Surviving Under Pressure In The ‘Year Of Efficiency’🌡️

Amid legal woes for Weedmaps and Village Farms, cannabis companies enter the 'Year of Efficiency'—cutting costs and managing debt while state-level policies heat up.

Author

Patricio Liddle
October 22, 2024

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Hey everyone! Patricio Liddle here, welcoming you to today’s cannabis industry roundup. We’re diving into the latest challenges facing Weedmaps and Village Farms, along with insights from the Benzinga Cannabis Capital Conference on how companies are tightening their belts in a tough market. Plus, we’ll explore the political tensions brewing around cannabis legalization in Florida, Arkansas, and Louisiana.

From stock woes to state-level battles, it’s a pivotal time for the industry. Let’s get into it!

Looks like some clouds are gathering over Weedmaps and Village Farms.

Weedmaps, officially WM Technology Inc., is in hot water once again. After agreeing to pay a $1.5 million fine to the SEC for allegedly inflating user metrics, the company now faces a class action lawsuit from investors accusing it of misleading statements. Adding to its woes, Weedmaps recently received a Nasdaq warning for trading below $1 per share (again).

Over at Village Farms International, they're dealing with their own set of challenges. Nasdaq also sent them a not-so-friendly reminder that their stock price has been hanging out below the $1 minimum bid price requirement. They've got 180 days—or until April 16, 2025—to get those numbers back up or face possible delisting.

Maybe it's time for a pep talk or perhaps a new game plan as it’s crunch time for both cannabis companies, and the clock is ticking.

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Year of the Core: Industry Tightens Belt

Looks like the cannabis industry is tightening its belt and gearing up for some tough times ahead. At the Benzinga Cannabis Capital Conference, experts highlighted the financial hurdles companies are facing.

Jesse Redmond from Water Tower Research called this the "Year of the Core," where businesses are cutting costs and zeroing in on their most productive assets. “It’s not just about cutting expenses,” Redmond explained in Chicago. It's about working smarter and growing sustainably.

This strategic shift toward mindful growth and financial discipline is critical as the sector faces mounting debt. Debra Borchardt of Green Market Report pointed out that many companies are sitting on "mountains of debt" that's about to come due. She warns that now's the time to tackle these debts before they become unmanageable. Counting on legislative changes to bail everyone out? That might be wishful thinking.

Over in California, Dustin Milner of Talarya Brands shed light on the cash flow crunch hitting brands not vertically integrated. Waiting 60 to 90 days to get paid can cripple a business, especially when heavy taxation and new regulations are already squeezing margins.

In a nutshell, the biggest challenges are cash flow, debt management, and efficiency. It's a rough road ahead, and only the leanest, smartest, and most resilient will thrive.

State-Level Policies Fuel Tensions

  • In Florida, Governor DeSantis is clashing with former allies like Jeff Roe over Amendment 3, which seeks to legalize adult use. The governor is investing significant political capital to block the amendment, but polls show two-thirds of Florida voters support the measure.

  • In Arizona, the Court of Appeals ruled that medical cannabis dispensaries can operate near preschools. This decision could increase accessibility for patients, but it's also sparking debate about the proximity of cannabis businesses to young children. 

  • Arkansas faces a heated debate over a medical cannabis amendment, with conservative groups rallying against it, claiming it will attract undocumented immigrants.

  • Down in Louisiana, hemp companies are suing the state over new THC limits, which they argue violate federal law and threaten to criminalize legal products, jeopardizing jobs. It's a legal showdown that reflects the growing tension between state and federal hemp policies, mirroring disputes in other states.

Stories In The Spotlight:

Our Writer Today

Patricio is a development economist with extensive experience in IT, finance, and banking. He writes about the economic and social opportunities obscured by over half a century of failed drug prohibition. Beyond his professional expertise, Pato is a committed advocate for social change, passionately working to promote harm reduction and reform drug policies.

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