Retailers Outperform Cultivators in Most States as Federal Reform News Drives Cannabis Market

LOS ANGELES– A recent report by cannabis research firm Zuanic & Associates sheds light on the performance of the cannabis industry during the second quarter. According to the report, market conditions in most states have favored retailers over cultivators, and the growth catalyst for the industry has been primarily contingent on federal reform news rather than fundamental performance metrics of multistate operating groups.

The analysis emphasizes that “less bad” stock performance has had a more significant positive impact on the market compared to merely maintaining “still good” numbers, which resulted in minimal stock fluctuations.

During the second quarter, mixed results were observed. While price deflation remained a factor, it did not worsen significantly. Additionally, some states recorded year-over-year declines that were less severe than in the past. Notably, the impact of Missouri’s recreational cannabis legalization on Illinois was less significant than expected, and Florida saw a lessening of deflation during the quarter. Furthermore, year-over-year trends between the first and second quarters improved in Arizona.

The report identifies key trends in different states. For instance, Michigan saw notable year-over-year sales growth of 39% and escalating sales momentum compared to recent quarters. Florida and Massachusetts also showed improved sales trends, but the report cautions that the second quarter typically experiences a seasonal bounce after soft first quarters.

Regarding the dynamics between retailers and cultivators, the report indicates that, in most states, market conditions tend to favor retailers over growers and processors. However, Arizona and Massachusetts are exceptions to this trend.

The report delves into state-specific performance as well. In Arizona, second-quarter sales remained steady at around $341 million, with a slight 1% year-over-year decline. Despite the lowest wholesale prices nationwide, retail prices for flowers remain high, favoring retailers over growers.

California reported second-quarter sales of $1.25 billion, experiencing a year-over-year decline of 12%. Nevertheless, the trend appears to be stabilizing, suggesting potential for future growth.

Colorado’s market remained balanced despite a 14% year-over-year drop. Meanwhile, Florida and Illinois reported modest year-over-year sales increases, and Michigan’s sales soared by an impressive 39%, reaching $792 million.

Missouri and Maryland stood out with significant year-over-year jumps of 286% and impressive first-week sales of $21 million, respectively, following the legalization of recreational cannabis.

On the other hand, New Jersey and Ohio showed signs of slowed growth, with legislative efforts facing challenges. In contrast, New Mexico recorded positive sales momentum.

The report concludes that the cannabis industry remains highly dynamic, with unique challenges and opportunities in each state. Ultimately, the industry’s trajectory will largely depend on future federal reforms, making it essential for stakeholders to closely monitor developments in this evolving market.