Curaleaf Holdings (CURLF) (CURA) is one of the leading vertically integrated cannabis players in the US. The company has operations in 12 states. It strives to increase its geographical footprint through strategic acquisitions and provide high-quality products to its customers.
Curaleaf was originally founded as a medical device company, PalliaTech, in 2010. The company changed its name to Curaleaf in 2018. It was established in Wakefield, Massachusetts. Its current management consists of CEO Joseph Lusardi, Chairman Boris Jordan, President Joseph Bayern, CFO Neil Davidson, and COO Stuart Wilcox.
Curaleaf went public on October 29, 2018, through a reverse takeover. The company is traded under the ticker CURA on the Canadian Securities Exchange. It debuted with a market cap of $4.5 billion.
Products and brands
Curaleaf has three brands under which it provides its products in different formats. It offers its products in the forms of vapes, concentrates, oils, lotions, gels, mints, flowers, prerolls, capsules, and edibles. The company’s brands are as follows:
- Curaleaf is the company’s mainstream brand. It’s the largest retail brand in the US. This brand provides premium products available in multiple states. The products in this brand are available in different formats such as vape oils and concentrates, mints and lozenges, topical lotions, flowers, prerolls and flower pods, capsules and tinctures, and edibles.
- Curaleaf Hemp provides CBD products extracted from hemp. These products are produced by following the stringent quality standards in the US cannabis industry. The products are also available in different formats such as balms, oils, gels, and lotions. Further, these products are classified into different collections such as Relax, Relieve, Renew, and Restore.
- UKU Craft Cannabis provides cannabis for experts and specialists. The brand aims to provide premium products for an elevated lifestyle. It also produces pure, effective, and premium quality oils. To meet the needs of different customers, it also produces a wide range of flavored products with different concentrations. Some of its product formats include gummies, vape pens, cartridges, oils, and flowers. The brand’s signature product is APEX flash oils, which contain 90% THC.
Curaleaf recently acquired Acres Cannabis’s production facilities in Nevada. The facility is 269,000 square feet and is used for processing cannabis products. It entered the deal in March 2019. The agreement also covers a state-of-the-art lab for extraction. This transaction is valued at $70 million—$25 million in cash and $45 million in stock.
Curaleaf acquires Select
In May 2019, Curaleaf signed an agreement to acquire Cura Partners. The value of the deal was $948.8 million. The deal included Cura Partners’ famous brand, Select, its intellectual properties, and all its operations and products. In selling Select, Cura Partners has given Curaleaf access to one of the country’s most well-known cannabis brands. The brand is famous in western states such as Nevada, Arizona, California, and Oregon. The deal will also improve the company’s geographic diversification.
As Curaleaf has a strong presence on the east coast, the acquisition will strengthen its footprint on the west coast. Recently, the value of the deal was amended to 55 million shares of Curaleaf Holdings. This transaction should close at the start of 2020.
Curaleaf acquires Grassroots
In July 2019, Curaleaf announced a deal to acquire Grassroots for $875 million. The consideration will be $75 million in cash and 108 million Curaleaf shares. The deal will complement Curaleaf’s current business model and will add operations in seven new states. In addition, Curaleaf will get licenses for 61 more dispensaries and 15 processing sites. The company will also have a total of almost 1 million square feet of cultivation space. As per the deal, Grassroots reserves the right to add one person to the company’s board of directors.
Curaleaf is positioned in some highly populated states. The company has its operations in 12 states with 50 dispensaries. It also has 13 processing facilities and 14 cultivation facilities. Once the Grassroots transaction is completed, the combined company will have the largest retail footprint in the US with 74 dispensaries. In addition, it will have more than 50 licenses for new dispensaries.
- Arizona currently has eight operational Curaleaf dispensaries.
- Connecticut has 11 operational Curaleaf dispensaries.
- Florida presently has 28 Curaleaf dispensaries.
- Maine has only one dispensary.
- Maryland currently has four dispensaries.
- Massachusetts has three dispensaries.
- Nevada has one dispensary and a dispensary partner, Blackjack Collective.
- New Jersey also has only one dispensary.
- New York has four dispensaries.
- Oregon has one dispensary.
Curaleaf’s financial highlights
Curaleaf reported $61.8 million in revenue in the third quarter, an increase of 27% from the previous quarter. The company’s wholesale and retail sales increased by more than 200% year-over-year. This growth mainly resulted from an increase in dispensaries in Florida, Arizona, and New York.
The gross profit of the company’s cannabis sales stood at $23.6 million. It also reported adjusted EBITDA of $9.0 million. Further, its net loss in the period was $7.4 million. Curaleaf’s cash and cash equivalents stood at $91.2 million on September 30. The company had outstanding debt of $106.0 million and 464.1 million outstanding shares.
Curaleaf’s 2020 outlook
Curaleaf plans to close its Select acquisition on January 1, 2020, and its Grassroots acquisition in the first quarter of 2020. Its integration of these deals will be a significant improvement to its operational capacity. These deals will also give the company access to key markets. In addition, management is currently focusing on operating with excellence to cater to demand.
The company’s management is currently focusing on generating more revenue from medical marijuana sales. It’s also working on building its brand by rolling out more lifestyle and wellness products. As its acquisition deals bring in more cultivation and processing sites, they’ll also help it increase its vertical integration.
More states might look to legalize cannabis on the November 2020 ballot, so the company is planning to expand into recreational marijuana markets. From its acquisitions, it will also gain more than 50 dispensary licenses. It could open more retail shops in line with its strategy to expand its retail presence.