It’s cannabis company earnings season once again. Below, I summarize the highlights from our portfolio companies. But first, here are the major sector trends that emerged from the calls.
1. Cannabis demand remains strong
Despite the decline in consumer confidence, demand for THC products is at an all-time high, said Green Thumb (GTBIF) CEO Ben Kovler in his first quarter earnings call.
Cannabis products continue to take share from alcohol, explained Green Thumb president Anthony Georgiadis in the call. “We’ve long believed the demand for cannabis products would accelerate, and we’re now seeing real evidence of that shift,” he said. “With new product formats like THC beverages gaining traction, especially in traditionally conservative regions, we’re increasingly bullish on long-term category growth. The tidal wave of demand that Ben has been talking about since the day I met him is big and getting bigger by the day.”
Trulieve (TCNNF) reported that retail traffic and units sold increased by 7% year-over-year in the first quarter, “indicating strong demand for cannabis products.”
2. Federal reform may remain elusive
Green Thumb CEO Kovler remains skeptical that federal reform like rescheduling will happen soon.
“From what I can see, that change is not on the agenda for the Trump administration,” he said in the first quarter earnings call. “The DEA has historically not been friendly to cannabis, and the nominee to head up the agency, Terry Cole, was pretty cagey about rescheduling at his recent congressional hearing.”
“As we look ahead, our expectations on regulatory reform remain grounded in reality,” said Green Thumb president Georgiadis. “We said before that we don’t expect sweeping federal reform anytime soon, and nothing we’ve seen recently has changed that view. We all listen to the same DEA hearing you did, and we remain confused by the industry’s false sense of optimism.”
But Kolver threw a bone to optimists. “Of course, there is always a chance for change, and this administration probably increases the odds of a left-field event,” he said.
3. Cannabis drinks are increasingly popular
“Alcohol consumption is declining, especially among younger adult consumers. And this gives us a long runway for future engagement as THC drinks gain momentum,” said Green Thumb CEO Kovler in his company’s earnings call.
“The THC beverage category is in its early stages of mainstream popularity, and we are bullish on its opportunity as a legal product and are encouraged by both the data on the ground and our position in the space,” he said.
“We plan to expand into every state that supports compliant hemp commerce,” said Curaleaf CEO Boris Jordan in his company’s earnings call.
Hemp-based THC drinks are legal under federal law, though several states are moving to crack down on sales.
4. More state-level legalization may happen soon
Trulieve said it is optimistic about recreational-use legalization in Florida and Pennsylvania, given the strong public support and recent legislative developments.
Heavily backed by Trulieve, the Smart & Safe Florida campaign in Florida is collecting signatures to get a recreational-use legalization measure on the ballot again in 2026. The measure got voted down last year, but the vote was close.
“To date, the campaign has collected over 700,000 signatures, which once validated, is sufficient to trigger a review by the Florida Supreme Court. With 23 million residents and 143 million tourist visits per year, Florida has the potential to be the best legal cannabis market,” said Trulieve CEO Kim Rivers in the earnings call.
Turning to Pennsylvania, “support for adult-use legalization continues to build momentum as most neighboring states have launched adult-use programs,” she said. “We remain optimistic that adult-use legalization can happen in the near term.”
5. Pricing pressure persists
“Supply-demand imbalances, new competition, unregulated products being sold as hemp and the consumer who’s watching their wallet are all contributing factors,” said Green Thumb president Georgiadis. “We have tools to manage this, operational efficiency, brand strength and scale among them, but we also recognize these tools have limits.”
Green Thumb reported scant 1% first-quarter year-over-year sales growth. Sales were down 3% sequentially. Same-store sales (at stores open a year or more) dropped 5%.
Curaleaf saw a 6% sequential decline in sales, in part due to price compression. “Price compression remains significant headwind across the industry and will likely persist, especially in the face of turbulent macroeconomic backdrop,” said Curaleaf CFO Ed Kremer. In an interview after the earnings call, Jordan said his company saw 13.5% year-over-year price compression across all markets.
“The promotional environment in Florida remains competitive, with some competitors continuing to engage in aggressive pricing and broad-based discounts,” said Rivers, at Trulieve. “Since the start of the year, we have observed moderate shifts in consumer behavior towards value-oriented products.”
Verano (VRNOF) reported a 5% decline in first-quarter sales compared to the year before, in part due to price compression, discount activity and increased competition in key markets.
6. Illicit competition continues to hurt legal operators
Jordan at Curaleaf said an influx of illegally imported cannabis, often from California, undermined the New York regulated market in the first quarter.
