Jushi Holdings Inc is meeting the rising demand for medical and recreational cannabis across the United States with its high-end retail locations, premium cannabis brands, and cutting-edge cultivation, processing and manufacturing facilities.
There is certainly a growing consumer appetite for what Jushi has on offer. With medical use of cannabis now legal in the United States in 37 states, four territories, and the District of Columbia (DC), and recreational adult use of cannabis legalized in 19 states, two territories and DC, more jurisdictions are sure to follow.
Consumer confidence in cannabis is growing as more Americans enter the state-legalized market and are exposed to the benefits of state legalization, according to Jushi EO Jim Cacioppo.
READ: Jushi Holdings opens 33rd retail location nationwide and fourth dispensary in Nevada
The company recently conducted its inaugural “4/20 Cannabis Insights Poll” which revealed that Americans are using cannabis for medical, stress, wellness, and recreational reasons. It showed most cannabis consumers (30.7%) use cannabis one to two days a week, with 28.1% using cannabis every day.
Cacioppo told Proactive that cannabis use in the US was trending upwards and that he expects it will continue to rise over the coming years.
“It is a much healthier way to lighten your load mentally than alcohol,” Cacioppo said. “It doesn’t have any calories, fat, or cholesterol and there tends to be less of a hangover, so to speak.”
In Cacioppo’s personal opinion, growth in cannabis consumption is expected to come from across the board, not just Gen Z and millennial consumers. “It’s very popular amongst those younger segments of society and as they get older that will trend higher,” he said. “Gen X and Baby Boomers are also using cannabis again and that number will also grow over time.”
This growth is paying off in the form of revenue increases for Jushi. The company recently reported its first-quarter results with revenue of $61.9 million compared to $41.7 million in the first quarter of 2021.
Up and coming legal cannabis markets
Jushi’s revenue growth in the first quarter of 2022 was boosted by the expansion of its retail footprint from 17 to 29 stores as well as the acquisition of Nature's Remedy of Massachusetts and increased wholesale sales at its Pennsylvania and Virginia grower-processor facilities.
The firm has built its multi-state portfolio of branded cannabis assets through strategic acquisitions and licenses, specifically focused on the acquisition of cannabis licenses in jurisdictions where there was a barrier to entry, growing populated areas with limited licensed medical cannabis markets, or where legalized adult-use was yet to arrive.
The company is now focused on building out these assets within its existing footprint, with its core markets being Virginia and Pennsylvania and operations scaling up in Illinois, Ohio, Nevada, California, and Massachusetts.
“Likely targets for us over the next 12 months would be Ohio retail, Illinois retail, potentially Illinois grower-processor, and then a third dispensary in Massachusetts,” Cacioppo said.
READ: Jushi Holdings confident of ‘accelerated growth and profitability’ after retail expansion boosts year-on-year revenue growth in Q1
Upcoming regulatory changes in both Virginia and Pennsylvania are set to cement Jushi’s strong position in its two largest markets.
In Virginia, recently passed legislation did away with the state’s medical marijuana card system, which had a significant backlog of 15,000 patients. As Cacioppo explained, US medical marijuana markets have a penetration rate of between 3% and 4.5% of the population who are willing to get a medical marijuana card. However, there are many reasons why an individual may forgo securing a card, including life insurance, gun licensing, stigmatization, workplace consequences, and concerns around their personal information ending up in a database.
“As of July 1, you don’t need a medical card, you just need a Written Certification,” Cacioppo explained, estimating that the new patients would grow the state’s small medical market to 3% quickly.
Virginia has also passed legislation making the adult use of cannabis legal in the state as of January 1, 2024.
Jushi has made several well-timed investments in Virginia to take advantage of the regulatory changes including having a grower-processor ready to go online to meet increased demand and opening more stores across the state this year.
Meanwhile in Pennsylvania, Jushi’s largest state, there is an adult-use bill coming down the pipeline, which Cacioppo called “really exciting for Jushi’s story.”
As far as cannabis legalization goes on a federal level, Cacioppo said he expects there to be some noise in that space this summer but noted that unexpected gun control legislation coming through after multiple tragedies may result in a delay. “If it doesn’t happen, there’s a pressure to do it in the lame-duck session, for non-Americans that is the period between November and January when new politicians get elected and take their seats,” he said.
Waiting until the timing is right
With the current volatility in capital markets, Jushi is biding its time when it comes to closing further potential mergers and acquisitions.
Cacioppo told Proactive that the company has a pipeline of deals in the works, but it is choosing to hold off due to the state of the markets. “We signalled to the street we are unlikely to close another deal before the end of the year,” he said. “We will get better pricing and we also want to conserve our management energy and balance sheet for our big markets in Virginia and Pennsylvania where we are growing hugely based on regulatory change.”
Jushi is targeting 50 retail licenses across seven markets as of the end of 2023, including 36 operating retail locations and approximately 330,000 square feet of cultivation and processing capacity, by the end of this year. “We’re pretty happy with where we are at as a company,” Cacioppo concluded.
Contact the author Emily Jarvie at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie