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Smaller dispensary chains show strong performance in Florida market

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While everyone in the cannabis industry has likely heard of Trulieve Cannabis Corp. (OTCQX: TCNNF) by this point, some of the multistate operator’s biggest competition in Florida might be coming from some of the state’s smallest players.

According to the latest data from the state’s Office of Medical Marijuana Use, some of the smaller operators are solidly outperforming larger chains in per-store sales.

The OMMU’s July 19 report showed that The Flowery, which has only eight dispensaries, leads in per-store efficiency out of all 25 state licensees. The company sold an average of 709,836 milligrams of THC per store for the week of July 12-18.

Trulieve, Florida’s largest operator with 141 locations, came in second with 703,776 milligrams of THC sold per store. Despite the slightly lower per-store average, Trulieve maintains a dominant market share of 30.77%, dispensing a total of 99.27 million milligrams of THC during the reporting period.

Sunburn, another relatively small player with 14 dispensaries, ranked third in per-store efficiency, selling 701,176 milligrams of THC per location. The company moved a total of 9.81 million milligrams of THC, capturing a 3.04% market share.

While larger operators command significant market share, their per-store performance varies. Curaleaf Holdings (TSX: CURA) (OTCQX: CURLF), with 62 locations, ranks fourth in per-store efficiency, dispensing an average of 663,412 milligrams of THC per store. The company holds a 12.75% market share, nearly matching Ayr Wellness’ (CSE: AYR.A) (OTCQX: AYRWF) 12.74% share.

Ayr, with 65 stores, ranks fifth in per-store efficiency with an average of 632,173 milligrams of THC sold per location.

It’s about efficiency

Using an “efficiency ratio,” which is calculated by dividing an operator’s market share by its share of total dispensaries, shows that size doesn’t always correlate with efficiency in Florida’s growing cannabis market. The ratio compares operators’ market performance relative to their retail footprint. A ratio above 1 suggests above-average efficiency.

The Flowery leads with an efficiency ratio of 1.44, followed closely by Trulieve and Sunburn, both at 1.43. This indicates that these companies are capturing more market share than their store counts would suggest.

At the lower end of the efficiency spectrum, several operators are performing below the market average. Colorado-based Green Dragon, with 38 locations in Florida, recorded the lowest efficiency among the major players. The company dispensed 3.56 million milligrams of THC for the week, averaging about 93,745 mg per store. This results in an efficiency ratio of 0.44, indicating that Green Dragon’s market share is less than half of what its store count would suggest.

Cookies also ranks toward the bottom of the list with a per-store average of 87,482 milligrams THC – which equates to an efficiency ratio of 0.18 across 10 stores – considerably lower than most other operators in the market.

The Florida medical marijuana market’s total THC sales for the week reached 322.62 million milligrams, according to the OMMU report. The OMMU report also shows that Florida’s medical marijuana program now serves 884,844 qualified patients.

This analysis focuses solely on THC milligrams dispensed, not accounting for other products like CBD or smokable flower. It also represents only one week of data and doesn’t account for factors such as store location, product mix, or pricing strategies.



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Florida’s Fluent responds to Reddit whistleblowers

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Cansortium Inc.’s (CSE: TIUM.U) (OTCQB: CNTMF) Fluent brand is facing fallout after an employee and others shared videos and images on social media allegedly showing poor growing conditions at its Tampa, Florida, cultivation facility, in addition to labor accusations.

A video, posted last week on Reddit’s r/FLMedicalTrees forum, appeared to show withering cannabis plants infested with aphids. The post quickly gained traction, bringing in more than 500 upvotes and nearly 300 comments.

“Ma’am this is an aphid farm, we feed our aphids live cannabis to keep them happy healthy and thriving!” the self-identified employee who uses the handle “Old_Length4214” wrote sarcastically in the comments section.

In response, Fluent CEO Robert Beasley confirmed that the video came from the company’s facility, but noted said there are quality control measures to address them.

“As preventing pests and pathogens entirely is not possible, we rely on our quality control program to catch these issues and eliminate them before they move on to the next stage of processing,” Beasley said in an email to Green Market Report on Tuesday.

Beasley outlined a multistep quality assurance process, including daily plant inspections, maintenance trimming and pre-harvest quality grading. He said that plants not meeting quality standards are removed or sent for extraction.

The CEO also addressed the challenges of growing cannabis in Florida’s climate.

“Cannabis does not like excess moisture in soil or in air, and Florida has both,” he explained, noting that these difficulties are factored into pricing and margins.

Another self-identified former employee, who said they worked at Fluent from October 2020 to May 2021, painted a wider picture.

Speaking on condition of anonymity, the former employee, who later worked in compliance for a cannabis testing lab, told GMR that these types of issues are problems for many operators in the state – but called out Fluent as one of the worst offenders.

“Every cultivation has issues … I remember swabbing MedMen’s (before Sunburn bought it) air vents, I remember Curaleaf had a huge issue with mold, Trulieve kept failing for pesticides even though their grow is indoors.”

The Florida Department of Health, which oversees the state’s medical marijuana program, did not respond to GMR’s requests for comment, but Beasley confirmed the agency conducted a routine quarterly inspection on Sept. 12.

“All Department inspections of medical marijuana treatment center facilities are unscheduled,” he said. That the inspection resulted in “one finding regarding waste logs, which the site team has corrected.”

