Florida medical-marijuana patients can soon drive to their local convenience stores and pickup pre-rolled marijuana joints.
Green Thumb Industries (GTBIF) , the Chicago cannabis company, said on Wednesday that it will sell several products through Circle K convenience stores in Florida starting in 2023.
The plan will double its footprint of seven stores in the state.
Florida legalized the use of medical cannabis in 2016. The recreational use of marijuana remains illegal in the state. The state is seeking to add the approval of adult-use cannabis on the ballot in 2024 if enough petition signatures are received.
Florida remains the second-largest U.S. market for marijuana after California.
Green Thumb had been in discussions with Circle K for more than a year to open its "Rise Express" branded dispensaries adjacent to the convenience stores, CEO Ben Kovler told TheStreet.
New Rise Express Dispensaries
The stores will be launched next year. Green Thumb will start with 10 initial stores and test out sales before ramping up with more. The company plans to focus in central Florida in the St. Petersburg area.
Green Thumb isn't disclosing the cost of adding the new stores, he said. The addition of the stores will be financed from free cash flow, Kovler said.
The agreement calls for Green Thumb to lease space from Circle K, a convenience store chain that also sells gasoline. Circle K, owned by Alimentation Couche-Tard of Laval, Quebec, has 600 locations in Florida.
Each Rise Express store will have its own entrance, separate door and cash register, Kovler said.
Medical patients can choose from a number of branded cannabis products including Rythm flower, Dogwalkers pre-rolls, Incredibles gummies and Shine vapes. The goal is to build brand equity, Kovler said.
"We can be the first mover to bring them the brand experience," he said.
Green Thumb entered the Florida market in 2018 and has a 2% market share. The company currently owns and operates medical cannabis retail stores in Bonita Springs, Deerfield Beach, Hallandale Beach, Kendall, Oviedo, Pinellas Park and West Palm Beach. The company also has a cultivation and processing facility in Homestead.
“The new Rise Express model is a huge step forward in making it easier and more efficient for patients to purchase high-quality cannabis as part of their everyday routine when stopping by their local convenience store,” Kovler said.
The partnership is a step in the right direction, Jason Spatafora, head trader at True Trading Group, told TheStreet.
"While I think the pilot program will add to sales, the more important factor is a proof-of-concept, which if successful will boost both brand awareness and acceptance by people who otherwise would not have been aware of the company or legality of cannabis within the state."
The deal could help the cannabis company boost its awareness among medical cannabis patients.
"Green Thumb Industries has a partner who is skilled and experienced at positioning brands on their shelves and driving buyers for products in highly regulated industries including alcohol and tobacco," Tim Seymour, founder of Seymour Asset Management in New York and portfolio manager of the Amplify Seymour Cannabis ETF (CNBS), told TheStreet.
"This opportunity is relatively asset light and could put them in a leadership position within the state assuming early success motivates both parties to build on this modest start.
"Right now GTI does not have significant presence in the state and therefore this is an opportunity for them. It's also setting the stage to have real national presence for Rise's products."
The products sold at these retail stores will come from the company’s new 28-acre cultivation facility in Ocala, which will be operational later this year.
More than 700,000 Floridians are currently registered active cardholders in the state’s medical-marijuana program, according to the Florida Department of Health.
Expansion Plans at Green Thumb
The cannabis company also is focused on expanding operations in Minnesota, Virginia, Ohio, New York, New Jersey, Connecticut and Rhode Island, Kovler said.
Sales will increase in Connecticut and Rhode Island, he said. Connecticut legalized the adult use of cannabis in 2021 while Rhode Island approved recreational use this year.
Cannabis companies such as Green Thumb focus on building licenses and dispensaries in various states to create more recognizable brands and emerge as large multistate operators.
Green Thumb's current footprint includes 15 states, including California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia. It operates 17 manufacturing facilities and 77 open retail locations.
The company reported that second-quarter net income was $24.4 million, 10 cents a share, compared with net income of $22.1 million, or 10 cents, in the year-earlier quarter. Revenue rose 15% from the year-earlier period, to $254.3 million.
Cash flow was $145.3 million and total debt outstanding was $253.4 million.
"We are pretty conservative on debt and cash levels," Kovler said. "We sleep well at night on how our balance sheet looks and feels."
The company is set to report third-quarter earnings on Nov. 2.
