You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
At the beginning of 2020, we expected Q3 financial reports for American cannabis operators to be very strong with the vaping crisis long behind us, but we certainly had our doubts when the pandemic hit. We reiterated our bullish outlook in May, and we have been reporting strong demand for legal cannabis for many months subsequently. Still, the growth that the leading publicly traded companies demonstrated in Q3 has exceeded our greatest expectations.
For those not paying close attention, New Cannabis Ventures provides a handy scorecard in its Public Cannabis Company Revenue & Income Tracker. The top 10 American companies in terms of reported quarterly revenue, which ranged from $45.5 million to as much as $352 million, all showed double-digit sequential growth:
Of these ten companies, seven are MSOs (combined Q3 revenue of $784 million), two are ancillary, and one, GW Pharma, sells cannabis-derived FDA approved medicine. Not a single company reported below analyst expectations, and some blew them away. An important sign of the maturation of the industry is that the majority of these companies are producing positive operating profits, with all of them improving from Q2. Most of the companies beyond the top 10 are also exhibiting strong growth and improving profitability.
One of big takeaways we have is that it’s becoming increasingly important for investors to understand the geographical exposure of the companies in which they invest. We note that acquisitions boosted the revenue growth for Columbia Care and Curaleaf among the MSOs, but the strongest organic growth was from operators