Cannabis Weekly Round-Up: MSO Shifts Distribution Strategy

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This past week, a leading MSO adjusts its distribution plans in California, while a Canadian producer reaches an international market.

In a move geared at increasing profits, a leading US-based cannabis multi-state operator (MSO) plans to exit exclusive distributor agreements for some branded products in California.

Meanwhile, the cannabis operator subsidiary of Village Farms International (NASDAQ:VFF,TSX:VFF) announced an international execution plan for the emerging Australian cannabis market.

Keep reading to find out more cannabis highlights from the past five days.

Cresco Labs adjusts third party distribution deals

Cresco Labs (CSE:CL,OTCQX:CRLBF) told investors it will move ahead with a plan to exit its existing distribution agreements in the California state market. The reasoning behind this decision is related to the desire to “increase profitability and shift toward owned-brand distribution in the world’s largest and most competitive cannabis market.”

Charlie Bachtell, CEO and co-founder of Cresco Labs, said the California market has become a key component in the overall strategy for the MSO.

“As we continue to implement localization strategies tailored to each state’s market dynamics, this decision will enable us to put our full weight behind our rapidly growing owned-brand portfolio in California, while also expanding profitability margins for our overall business,” he said.

As part of this decision, the company will face a slight decline in its Q4 revenue. Cresco Labs now expects to earn between US$235 million and US$245 million in the last quarter of the year.

Village Farms displays cannabis subsidiary synergy

Pure Sunfarms said it has completed its first shipment of medical-grade cannabis to partner Altum International. The shipment is part of a three year agreement set between the two cannabis companies.

“For Pure Sunfarms, exportation of their  leading cannabis products represents a significant long-term opportunity to leverage their scale and position as the top-selling dried flower brand in three of Canada’s largest provincial markets for opportunities beyond the Canadian market,” Michael DeGiglio, CEO of Village Farms International, said in this week’s announcement.

The executive added that this represents an example of the synergies forming between its subsidiaries. Village Farms has a minority interest in Altum.

“We are excited to supply dried flower for consumers internationally for the first time and look forward to supporting our partner, Altum, as they expand their product offerings going forward to build their own brand in the Australian medicinal market,” Mandesh Dosanjh, president and CEO of Pure Sunfarms, said.

Cannabis company news

  • Innovative Industrial Properties (NYSE:IIPR)issued a financial update for the Q3 period. The company confirmed that as of October 1, it had invested US$1.4 billion throughout its cannabis operations. The firm now owns 75 properties across the US cannabis marketplace.
  • Jushi Holdings (CSE:JUSH,OTCQX:JUSHF)confirmed an agreement to acquire a dispensary by the name of Apothecarium based in Las Vegas, Nevada. The company also has a cultivator in the state.
  • Ayr Wellness (CSE:AYR.A,OTCQX:AYRWF)announced the launch of a new THC-infused gummy lineup of products through its dispensary network in Florida. “We look forward to providing more exciting choices for our customers with additional flavors and form factors throughout our 42 open dispensaries in Florida,” Jon Sandelman, CEO of Ayr Wellness, said.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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