The Highlights
Cannabis stocks had another good week, with the US cannabis MSOS ETF gaining 5.50% and the global YOLO increasing 2.49%. As the potential DEA news inches closer, US cannabis stocks continue to outperform Canadian counterparts. MTD, MSOS is +22.86%, while YOLO is +10.34%. Ayr Wellness (CSE: AYR, OTCQX: AYRWF) was +27.29% and led the way for the larger operators. The company reported 3Q earnings on Thursday and CEO and President David Goubert joined us on Higher Exchanges to review the quarter. Those interested can listen to the episode on Apple Podcasts, Google Podcasts, Spotify and X. Cresco Labs (CSE: CL, OTCQX: CRLBF) also had a strong week, ending +21.92%. The “year of the core” strategy appears to be working, as the company beat 3Q revenue and AEBITDA expectations this week. Importantly, excluding impairments, opex fell 5.5%, while AEBITDA margins increased 5.2%. The Cannabist (NEO: CBST, OTCQX: CBSTF) ended the week -14.32%. The company reported lower Q/Q revenue and AEBITDA, and both missed consensus estimates. Margins remain at the low end of the peer group, but upside may be ahead with 12 stores in Virginia, eight in New York, and five in newly adult-use Ohio. Jushi (CSE: JUSH, OTCQX: JUSHF) had a volatile five days and finished +3.59% this week. Revenue and AEBITDA both declined Q/Q and missed consensus estimates. Cost controls were a strong point, with opex falling 5.5% Q/Q and 67.1% Y/Y. Jushi is highly levered to potential adult-use transitions in Virginia (six stores) and Pennsylvania (16 stores). California’s Glass House Brands (NEO: GLAS, OTCQX: GLASF) reported another strong quarter and finished the week +9.60%. Revenue and AEBITDA exceeded expectations, and gross margins were a healthy 54%. Importantly, the cost of production dropped to a record low of $188, while the average selling price increased 63% Y/Y to $336/pound. The stock is +157.10% YTD. Glass House guided to 4Q revenues of $38-40 million, up 21% versus 3Q22 and down 19% sequentially (from the midpoint of guidance). The drop is due to high heat, high humidity, and low sunlight conditions affecting flower output.
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