The Biggest Cannabis Company in the United States

Bigger isn’t always better – except when it is. The tech world is full of examples. Amazon (AMZN) is an obvious one, as it makes inroads in everything from automated warehouses and delivery drones to retail automation. But is it truly the biggest ecommerce company on the planet? It depends on how you want to measure it. There’s market cap, where Amazon sits at about $860 billion, which is currently about $380 billion more than Chinese ecommerce rival Alibaba (BABA). However, when the yardstick is gross merchandise volume, which is the total value of all items sold, then Alibaba reigns as champ: $768 billion versus $239 billion. The dilemma of picking the biggest (baddest is usually easier) publicly traded cannabis company is equally tricky for reasons that we’ve already explained. Curaleaf (CUR:CN) claims the title based on market cap. Let’s dig into the company.

Biggest Cannabis Company by Market Cap

Click for company websiteCuraleaf debuted on the Canadian Securities Exchange (CSE) a little more than a year ago with a reported valuation of $4.5 billion. That was about the time that peak pot had started to plummet precipitously, following the initial hype and excitement. There was something of a recovery earlier this year (at least for some), before yet another downturn. In other words: volatility from a highly volatile market. The world’s biggest cannabis company, Canopy Growth Corporation (CGC) with a market cap of more than $4.8 billion, has followed this ebb and flow for the last year, while another major player, Tilray (TLRY), has been in a steady decline following a stratospheric climb in 2018, sitting at about $2.1 billion. Meanwhile, Curaleaf sits at a market cap of about $2.65 billion but has managed to tread water over the last 12 months:

Comparison of stock value over the last year between Curaleaf, Canopy Growth, and Tilray.
Over the last year, MSO leader Curaleaf has ridden a volatile cannabis market with some aplomb, unlike other leading cannabis companies like Canopy and Tilray. Credit: Bloomberg

The more interesting comparison is when we look at the most recent quarterly results for each company. Canopy recorded net revenue of $76.6 million but a quarterly loss of more than $374 million. Tilray reported total revenue of about $51.1 million versus a net loss of $35.7 million. Then there’s Curaleaf, which this month released its third-quarter earnings report, with net revenue nearly tripling from a year ago to $61.8 million against a net loss of “just” $6.8 million. Another encouraging metric is the increase in gross margin from cannabis sales, which jumped to 47% from 40% from last quarter (though not as good as a year ago), and the positive EBITDA over the last two quarters:

Curaleaf third quarter financials.
Credit: Curaleaf

There are other signs that Curaleaf represents a steadying influence in a very shaky industry.

The Merger Mania May be Over

Until recently, cannabis investors and companies have been spending money on startups and acquisitions like they were playing with Monopoly money. Curaleaf has been no different. It’s spent more than $1 billion this year on expanding its presence throughout the United States with the purchase of Las Vegas-based Acres Cannabis in March for $70 million before announcing a couple of nine-figure acquisitions, including $875 million for Chicago-based Grassroots, the largest private U.S. multi-state-operator (MSO). The move will eventually expand Curaleaf’s presence to 19 states and 131 retail licenses.

Timeline of Curaleaf business acquisitions.
No doubt the roller coaster ride isn’t over just yet. Credit: Curaleaf

The other big deal, which is also being finalized, was an all-stock merger of sorts to acquire Portland, Oregon-based Cura Partners and the Select brand for 95.5 million shares in Curaleaf, originally valued at nearly $950 million. However, “due to changes in market conditions since the original merger agreement was signed,” Curaleaf has since amended the deal, only ponying up about 55.5 million shares (and at a much reduced value), with the other 40 million shares based on Cura Partners meeting certain milestones, with the deal now valued closer to $700 million.

Curaleaf business overview.
Credit: Curaleaf

We can take away a few lessons here. First, Curaleaf acknowledged that it was paying way too much for Cura Partners, which we can pretty well extrapolate to most of the recent consolidation in the industry, including that $875 million Curaleaf spent on Grassroots. Second, Curaleaf was able to renegotiate a better deal, which is an encouraging sign that management isn’t careening blindly ahead. Third, we can expect Curaleaf to focus on getting its new house in order rather than go after any additional acquisitions. From the transcript on the third-quarter results:

While we are continuously evaluating the cannabis landscape, at this point we’re well-represented in the markets in which we operate. Upon closing of Select and Grassroots, we’ll operate 19 of the most attractive cannabis markets in the nation, and 11 of the 12 largest markets, where we believe significant upside exists. Our priority is on execution in our markets of operation and integration of both Select and Grassroots …

There’s good reason for the shift, as pro forma revenue – a best guess of what the company will earn once all of these acquisitions have been completed – was estimated at $129 million for the third quarter (no number on net losses). Curaleaf expects its pro forma revenue for 2020 will be between $1 billion and $1.1 billion, which would start to justify its paper valuation and the high cost of consolidation.

The State of Curaleaf

You would expect the biggest MSO in the United States to be making some moves throughout its state-by-state, vertically integrated empire, and that’s exactly what we see from Curaleaf. Here are a few highlights:

  • Florida is considered one of the company’s key markets where it already has 28 operating stores, opening eight new retail operations in 2019, with plans to add 12 stores by the middle of next year in order to have a presence in every major population center in the state. With nearly 284,000 active registered patients and a backlog of nearly 120,000 patients, Florida is among the fastest-growing medical cannabis markets in the country, having more than doubled year-over-year. (Truelive is presently the largest medical marijuana corporation in the State of Florida with a dominant market share of around 65%.)
  • Another major market for Curaleaf is New Jersey, where it claims to be the largest medical cannabis provider by revenue and market share in the state. To stay on top, Curaleaf secured a new property in October that comes with a 128,000-square-foot warehouse plus 21 acres of land that it plans to develop in 2020.
  • In Connecticut, Curaleaf is building a new 50,000-square-foot cultivation facility that will produce 7,300 pounds of flower per year to supply new dispensaries in the state, which is considering legislation that could add recreational sales in 2020.

While there’s a lot of optimism built into this strategy and the financial projections, the numbers may not be totally misplaced, especially as there are signs that legalization, or at least decriminalization, on the federal level in the United States may be on the horizon. Eventually, that could open the door – or, more accurately, the border – to crossing state lines and streamlining supply chains that are currently set up to operate independently due to federal restrictions. One need only look at the current map of Curaleaf’s current and future operations to see that it could establish two regional hubs on the west coast and northeast:

Map of Curaleaf geographic operations.
Credit: Curaleaf

The company is already making strides to integrate its retail and wholesale operations based on the current state-by-state model:

Curaleaf integration strategy.
Credit: Curaleaf

One obvious gap in coverage is Colorado, which this year had already surpassed $1 billion in cannabis-related revenue by the middle of the year. While one could argue that the market there is saturated compared to most – there are more than 2,900 licensed cannabis businesses – the industry is still thriving. Meanwhile, California has done its best to stifle the legal market with high taxes and restrictive rules, and states like New York have been slow to move toward an adult-use market – two potentially huge markets where Curaleaf is staking out a position.


Curaleaf is undoubtedly one of the biggest, if not the biggest cannabis company, in the United States – and that advantage may prove to be the difference as the dust clears. There are never any sure bets in any industry, and cannabis has more uncertainty than most, but Curaleaf is demonstrating that it not only has a strategy but the discipline to execute as well. Restructuring the Cura Partners/Select deal could prove to be a decisive turning point in the race to cannabis supremacy in the long run.

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