Navigating Highs & Lows: Reflections on the Industry in 2023 & 2024 Projections
As 2023 comes to a close a lot of folks out there are praying for better business prospects in 2024. How did your company do this year?
We saw quite a few trends emerge:
- Pricing for Flower: A noteworthy trend is the stabilized and improved pricing for flower. After the painfully low prices of 2022, 2023 saw significant improvements. However, these prices fell short of the stratospheric, exotic highs witnessed in the winter of 2021.
- Challenges for Retailers: Some standalone and dispensary chains struggled to stay afloat amidst softer sales and high costs. This led to a lot of "bottom selling," while more fortunate owners focused on boosting profits.
- Industry Shakeups: High-profile players like Kings Garden closed their doors, possibly for good. Excessive debt loads and high rents have been major factors affecting some of the most prominent players in the California cannabis space.
Looking ahead to 2024:
- Flower prices. We hope to see continued gains in flower prices. If indoor pounds reach $2,000 again, it would significantly benefit the growers who endured the lows.
- Schedule III. A potential re-scheduling, as opposed to de-scheduling, might not be ideal for cannabis businesses. However, it is expected to alleviate 280E exposure and potentially enable Nasdaq uplisting, along with boosting institutional cannabis stock ownership. Overall, Schedule III should foster a healthier financial ecosystem for operators.
- Market Share Dynamics. With some retailers closing stores and other supply chain businesses shutting down, will the surviving operators capture a larger market share? 2024 might see smart consolidation by well-positioned acquirers seeking higher exit multiples post-regulatory reform.
Conclusion: 2023 was a tough year overall for the industry, but Pac Garden Assets still managed to complete its fair share of transactions. We look forward to helping more of our partners in the year ahead as California cannabis marks its lucky SEVENTH YEAR of adult use sales.
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