Trulieve Cannabis Corp (TCNNF)

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Big-time cannabis player Trulieve hits a limit in Massachusetts (Editorial)
Published: Jun. 03, 2023, 4:29 p.m.

When sharing bad news, big companies mask blunders with jargon. We saw that last week when Trulieve, one of the country’s largest cannabis operators, said it would pull out of Massachusetts, shuttering its massive Holyoke growing facility.

Time to focus on “cash preservation,” its CEO said. Time to trim “non-contributive assets.”

Translation: Trulieve is bleeding money after investing more than $33 million in its 56 Canal St. plant.

The Republican’s Jim Kinney reported in February that 2023 would be a year of reckoning for commercial cannabis. Here and there, small-scale retailers had already bottomed out.

Trulieve’s flight from the Bay State adds an exclamation point. The golden age of legal weed is in the books, five years after the debut of adult use sales. Early players, like NETA in Northampton, had it good. Later arrivals have struggled amid falling prices – down from around $400 an ounce in early 2021 to $171 today, according to state officials.

In business lingo, that’s called “price compression.” It leaves cannabis companies subject to the pressures that bedevil all retailers.

For investors, risks brought rewards, to be sure. Gross sales since 2018 have topped $4.6 billion – and are still going strong, with $600 million so far this year, about $28 million a week.

Trulieve made its own mistakes. An employee told Kinney the Holyoke plant was so massive – 600,000 square feet of growing floor – it could have supplied the entire state market. One problem with that, and it’s a big one: Producers under current rules cannot ship outside the state.

That worker is one of 128 who lost jobs last week; the company closed retail stores Saturday in Northampton, Framingham and Worcester.

Trulieve’s $30 million buildout in Holyoke was an overreach. Early word is that the site could sit on the market for a while.

Don’t cry for Trulieve. Though it is also scaling back in California and Nevada, the Canadian company continues operating in Arizona, Connecticut, Florida, Georgia, Maryland, Pennsylvania and West Virginia. Nationally, as laws loosen, the cannabis market will grow.

The cannabis reckoning in Massachusetts will continue, especially as new shops open in Connecticut, New York and Vermont.

In its press releases, Trulieve boasts that it “delivers optimal customer experiences” and helps patients and customers “live without limits.”

The company found, at considerable expense, that limits exist.

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https://www.masslive.com/opinion/2023/06/big-time-cannabis-player-trulieve-hits-a-limit-in-massachusetts-editorial.html