“We saw our revenues from the fourth quarter to February drop almost by 50% because of what we would call the inversion,” he said in the earnings call. “The inversion is where illicit cannabis from California and other markets made it into the New York system because of a lack of a seed-to-sale tracking system, and that definitely affected the New York growers.”
“A straightforward solution exists, the implementation of a long overdue track and trace system,” he said. “We continue to advocate for this regulatory action to help ensure a level playing field and protect the integrity of the New York market.”
7. International growth remains impressive
At Curaleaf, international sales advanced 74% to $35 million in the first quarter. That was the fourth consecutive quarter of 70% plus growth. Growth was solid in Germany and the U.K.
Curaleaf expects international sales to grow to $170 million this year, from $107 million last year. “Both the U.K. and Germany are still very much underpenetrated and have a lot more room to continue growth,” he said.
“Germany represents a significant growth opportunity, with approximately 10% of the population self-reporting cannabis use and only 0.5% registered as medical cannabis patients,” agreed Organigram (OGI) CEO Beena Goldenberg.
Jordan expects solid growth to continue as more countries legalize sales. “We are encouraged by prospects for new market openings that could materialize over the next year,” he said. Jordan would not name countries that are about to legalize.
On the downside, product from Colombia, Africa and Canada is arriving in Europe, and it may lead to price compression there, too. “There’s a tremendous amount of cannabis that can’t be sold in Canada or other markets. It’s now making its way into the European market,” said Jordan.
8. Tariffs probably won’t be a big issue
“We’ve done a very robust analysis around potential tariff impact and it’s immaterial for our organization,” said Trulieve CEO Rivers.
“Given the majority of our suppliers are domestic and the interstate nature of our business, which includes foreign export restrictions, thankfully, our overall exposure to tariff impacts is limited,” said Verano (VRNOF) CEO George Archos.
“Our exposure to China sourcing is just 5% and will be zero in a matter of weeks as our suppliers pivot to lower-cost countries,” said Curaleaf CFO Kremer.
“At the moment, there’s no clear picture on what tariffs might mean for our business. We’ll know more as policy takes shape,” said Green Thumb president Georgiadis.
9. M&A will pick up, but not just yet
“Pricing is actually not as low as it’s going to get,” said Trulieve CEO Rivers. “There’s significant debt coming due for a lot of companies out there who I don’t think have the ability to pay that down. Folks are going to be facing some tough decisions and that creates opportunity. We are going to make sure that we’re in a position to be opportunistic when those opportunities arise. But I also think that there’s no benefit here in not being patient.”
What to Do Now
I believe our Cabot Cannabis Insider portfolio “get paid to wait for reform” names look buyable here. They offer attractive yields in the 12%-14% range that pay out every quarter while we wait for the catalysts of federal and state reform. They are: Advanced Flower Capital (AFCG), Chicago Atlantic Real Estate Finance (REFI) and Chicago Atlantic BDC (LIEN).
In dividend investing, yields like these are often considered “too high” and a sign they cannot last. At least as of the most recent updates, it does not appear these dividends will be cut. All have recently affirmed their dividend payouts.
Otherwise, consider taking both trading positions and multiyear positions in portfolio names now, or averaging down.
Portfolio names are: Ayr Wellness (AYRWF), Cresco Labs (CRLBF), Curaleaf (CURLF), Cronos (CRON), AdvisorShares Pure U.S. Cannabis (MSOS), AdvisorShares MSOS 2X Daily (MSOX), ETFMG Alternative Harvest (MJ), Green Thumb (GTBIF), Organigram (OGI), Tilray Brands (TLRY), Trulieve (TCNNF) and Verano (VRNOF). For simplicity, consider getting exposure via MSOS or the leveraged version, MSOX.
Note that two of the safest and most attractive names, in my view, are Cronos and Green Thumb. As I explain below, both have solid balance sheets, and Cronos continues to post strong sales growth.
Portfolio Company News
Cronos Group (CRON)
Cronos continues to look like the safest and most promising name in cannabis. Not only is it posting impressive sales growth, its cash level exceeds its market cap (you “get the business for free” when you buy the stock), and it has leading brands in Canada and Israel.
One risk is that it gets a lot of revenue from sales in Israel, and it could get caught up in a tariff issue there. Here’s a closer look.
First-quarter sales grew an impressive 28% year over year to $32.2 million. Adjusted for currency fluctuations, sales advanced 33%. The sales growth was primarily due to higher cannabis flower sales in Israel and other countries, and higher cannabis extract sales in the Canadian market. Net income increased $10.2 million to $7.7 million. The company closed the quarter with $836 million in cash compared to a market cap of $791 million.
