The American cannabis seller Green Thumb Industries reported sunny 2019 results on Thursday, as the company and the country hunkered down under a coronavirus cloud. Revenue for the year more than tripled to $216 million. While the impact of Covid-19 on consumer spending remains to be seen, chief executive Ben Kovler gratefully announced that all of Green Thumb’s production facilities and its 41 stores have been declared “essential services” in the states where they operate.
“Despite the macro environment,” Kovler told conference call listeners, “we remain bullish on the medium- and long-term prospects of the sector and our business.”
Ahead of the company’s report, Green Thumb stock (ticker: GTII.Canada) rose 7% Thursday on the Canadian Securities Exchange, to close at 9.22 Canadian dollars (or US$6.56).
The Chicago-based company’s home state started recreational sales in January, and Kovler said that rec sales in Illinois are on their way to becoming a multibillion annual industry.
That bodes well for states considering expansion from medical to recreational pot, such as Pennsylvania, New Jersey, New York, Connecticut and Ohio. Adult use sales and tax receipts might help those states recover after the pandemic. “States considering economic stimulus might look to cannabis,” said Kovler.
As Illinois locked down, the Green Thumb chief said customers feared that his six stores would close. They didn’t. “We’ve seen a surge and strong demand,” Kovler said.
During the pandemic Illinois is allowing curbside pickup of orders, while Nevada is having its cannabis licensees deliver.
While Canada’s cannabis leaders have stumbled and smaller U.S. operators find themselves in a cash crunch, Green Thumb ended December with $47 million in cash and all of its current expansion projects fully-funded.
Green Thumb’s operating results puts it among the top three U.S. chains, along with Curealeaf Holdings (CURA.Canada) and Trulieve Cannabis (TRUL.Canada).
Revenue in Green Thumb’s December quarter grew 12% sequentially to $76 million. It had a net loss of $18 million in the December stretch, but positive earnings before interest, taxes, depreciation and amortization of $14 million (not counting stock compensation and other expenses it deemed “non-operating”).
Kovler said Green Thumb is in a stronger position than most rivals. If the Covid crunch puts too many people out of work and stuck at home, he acknowledged, things could get worse. “Which wallet share gets cut first remains to be seen,” Kovler said, “but we are very confident in cannabis.”
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