Acreage Holdings Reports Q1 2023 Financial Results with Declining Revenue and Net Loss

NEW YORK – Acreage Holdings, Inc, a multi-state cannabis operator, announced its financial results for the first quarter ended March 31, 2023. Despite challenges faced by the industry, the company reported a 1.6% decline in revenue compared to the previous year, totaling $55 million. Sequentially, sales dropped by 2.7% from the fourth quarter. The net loss for the first quarter amounted to $16 million, slightly higher than the $13 million loss reported in the same period last year. However, it was a significant improvement from the fourth quarter’s net loss of $119 million.

Acreage Holdings credited its ability to maintain strong margins and positive Adjusted EBITDA to its focus on its core footprint and strict cost controls. The company expressed enthusiasm about expanding its addressable market in Connecticut, where it launched adult-use sales at The Botanist Montville location during the first quarter. Additionally, Acreage recently began serving adult-use consumers at its Danbury store in the second quarter. To diversify its product portfolio, the company introduced fast-acting gummies under its flagship brand, The Botanist, in Illinois, Maine, Massachusetts, and Ohio.

The revenue decline was attributed to ongoing industry headwinds, decreased pricing due to competitive pressures in various markets, and the divestiture of operations in Oregon. However, the acquisition of a Maine dispensary in 2022 partially offset the year-over-year decrease. Acreage clarified that after adjusting for acquisitions and divestitures, the first-quarter revenue was relatively consistent with the previous year.

Acreage ended the quarter with $14.3 million in cash and cash equivalents. The company had $125.0 million drawn under the Amended Credit Facility as of March, with an additional $15.0 million of long-term debt available from committed debt facilities for eligible capital expenditures. In April, Acreage sold certain Employee Retention Tax Credits with an aggregate receivable value of $14.3 million, generating $12.1 million in proceeds.

The company’s total operating expenses for the quarter amounted to $25.4 million, a decrease from $32.2 million in the same period last year. The current quarter’s operating expenses included a one-time bad debt charge of $1.3 million and a reversal of prior period bonus accruals of $2.5 million.

In its recent annual report, Acreage acknowledged its status as a going concern, given its accumulated deficit of $678 million. However, the company expressed confidence in weathering the challenges through incoming revenue and financial maneuvers. Acreage also announced the resignation of its Chief Financial Officer, Steve Goertz, and the search for a new CFO.

Looking ahead, Acreage is optimistic about its revenue rebound. The company has launched adult-use retail operations in Connecticut, joining a select group of operators permitted to begin adult-use sales in the state. The Botanist store in Montville has already commenced sales, followed by The Botanist Danbury location.

Furthermore, Acreage secured approval to relocate its existing Atlantic City medical dispensary to Pennsauken, New Jersey, and received the annual license renewal in the state. The company expects to initiate adult-use sales at the new Pennsauken location before the end of 2023.

Peter Caldini, CEO of Acreage, emphasized the positive progress made by the company, stating, “Notably, during the quarter, we received shareholder approval for our strategic arrangement with Canopy and Canopy USA, bringing us one step closer to satisfying what is required