Curaleaf’s recreational license renewal in New Jersey, a reversal of the state’s Cannabis Regulatory Commission’s (CRC's) earlier decision, is a positive development for the company according to Stifel GMP analysts.
“As a result, we no longer intend to revise our forecasts based on this past week’s events and will wait for 4Q FY22 results to update our outlook, with a focus on gaining greater clarity on management's industry-high guidance of greater than $125 million 2023 free cash flow,” the analysts wrote in a note to clients.
The analysts repeated their ‘Buy’ rating on the stock with a price target of C$8. Curaleaf shares were trading up 0.5% at C$3.28 on Wednesday afternoon.
The license renewal covers Curaleaf’s production facilities and two stores in Edgewater Park and Bellemawr, the latter of which is likely to be the company’s most productive in the country at $7 million per month in sales as of November 2022, the analysts noted.
The analyst pointed out that the approval came with conditions, firstly, providing the board with evidence of good faith efforts to negotiate for a collective bargaining agreement at each facility and attesting under oath to its activities and tactics.
Curaleaf is also required to produce documents requested by the board about its intention to modify its New Jersey operations and provide updated information regarding its good faith efforts to hire employees and vendor contractors that meet certain conditions, they added.
“It seems if CURA does not satisfy these conditions by the next CRC meeting scheduled for June 1, the board may issue penalties allowable under regulations, which may include fines or revocation of renewed licenses.”
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