The launch of Ohio’s recreational cannabis market on August 6 has set the stage for significant growth, with early data showing a 45% sales increase at various marijuana shops in just two weeks. Wholesale performance has also been strong.
“Ohio began non-medical sales on 8/6/24, but full AU rules aren’t out yet, limiting growth. In the first 26 days, total rec/med sales reached $75.6M, implying an annualized run rate of $1.06B, compared to $480M in 2Q24 (just med). We expect Ohio to reach 3-4x its current med base once the full AU program is in place,” Pablo Zuanic, senior analyst at Zuanic & Associates, wrote in a Friday night note.
This positions cannabis company Vext Science Inc. VEXTF as a rising contender among multi-state operators (MSOs).
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2Q24 Financial Performance
Despite positive trends in Ohio, Vext’s overall sales declined by 8% year-over-year in the second quarter, primarily due to challenges in Arizona where sales, which accounted for 61% of total revenue, fell by 34%, driven by price deflation and increased competition.
Zuanic’s report noted that despite outperforming the state average, Vext’s Arizona stores still faced pressures. On the other hand, Ohio sales grew by 141%, partially boosted by mergers and acquisitions.
“Vext’s profitability suffered due to startup costs in Ohio, with gross margins in both states declining by around 10 percentage points year-over-year,” Zuanic wrote.
H/T: www.benzinga.com
