U.S. cannabis producer Curaleaf Holdings Inc. on Monday reported a bigger loss than expected during its third quarter, amid what it said were “unexpected revenue impacts” in Florida and New Jersey.
Curaleaf
CURLF,
reported a net loss of $54.7 million, or 7 cents a share, compared with a loss of $56.9 million in the same quarter last year, or 8 cents a share. Sales came in at $340 million, compared with $317 million in the prior-year quarter; sales grew just 1% from the previous quarter.
Analysts polled by FactSet expected a loss of 3 cents a share on revenue of $337 million. Shares closed 3.4% lower on Monday.
Curaleaf — one of the largest U.S. cannabis producers, with dozens of dispensaries and some degree of operations in 22 states — has opened new stores in states like Arizona, Florida and Pennsylvania in recent weeks. But the legal U.S. cannabis industry has faced a drop in weed prices, as legal producers grow aggressively and as the illicit market maintains its hold on cheaper product, while consumers appear to be rethinking their shopping habits in a universe of rising prices for basics like groceries and gasoline.
Ben Kovler, CEO of Curaleaf rival Green Thumb Industries Inc.
GTBIF,
citing data from BDSA, recently told MarketWatch that U.S. cannabis sales were up 3%, while unit sales had jumped 22%. The gap between revenue and the amount of goods sold — which indicate lower prices — has made it more difficult for multistate operators to manage their own costs.
For more: Amid steep inflation, one thing is getting cheaper — cannabis
Ahead of Curaleaf’s earnings, other analysts also said that rising prices elsewhere posed a danger to the legal-weed market.
“Per our review of state-level sales data in the U.S., it appears that in Q3/22, end-user sales at the retail level increased, on average, by ~1.2%. However, many of the markets with a higher concentration of MSO participation were flat to slightly down in a number of cases,” Canaccord analyst Matt Bottomley said in a note last month.
“As was a key theme in Q2, we believe inflationary pressures on consumer spending will continue to weigh on growth as the cost of food, transportation and other nondiscretionary staples rise and demand a higher proportion of wallet share from consumers,” he continued.
Curaleaf reported as voters in five states prepare to vote on Tuesday on marijuana-reform measures. Voters in Maryland and Arkansas will decide whether to legalize recreational use. In Missouri, they’ll vote on a measure that would lift state restrictions on personal use. North Dakota and South Dakota will also vote on legalization measures.
Nineteen states allow recreational cannabis sales. A majority of states have now legalized marijuana for medicinal or recreational use.
Curaleaf stock has slid 38% through this year. By comparison, the S&P 500 index
SPX,
has declined 20.9%.