While Beasley downplayed the issue to Green Market Report, the situation appears to have escalated internally. A self-described current Fluent employee, posting anonymously on Reddit as “smokechecklafleur,” described a tense work environment last Friday, two days after the original post.

“A large amount of my coworkers and myself included are considering leaving the company due to how bad things have gotten,” the employee wrote. They detailed new restrictions, including a ban on phones “whatsoever” at work and prohibitions on discussing the grow issues or a “random” visit from the state’s health department the day before.

“Morale is through the floor while management is scrambling to do damage control,” the employee added, “and we’ve been threatened with being terminated every day since the first post for more reasons than I can remember.”

The user also reported that four people had been terminated within an hour of their post.

“These are not new but rather an existing policy that was not being strictly enforced,” Beasley said about allegations that management is trying to stem information flow in response to the increased scrutiny.

He added, “The rationale is that it allows for greater efficiency and safety in the workplace environment. It also prevents incidents such as this where a former employee took pictures of plants being trimmed or disposed of and are claiming they represent the final product output.”

Regarding personnel changes, Beasley said, “We are not able to disclose the details of employment matters, however, we can confirm that if an individual violates Company policy by posting misleading and derogatory information about the Company online, it can lead to termination.”

The CEO said management’s planning a town hall meeting to discuss working conditions “in a professional and respectful setting.”



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Missouri issues yet another cannabis recall, rolls back hemp ban

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Missouri cannabis regulators continued their scrutiny of the industry’s compliance this week with their fifth recall since the adult-use marijuana market launched – this time recalling more than 23,000 goods for improper safety testing – while also announcing that many intoxicating hemp goods will be exempt from a new law that initially banned most of the products.

The state Division of Cannabis Regulation issued the recall on Tuesday after discovering the relevant products “were not compliantly mandatory tested” by ClearWater Science, one of the state’s cannabis testing labs, according to the press release issued on Tuesday by the state Department of Health and Senior Services.

“DCR cannot verify compliance with health and safety requirements,” the agency said, in justifying the recall. There have been no adverse health incidents connected to the products in question, the DCR clarified.

The goods affected by the recall include a wide range of brands and products, including pre-rolled joints, flower, concentrates, vape cartridges and edibles.

It was not immediately clear if the goods in question will be allowed to undergo retesting in order to be legally sold at dispensaries, since there’s no immediate evidence that the products themselves were tainted in any way.

The latest recall follows several earlier parallel moves by the DCR, which ramped up its oversight on the adult-use and medical cannabis industry over the past year. The total of goods recalled is now near 200,000.

Also this week, an attorney for DHSS wrote in a letter to a hemp trade association that an executive order from Gov. Mike Parsons last month that attempted to ban intoxicating hemp goods would not apply to hemp-based products with THC.

“In regard to psychoactive cannabis products, the department will focus its efforts on the identification of  ‘misbranded’ products,’” Richard Moore wrote to the Missouri Hemp Trade Association, which filed suit against the state last month over the ban.

“I trust that you understand that the consumption of these products may be dangerous,” Moore wrote to the hemp companies, “and that under no circumstances should they end up in the hands of Missouri’s children.”

Moore said his office would be only targeting goods that are “misbranded” to target kids, “for potential enforcement under the State’s Merchandising Practices Act,” the Independent reported.

“The department has no intention at this time to embargo additional psychoactive cannabis products as adulterated,” Moore wrote. “Further, within 30 days after referral to the attorney general’s office, the department will release all currently embargoed products and remove all embargo tags.”

The Missouri Hemp Trade Association reacted favorably to the news, which seems to settle for now what had been a legal tug-of-war between the governor and hemp businesses. A spokesperson told the Independent it wholeheartedly supports Moore’s move “to prosecute bad actors marketing counterfeit and misbranded hemp products to children.”

In other words, “Hemp sales are back on,” said an attorney for the trade group.



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The Daily Hit: September 18, 2024

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News from: Missouri, California, C3, European Union and more.

The Daily Hit is a recap of the top financial news stories for Wednesday, September 18, 2024.

On the Site

Missouri issues yet another cannabis recall, rolls back hemp ban

The state’s Department of Health and Senior Services will focus its efforts on “misbranded” products rather than intoxicating ones.

Read more here.

Proposed California intoxicating hemp ban may wind up in court

Advocates say the new emergency rules will eliminate access to high-CBD products.

Read more here.

Banned C3 team has new IPO for Canadian markets

The IPO was announced the day after the executives filed an appeal regarding the ban and accompanying fines.

Read more here.

Washington DC moves toward gray market cannabis crackdown

City leaders want to ramp up enforcement on so-called I-71 shops.

Read more here.

EU initiative begins bid to open access to psychedelic therapies

The initiative must collect 1 million signatures within a year to trigger the European Commission to take action.

Read more here.

In Other News

Cannabis Cured

One week after Maine regulators recalled a handful of cannabis products for failing mold and yeast tests, it remains unclear how the contaminated products made it to the market. The recall, announced last week, impacts one strain of cannabis flower and three strains of pre-rolls, all of which were produced by Cannabis Cured, a cultivator and retailer headquartered in Fairfield.

Read more here.

Flora Growth Corp.

Flora Growth Corp. entered into a strategic supply agreement with Blossom Genetics to bring Colombian medical cannabis to the German market.

Read more here.

Tilray

Tilray Medical, a division of Tilray Brands, announced on Wednesday that several Redecan EU-GMP certified medical cannabis products are now available for medical cannabis patients in Australia.

Read more here.



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