The Cronos Spinach brand was the top brand in edibles in Canada and the third biggest brand in flower. The company says sales growth would have been better, but demand was so strong for Spinach products in the first quarter, it could not keep up. “These shortages reflect the exceptional popularity of our flower offerings,” said CEO Mike Gorenstein in the earnings call. PEACE NATURALS retained its position as the number one cannabis brand in Israel.
The company will complete expansion of its Cronos GrowCo capacity in the second quarter and produce sales revenue in the second half of the year. This “will unlock significant capacity to meet this demand and fuel our next phase of growth,” said Gorenstein. He says brand strength stems from extensive investments in genetics, breeding, research and development.
On May 7, Cronos’ board approved a $50 million share repurchase plan.
A risk here is that Israel is considering a 165% tariff on cannabis imports in response to allegations that foreign companies like Cronos dump cannabis in the domestic market. “Following investigation into antidumping allegations, which Cronos strongly believes to be baseless and firmly disputes, on April 10 Israel’s Minister of Economy and Industry announced that Israel would impose tariffs of up to 165% on Canadian cannabis, which would include Cronos’s imports,” said Gorenstein in the May 8 earnings call.
“The proposed tariffs were opposed by the Ministry of Health and the Competition Authority and on April 25, were vetoed by Israel’s Minister of Finance. Despite the veto, on April 29, the Minister of Economy and Industry publicly stated that he would move forward to seek final approval for the tariff. This is without precedent and contrary to the law and it risks severely impacting patients.”
Elsewhere abroad, the company says it will continue to grow in Germany and the U.K., especially as new Canadian growing capacity comes online later this year.
Curaleaf (CURLF)
Curaleaf May 8 reported first-quarter sales of $310 million, an 8.5% decline year over year. Sequentially, revenue decreased 6%.
CEO Boris Jordan blamed it on seasonality, one less selling day year over year, and ongoing price compression. The company also reduced exposure to wholesale customers identified as higher credit risks, and it eliminated some underperforming products.
Strength in international, New York and Ohio was offset by pricing pressure in New Jersey, Arizona, and Illinois, said CEO Ed Kremer in the earnings call. The company reported a loss of $54.8 million or $0.07 per share.
Pockets of strength
In New York, revenue grew 24% year over year, thanks to strength in both retail and wholesale sales. Ohio delivered robust year-over-year growth of 58% due to both retail and wholesale business strength. “We continue to build momentum in the state, and our third store in Lima is ready to open, pending state approval,” said Jordan. “Our fourth and fifth locations are on track to open in early quarter three, with additional openings planned for the second half of the year. Ohio is well positioned to remain a significant growth engine for Curaleaf.”
International sales advanced 74% to $35 million. The first quarter was the fourth consecutive quarter of 70% growth and 14% sequential growth. “Germany led this exceptional performance, with the U.K. also contributing solid gains,” said Jordan. Meanwhile, the U.K. delivered another quarter of strong double-digit growth.
Jordan predicted ongoing strength in its foreign markets, the U.K., Germany, Poland, Australia, and New Zealand. He said foreign sales should grow to $170 million this year, from $107 million last year. “Both the U.K. and Germany are still very much underpenetrated and have a lot more room to continue growth.”
Jordan teased the possibility of new markets opening in Europe. “We are encouraged by prospects for new market openings that could materialize over the next year,” said Jordan. But he declined to identify them.
On the downside, he said lots of product hitting the European market from Colombia, Africa and Canada could create some price compression. He said Curaleaf might be less affected because it sells premium products. “But it is a threat to the market. There’s a tremendous amount of cannabis that can’t be sold in Canada or other markets. It’s now making its way into the European market.”
During the quarter, Curaleaf launched a caffeinated hemp-based THC energy drink called Select FormulaX, a new vape line called Select ACE, and a new pre-roll brand, Anthem. The company opened its 66th store in Florida, bringing the nationwide store count to 151. It also opened the first fully dedicated hemp retail storefront in West Palm Beach, Florida.
The company ended the quarter with $122 million in cash, against $561.2 million in debt.
The company reported operating cash flow of $42 million and free cash flow of $26 million.
CFO Kremer predicted low-single-digit sequential sales growth for the second quarter. “We anticipate stabilization across our core domestic markets with accelerated growth driven by strategic expansions in New York, Ohio, international, and twelve new store openings this year,” said Jordan. The company may also expand via small acquisitions.
After quarterly results were released, the company announced on May 12 that it got European approval of a handheld liquid inhalation device designed for medical cannabis use.
