The cannabis industry received some great news earlier this month when voters in multiple states chose to legalize marijuana for recreational use.
Maryland and Missouri will be among the newest states to permit adult-use pot. Maryland, in particular, could be a hot one as MJBizDaily projects the recreational market there could bring in $600 million in revenue in its first year (Missouri is likely to be a bit smaller). Plus, its presence on the East Coast and proximity to Pennsylvania could draw in customers from that state, where pot is only legal for medicinal use.
A new market opening up for marijuana means new growth opportunities for multi-state operators (MSOs). Three such companies that already have a presence in Maryland and could benefit from news of legalization in that state include Cresco Labs (CRLBF -6.71%), Curaleaf Holdings (CURLF -2.14%) and Trulieve Cannabis (TCNNF -4.72%).
1. Cresco Labs
Earlier this year, Cresco Labs announced it would be merging with fellow MSO Columbia Care and that the two companies would become the “new leader in cannabis.” The move expanded Cresco Lab’s presence in multiple states, with Maryland being one of them, as Columbia Care has three locations within the state.
And Cresco Labs, on a pro forma basis (i.e., including the impact of the acquisition of Columbia Care), says it has that many locations operating in Maryland today. It would have an additional one, but it terminated its planned acquisition of Baltimore-based medical dispensary Blair Wellness in January because closing conditions weren’t met.
The combined Cresco-Columbia Care entity also has one location in Missouri that, along with Maryland, is one of the markets it has identified in its “future growth” strategy. Cresco has yet to benefit from the New York market, which may not start generating recreational sales until next year.
With multiple new recreational markets coming online, Cresco and Columbia Care could be poised for some significant growth in the next few years. For the three-month period ended Sept. 30, Cresco’s revenue totaled $210 million — down 2% year over year — but that’s not a trend that’s likely to last with all these new markets opening up.
2. Curaleaf Holdings
Curaleaf has a presence in 22 states, and expansion into new markets has been key to its growth. It has four dispensaries in Maryland, and while it does sell its products in Missouri, it doesn’t have a dispensary there yet. However, with the recreational market now getting the green light there, it likely won’t be long before Curaleaf makes a big move into that state as well.
The company will likely be looking for a way to boost its sales as in its recent quarter, for the period ending Sept. 30, Curaleaf’s sales of $339.7 million were up less than 1% from the previous period. Curaleaf, however, remains active with expansion efforts; it has commenced operations in New Jersey this year, and in October, it launched a cannabis flower brand called Find, which is available in eight states — including Missouri.
3. Trulieve Cannabis
Trulieve is the only MSO on this list without a presence in Maryland and Missouri. The company has predominantly focused on the Florida market, but last year, it transformed its business by acquiring Harvest Health & Recreation, expanding its presence and giving it a leading position in Arizona.
Today, the company has three locations in Maryland. However, on the company’s most recent earnings report — where Trulieve reported sales of $304.6 million, up 34% year over year — Trulieve stated that its operations in Maryland “have not been material to our business.”
Trulieve isn’t as focused on expansion into new markets as Curaleaf and Cresco appear to be, so it may benefit the least from Maryland and Missouri opening up their recreational markets. However, it could provide a boost in revenue nonetheless. And as the cannabis company looks for more growth opportunities down the road, it will at least have a head start on other MSOs not yet operating in Maryland.