some of the high-profile cannabis collapses of 2024 and how they went bust.

MedMen Enterprises

MedMen was by far the highest-profile washout of the year. Originally a darling of the California medical marijuana boom prior to going public in 2018 (CSE: MMEN), the former unicorn formally filed for bankruptcy in Canada and a court-appointed receiver in the U.S. in April, after the company ran up nearly $600 million in debts during a multiyear expansion push that ultimately proved fatal.

Warning signs existed for years before MedMen’s collapse. Founding CEO Adam Bierman suddenly relinquished control of the struggling business in 2020, amid mass layoffs at the multistate operator and ongoing sale of assets in a desperate attempt to right the financial ship. Co-founder Andrew Modlin also resigned at the time.

Even so, four years of a revolving C-suite and new corporate strategies came to naught, and MedMen’s former national empire – which spanned seven states and more than two dozen retail dispensaries – has been resigned to the auction block.

High Times

High Times’ foray into the actual marijuana plant-touching business came to a ruinous conclusion this year when its assets went up for auction after it couldn’t repay a $29 million loan.

The original stoner magazine, which dates back to 1974, pivoted from cannabis media directly into selling marijuana in 2020 with the purchase of 10 California dispensaries from Harvest Health and Recreation for $80 million in a combination cash-and-stock deal.

The parent company, Hightimes Holding Corp., never truly found its footing in the tough California market and endured critical press for years as it struggled. Hightimes Holding Corp. tried to go public in 2023 via a complex intellectual property deal with Lucy Scientific (Nasdaq: LSDI), but that fell apart after a lawsuit from U.S. securities regulators alleged fraud and illegal stock promotion by CEO Adam Levin, which resulted in a settlement of more than $500,000.

High Times was ultimately forced to begin selling off dispensaries and assets this year to settle a $29 million debt to ExWorks, under the management of a court-appointed receiver.

StateHouse Holdings

Originally known as Harborside – a major part of cannabis activism in Northern California during the height of dispensary raids in the Bush and Obama years – StateHouse earlier this year was relegated to bankruptcy in Canada and a court-appointed receiver in the U.S., driven by a lawsuit over $116 million in debt owed to one of its creditors.

Harborside was rebranded as StateHouse in 2022, three years after it was taken public in 2019 by brothers Steve and Andrew DeAngelo, who said later they were forced out by what they described as a hostile takeover. After the DeAngelos were removed, new company leadership went on an acquisition spree, purchasing three companies in the span of a year and rebranding in a bid to become a more powerful overall California brand.

But the move backfired, and it proved too much too quick. StateHouse found itself unable to repay loans from creditor Pelorus Fund, and Pelorus filed suit in September to force StateHouse’s hand.

StateHouse has since been put up for sale, and the receiver in charge is taking bids for assets until Jan. 15, 2025.

Slang Worldwide

At its height, Toronto-based Slang Worldwide distributed cannabis goods to 2,600 dispensaries in 15 states. But in November, the company declared bankruptcy in Canada and entered a receivership in the U.S., after seven years in the marijuana trade, and reported pared-down operations in only Colorado and Vermont.

Slang drew far less media attention than MedMen and High Times, and its quiet path to insolvency arguably more reflects the broader troubles of the U.S. and Canadian cannabis industries in general. After ambitious expansion for several years, Slang was forced to pull out of several key markets, including California, Oklahoma and Oregon, in 2023 as conditions worsened for it and other operators.

More trouble appeared on the horizon as recently as fall 2023, when Slang essentially put itself up for sale when it retained PGP Capital Advisors to evaluate its options.

The bottom line was the company didn’t have $17 million with which to repay creditors when at least one loan comes due in 2025. Slang formally entered bankruptcy in Canada on Nov. 26, according to receiver B. Riley Farber’s website, and a meeting of creditors was scheduled for Monday this week.

In a trustee report, Farber wrote that Slang had just $107,325 in total assets, including $52,529 in cash, against $27.2 million in debts to various creditors.

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