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Twenty of the largest publicly traded marijuana companies in the U.S. lost a cumulative $2.3 billion last year, and only one of them turned a profit. That’s despite the group as a whole pulling in more than $8.7 billion in revenues, according to analysis of public filings by Green Market Report.
The included companies are all vertically integrated operators, with retail shops, grow operations, and manufacturing facilities in various states across the U.S. The bottom-line data is one of the few snapshots available for seeing how the cannabis sector in general is performing financially.
A similar analysis of 2022’s financial filings found that only two of 24 public cannabis companies posted profits that year. The group as a whole lost more than $4 billion that year, so losses have arguably contracted significantly year-over-year.
Biggest losers
The only cannabis company that posted net income in 2023 was Chicago-based Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF), which reported a profit of $36.3 million for the year, just 3% of the company’s eye-popping $1.1 billion in revenue. GTI also reported profit of $12 million in 2022, meaning the business managed to more than triple its profits year-over-year.
The biggest loser of 2023, by far, was Florida-based Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF), which posted a $527 million loss for the year against revenue of $1.13 billion.
But Trulieve was far from the only publicly traded marijuana company to post nine-figure losses. New York-based Curaleaf Holdings (TSX: CURA) (OTCQX: CURLF) managed to lose $281.2 million despite pulling in the most revenue of all 20 companies, an impressive $1.35 billion.
GTI, Trulieve, and Curaleaf were also the only three public plant-touching cannabis companies that surpassed $1 billion in revenues last year.
Rounding out the top profit-impaired marijuana businesses are:
Florida-based multistate operator Ayr Wellness (CSE: AYR.A) (OTCQX: AYRWF), which posted a loss of $272 million.
Chicago-based Cresco Labs (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ), with $180 million in losses.
New York-based The Cannabist Co. Holdings Inc. (NEO: CBST) (OTCQX: CBSTF) (FSE: 3LP), with $174 million in losses.
Chicago-based Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF), which lost $113 million.
The widespread financial distress is one reason that many companies and investors are so keen on the possibility of the Biden administration moving marijuana to Schedule III from Schedule I, which would save the industry as a whole hundreds of millions in taxes each year, according to various estimates. But it’s also not clear when those savings may yet fully kick in.
Market turbulence
The difference between this year’s and last year’s analysis belies market turbulence, given the circumstances of the four absent on this year’s list.
Of the four companies left off the list this year, MedMen Enterprises (CSE: MMEN) (OTCQX: MMNFF) has essentially gone bankrupt. Two of the others – StateHouse Holdings (CSE: STHZ) (OTCQB: STHZF) and Vext Science (CSE: VEXT) (OTCQX: VEXTF) – have not yet filed their full-year financials with securities regulators, which both companies blamed on a change of auditors.
The fourth change to the list, second-tier multistate operator, Red White & Bloom Brands (CSE: RWB), was also in the red with $104.9 million in losses last year and $240 million in debt, against $88.3 million in revenues, the company reported in April.
The big takeaway from the “never-ending” losses, according to GreenWave Advisors Founder Matt Karnes, is the expense of doing business while the entire U.S. marijuana industry remains federally illegal.
“Turning a profit is difficult, as well as generating sufficient levels of cash. That’s really it in a nutshell,” Karnes said. “That’s why everyone’s been hounding the government … because everyone is running out of money. 280E is just killing everybody.”
Karnes agreed, however, that there are plenty of other factors dragging the sector down financially, including misplaced optimism when many of the nascent companies went public over the past several years, and an underestimation of the strength of the illicit marijuana market’s cheaper prices.
And real political progress at the federal level has taken far longer than many industry insiders were expecting five or 10 years ago, Karnes noted.
That’s led to a lot of expansion plans that have fallen through, investments in infrastructure that aren’t panning out, and widespread price compression, all of which has piled onto the cannabis sector to drive down profit margins.
“The inability to accurately calculate when this all will change – to read the political landscape correctly – is really hard,” Karnes said of the ongoing financial losses. “That’s a big part of it.”
“}]] [[{“value”:”The only company that posted a profit in 2023 was Chicago-based Green Thumb Industries.
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