Curaleaf Holdings Inc. (CSE: CURA) had a busy Tuesday, reporting both a new acquisition to enter the European cannabis market as well as record fourth-quarter earnings after markets closed.
America’s biggest weed firm said it made US$230.3 million in total revenue for the three months ended Dec. 31, a quarterly increase of 26 per cent.
In a conference call with analysts, executive chairman Boris Jordan said he expects Curaleaf to report at least US$1.2 billion in revenue over its next fiscal year. That would make the Massachusetts-based operator the first cannabis company to report over US$1 billion in annual sales.
In fiscal 2020, Curaleaf posted US$626.6 million in total revenue, an annual increase of 184 per cent.
With U.S. federal legalization potentially on the horizon, the sky’s the limit for Curaleaf to continue expanding operations, Jordan says.
Because Democrats recently swept both the White House and Congress, Jordan expects a new green wave of political momentum will pave the way for major banking reforms this year.
If a version of the SAFE Banking Act passes in the coming months, financial institutions will finally be able to service the cannabis sector.
That would open up the door for greater access to liquidity, lower cost of capital, tax relief and potential up-listings to major stock exchanges for U.S. cannabis companies, Jordan told analysts.
Because cannabis is federally in the U.S., domestic operators can only tap Canada’s smaller public markets like the Canadian Securities Exchange or the NEO Exchange, which don’t restrict them. Meanwhile, larger exchanges like the Nasdaq and the New York Stock Exchange don’t permit listings by U.S. weed firms.
But despite being restricted to the 23 U.S. states that have legalized cannabis for adult or medical use, Curaleaf is making money.
The firm reported an adjusted earnings before interest, taxes, depreciation, and amortization of US$53.8 million in the fourth quarter, and an adjusted EBITDA of US$144 million for fiscal 2020.
The company currently owns and operates 101 cannabis stores, 23 cultivation sites and 30 processing facilities in the U.S.
Curaleaf eyes global cannabis market domination
On Tuesday, Curaleaf unveiled the next part of its growth strategy: European expansion.
The firm said it agreed to buy Emmac Life Sciences Ltd., Europe’s largest independent cannabis company, for about US$286 million in cash and stock.
In the U.K., month-over-month growth in the number of patients and prescriptions is up 40 per cent since June 2020. Photo of London Bridge via James O/Flickr Commons
Emmac brings a wealth of experience inside the continent, Curaleaf says. The operator has cultivation licences and European Union Good Manufacturing Practice processing licences, as well as distribution across several key European medical cannabis markets, including the United Kingdom, Germany, Italy, Spain, France and Portugal.
Demand for medical cannabis has been growing steadily in Europe over the past three years, with jurisdictions like Germany and the U.K. introducing medical programs that are showing signs of acceleration.
In the U.K., month-over-month growth in the number of patients and prescriptions is up 40 per cent since June 2020, Curaleaf notes. Europe’s largest medical cannabis market Germany has over 100,000 active patients. Italy has more than doubled the import of medical cannabis between 2019 and 2020.
Cannabis consumer and reform trends sweeping the U.S. are increasingly taking hold across Europe, Jordan says.
An estimated 90 million people are consuming cannabis in Europe with use rates above 10 per cent in some of the larger countries.
That reality is pushing governments to reconsider their policies, to reduce the police burden of enforcing cannabis-related crimes and gain taxes from legalized production, Jordan told analysts.
The Curaleaf executive says his goal is to “build the largest cannabis product company in the world.”
His firm inked eight acquisition deals over the past year, including the purchase of Emmac.
The flurry of acquisitions was partially responsible for its reported net loss of US$61.7 million in 2020. Fourth-quarter net loss was US$35.3 million.
Shares of Curaleaf fell 4.6 per cent Wednesday, closing at $19.75 on the Canadian Securities Exchange. However, company stock is up 30 per cent year-to-date.
Top image via Curaleaf
jared@mugglehead.com