Green Thumb Industries (GTBIF)
Green Thumb, probably the strongest company in the cannabis space, on May 7 reported scant 1% year-over-year sales growth to $280 million for the first quarter. Sales were down 3% sequentially. Same-store sales (at stores open a year or more) dropped 5%.
The company blamed increased competition and ongoing price compression, particularly in Illinois and New York. “As stores open up, obviously, that’s less of the pie. The pie just gets sliced into more pieces,” said president Anthony Georgiadis in the earnings call. “The other component is price erosion. Illinois and New Jersey are two states that stand out in terms of where we’ve seen a lot of new competition as well as some relatively sizable price movement in the last six to nine months.”
Gross profit was $143 million or 51% of revenue, down from $145 million or 53% of revenue year over year. The company reported net income of $8 million or $0.04 per diluted share, down from net income of $31 million or $0.13 per diluted share in the prior year, due in part to accounting adjustments.
On the bright side, the company continues to have a strong balance sheet. It ended the first quarter with cash of $211 million against debt of $252.4 million. Cash flow from operations for the first quarter came in at $74 million. Aside from investing in the business, it will use the cash to buy back stock and do M&A.
“There’s larger blocks of stock out there that could come available for sale that we would be very interested in buying as a strategic asset for the business,” said CEO Ben Kolver in the earnings call. And M&A? “We’re listening to what’s out there, and we’re watching what’s happening. The capital markets are pretty bleak, and we know our cash is a unique asset. And that should help all of us, including our shareholders.”
The company guided for flat sequential sales in the second quarter, citing price pressure. It said it expects to open, relocate, or remodel 10 to 12 stores in 2025. It is circling recreational-use store opportunities in Minnesota, Pennsylvania, and Virginia. Minnesota has approved rec-use sales, and Pennsylvania may do so soon. “We have a strong position in states where the launch of adult-use sales is coming soon, like Minnesota, Virginia and Pennsylvania,” said Kolver.
Organigram Global (OGI)
Organigram sales grew 74% in the first quarter to $65.6 million, but that was largely due to the acquisition of a Canadian vape and infused pre-roll company called Motif last December.
The company also cited organic growth in recreational-use sales and international sales growth. International sales advanced 177% to $6.1 million.
Net income was $42.5 million, or $0.23 per share. Organigram company ended the quarter with $83.4 million in cash and little debt. It has a market cap of $172 million.
During the quarter, Organigram launched a foray into the U.S. hemp-based beverage category with the purchase of a company called Collective Project. It sells drinks in 10 states and six Canadian provinces.
Organigram plans to launch Collective Project beverages that use its fast-acting soluble technology (FAST) nanoemulsion technology, which speeds up the impact of THC consumption via drinks or edibles. “The onset, duration and offset for beverages with FAST is even quicker than it is in gummies, more closely resembling alcohol,” says CEO Beena Goldenberg.
Organigram expects ongoing strength in Germany, where it has a presence through a strategic investment in Sanity Group to secure supply. It is also expanding in the U.K. and Australia. Its Jupiter strategic investment pool, funded by BAT, supports international expansion efforts. The investment arm has about $58 million to fund growth abroad via strategic investments and acquisitions.
Organigram expects to realize $5 million in synergies from the Motif acquisition this year, with annual synergies reaching about $15 million in 2026. Organigram held the #1 market share in vapes and pre-rolls in Canada in the quarter.
Trulieve (TCNNF)
Trulieve on May 7 reported $297.8 million in first-quarter revenue, up slightly compared to the year before.
Gross margins improved to 62% compared to 58%, driven by lower production costs and fewer price promotions.
First-quarter net loss was $33 million compared to a loss of $23 million last year. The loss per share of $0.17 was the same as last year. Excluding nonrecurring charges, first-quarter loss per share was $0.02 compared to a loss of $0.05 last year.
Retail traffic and units sold increased by 7% year over year, indicating strong demand for cannabis products. Loyalty program membership surpassed 625,000 members, up nearly 20%. Loyalty members spend 2.3 times more per month than non-members.
The company opened six stores in Arizona, Florida, and Ohio during the quarter and relocated one Pennsylvania store. The company launched a line of hemp-derived drinks called Onward, and it plans to introduce a new energy drink called Upward in June.
Operating cash flow of $51 million contributed to a cash balance of about $330 million at the end of the quarter, against $480 million in debt.
Trulieve expects second-quarter sales to be flat or up slightly, sequentially. It projects full-year operating cash flow of at least $250 million. Trulieve plans to open 10 stores this year, relocate up to three stores, and refresh or remodel up to 45 stores.
