Curaleaf (CSE:CURA) officially entered the CBD market with their exclusive brand of hemp-based consumer products last week. The new line, called Curaleaf Hemp, will be released in the United States and include lotions, drops, soft-gel capsules, and disposable vape pens.
"Patients already trust and rely on Curaleaf for the highest-quality medical cannabis products and we have taken that same care with the development of Curaleaf Hemp,” said company President and CEO Joe Lusardi in a statement.
On top of launching a new line of CBD products, the company acquired Phoenix-based medical dispensary Midtown Roots. Now called Curaleaf Midtown, it’s located in the heart of downtown Phoenix and marks the fifth dispensary the company owns in Arizona’s medical market. According to Curaleaf Arizona president Steve Cottrell, the acquisition is more of a rebranding.
"Curaleaf is a leading medical cannabis brand that is recognized across the country for its quality and expertise," said Steve Cottrell, president of Curaleaf Arizona. "With this rebrand, we will bring additional resources to Midtown Roots to support upgrades that will enhance the patient experience as well as the continued education of our staff."
With this latest acquisition, Curaleaf now operates a total of 33 dispensaries across the country in key states such as Florida and New York as well as Arizona. Expanding their presence in Arizona should not surprise cannabis investors, and the acquisition will no doubt elevate Curaleaf and Curaleaf Hemp’s reputation in the wellness market. But from a political perspective, Arizona provides an interesting opportunity for cannabis.
The case for medical marijuana in Arizona
According to Curaleaf, the company serves over 70,000 medical marijuana patients in Arizona. That is a significant patient list, but it does not even meet half of the potential market. Arizona has one of the highest medical marijuana patient populations in the country. It is home to over 180,000 registered users, with 100,000 more applications waiting in the wings. The state issued every one of its available licenses, and sale numbers are anticipated to reach $425 million this year.
In July, the local Phoenix New Times reported that Arizona houses more medical dispensaries than any other state, with foot traffic of around 1,350 visitors per dispensary. To put that in perspective, most states average 900 visitors.
In Phoenix, home of Curaleaf’s latest dispensary, city officials are hoping to generate at least $50 million per year in tax revenue from medical marijuana. The tax would be especially hefty on medical marijuana distributors, costing them roughly $1 million a year in taxes, but the city intends to use the money to staff police and firefighters.
The 2018 midterm elections failed to launch recreational sales, and cannabis extracts are still considered illegal per the state’s Court of Appeals ruling over the summer. This is unfortunate, given that marijuana-infused products like edibles and vape pen oils make up forty percent of Arizona’s medical marijuana sales. Still, investors are optimistic. The amount of marijuana sold more than doubled over the past two years, jumping from a little over 5,000 pounds in 2016 to nearly 11,000 pounds in 2018.
Arizona offers up a competitive marketplace for medical marijuana. Even without recreational sales, the state appears to be a favorite among investors due to the high traffic and high volume the local dispensaries are seeing.
Curaleaf appears to have made a strategic move acquiring a dispensary that is already well-known by the medical community. And just in time, too, seeing as MedMen Inc. (CSE. MMEN) (OTCQB.MMNFF) spent $33 million earlier this month to expand their presence in the copper state. As the year comes to a close, the competition in American cannabis will only get steeper. Key markets will play a critical role for companies like Curaleaf, and the potential in Arizona is one investors should seriously consider before the new year.