While there are some reports of over investment in hemp extraction facilities, companies selling finished goods to consumers report growing revenue. Curaleaf is a vertically integrated manufacturer of CBD oil and recreational and medical cannabis products. Neil Davidson, Curaleaf’s chief operating officer, said demand, which was already strong, has increased during the current disease crisis.
Demand spiking during crisis
“The only thing I will say is that I think it's true frankly across the industry that we are seeing an uptick in demand for cannabis. I will point you to one specific data point which is Florida that publishes weekly data. So last week in Florida, we dispensed 13 million milligrams of oil and almost 3,000 ounces which was a record for Curaleaf and we have really ramped up our production in Florida to keep putting up that type of product,” he said. Davidson made his comments during an earnings call with stock analysts that was posted in transcript form on the site seekingalpha.com.
For the full year Curaleaf recorded $173.9 million in retail sales, which was up from $57.5 million the year previously. The company also reports a measure it refers to as ‘managed revenue,’ which includes revenue from entities with which it has management contracts but which are not included in the company’s consolidated results under standard accounting rules. But that measure, the company brought in $221 million in 2019 versus $77 million a year previously.
Coronavirus supply chain adjustments
Curaleaf CEO Joe Lusardi said the company has been successful in having its facilities classified as essential businesses in many of the states in which it operates. And Curaleaf has sufficient inventory to weather the current economic crisis, which has seen many workers confined to their homes under shelter in place mandates. And he said the company’s production protocols needed little modification to match current needs.
“Given the nature of our business we already have a strong culture of strict sanitation protocols in all our facilities. We have further enhanced our sanitation protocol frequency with standards that go well beyond current relations including more frequent sanitation and enhanced use of protective equipment, including gloves and masks,” he said.
“Our supply chain is strong. We have equipment, packaging and gross supplies for a 90-day period and continue to collaborate with supply vendors on creative solutions for future needs,” Lusardi added.
Preparation for continued heavy investment
During 2019 Curaleaf completed the acquisition of two retail brands named Acres and Select. The company reportedly has a commitment of $100 million in financing from key shareholders for additional acquisitions.
Those transactions, plus a hefty bill for stock compensation for executives, which totaled $5.7 million in the fourth quarter alone, meant that despite the good news about revenue and demand growth, Curaleaf still lost $27.5 million in the fourth quarter of 2019 versus a loss of $16.5 million in the fourth quarter of 2016. For the full year, the company reported a loss of $69.8 million, versus a loss of $61.9 million a year previously.