Verano (VRNOF)
Verano May 8 reported $209.8 million in sales, down 5% compared to the year before. The company attributed the decline to the exit from an Arkansas store and ongoing price compression. During the quarter, the company also paused wholesale operations in Massachusetts due to price compression and increased competition. It still has two Zen Leaf stores in the state.
The company opened two MÜV dispensaries in Florida in the quarter and a Zen Leaf store in Connecticut. It plans to open a new store each in Ohio and Connecticut near term and several new stores in Florida during the year.
Cannabis News from Around the World
Part of my core thesis for being bullish on cannabis stocks is that there continues to be tremendous cultural momentum toward cannabis reform around the world. I’m convinced institutional investors will not ignore cannabis stocks forever.
We see evidence of this powerful cultural momentum in the changes in laws to legalize cannabis, big tobacco investments in the space, robust cannabis sales growth in states that legalize, increased cultural acceptance in the form of relaxed drug testing standards in sports leagues and the workplace, and poll results that show a growing majority of people support legalization regardless of age and party affiliation.
These trends tell us cannabis stocks are a strong contrarian buy that will turn very profitable for patient investors with a medium-term horizon. The sector is so volatile, it is easy to get shaken out of names by heightened emotional reaction to drawdowns. So, it is important to catalogue evidence of this cultural momentum. That is the purpose of this section of Cabot Cannabis Investor.
State News
* Pennsylvania’s House in early May passed a bill that would legalize recreational-use cannabis sales. It was the first time a rec-use legalization bill was approved by either legislative chamber. Democrats voted unanimously in favor, and Republicans were unified in their opposition. Democratic Gov. Josh Shapiro has proposed legalizing rec-use as part of his budget plan.
* Four in five Texas voters say they want to see cannabis legalized, according to a recent poll. The poll found 41% of residents think possession of at least small amounts of cannabis should be legal, and 33% are OK with legalization for medical purposes only. Half of respondents said they oppose efforts to ban hemp-derived products. The poll was conducted by the University of Texas.
* Most Georgia voters say cannabis should be legal for recreational use, according to a recent poll. The Atlanta Journal-Constitution poll found that nearly 56% of respondents support the reform.
* Minnesota will hold lotteries on June 5 to assign licenses for recreational-use cannabis cultivation and product manufacturing.
* Florida Gov. Ron DeSantis (R) recently signed a bill that makes it harder to introduce referenda. It mandates that supporters post a $1 million bond before gathering signatures, prohibits the use of out-of-state petitioners, and increases the amount of personal information signatories must provide. A recreational-use cannabis legalization referendum almost passed last November. Backed by cannabis companies, Smart & Safe Florida is currently gathering signatures supporting the introduction of a similar referendum for the 2026 elections.
* Oklahoma Gov. Kevin Stitt (R) recently asked state drug law enforcement agencies to come up with ways to crack down on the sale of hemp-based THC products. “These compounds, often marketed to young people, have psychoactive properties that threaten the safety and well-being of Oklahomans,” said Stitt. “We must act quickly and collaboratively to address this emerging threat and ensure that both licensed and illicit markets are held accountable.”
* The Alabama Senate recently passed a bill that would ban the sale of hemp products at gas stations. The bill would authorize the Alabama ABC Board to regulate hemp products by licensing manufacturers, wholesale distributors and retailers. Sales would be limited to liquor stores or other locations that minors may not access, though grocery stores could sell hemp-based beverages. It also limits THC in hemp products to five milligrams.
Medical News
* CBD has significant anticancer effects, including induction of cell death, inhibition of cell proliferation, suppression of metastasis, and modulation of the tumor microenvironment, according to a recent meta-analysis of research. Authors said CBD does this by modulating key cancer cell signaling pathways and interacting with non-cannabinoid cell receptors. The study, published in the journal BMC Cancer, suggests CBD could be used as an adjunct to conventional therapies.
* A separate study recently published in the journal Pharmaceuticals found that several compounds found in cannabis have “strong inhibitory activity” against tumors. The study was conducted by researchers from Wonkwang University, the Korean Ministry of Food and Drug Safety, Kyung Hee University, Kookmin University and the National Institute of Horticultural and Herbal Science.
* A recent study in the U.K. concluded that cannabis-based medicinal products may effectively treat post-traumatic stress disorder (PTSD). The study was published in the Expert Review of Neurotherapeutics.
International News
* Denmark recently codified its long-running medical cannabis pilot program into law, making it part of the country’s national healthcare system. The pilot program was launched in 2018.
* The UN’s human rights commissioner recently called for cannabis decriminalization in a speech at the Harm Reduction International Conference in Bogotá, Colombia.
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