Content analysis
?Positive | ||
Negative | ||
Uncertain | ||
Constraining | ||
Legalese | ||
Litigous | ||
Readability |
H.S. sophomore Avg
|
Financial report summary
?Risks
- Cannabis is illegal under United States federal law.
- The regulation of cannabis in the United States is uncertain.
- We may be subject to constraints on and differences in marketing our products under varying state laws.
- The cannabis industry is relatively new.
- We face risks due to industry immaturity or limited comparable, competitive or established industry best practices.
- Our ability to grow our medical and adult-use cannabis product offerings and dispensary services may be limited.
- We may acquire other companies or technologies.
- If we cannot manage our growth, it could have a material adverse effect on our business, financial condition and results of operations.
- Anti-Money Laundering Laws in the United States may limit access to funds from banks and other financial institutions.
- We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.
- Potential regulation by the FDA could have a material adverse effect on our business, financial condition and results of operations.
- Our contractual arrangements may not be as effective in providing control over the variable interest entities as direct ownership.
- We could be materially adversely impacted due to restrictions under U.S. border entry laws.
- As a cannabis company, we may be subject to heightened scrutiny in Canada and the United States that could materially adversely impact the liquidity of the Subordinate Voting Shares.
- We expect to incur significant ongoing costs and obligations related to our investment in infrastructure, growth, regulatory compliance and operations.
- The market for the Subordinate Voting Shares may be limited for holders of our securities who live in the United States.
- We may not be able to locate and obtain the rights to operate at preferred locations.
- As a cannabis business, we are subject to certain tax provisions that have a material adverse effect on our business, financial condition and results of operations.
- We expect to be subject to taxation in both Canada and the United States, which could have a material adverse effect on our financial condition and results of operations.
- We may not have access to United States bankruptcy protections available to non-cannabis businesses.
- We are a holding company and our ability to pay dividends or make other distributions to shareholders may be limited.
- There is doubt regarding our ability to enforce contracts.
- We face increasing competition that may materially and adversely affect our business, financial condition and results of operations.
- We are subject to limits on our ability to own the licenses necessary to operate our business, which will adversely affect our ability to grow our business and market share in certain states.
- Our subsidiaries may not be able to obtain or maintain necessary permits and authorizations.
- We may not be able to accurately forecast our operating results and plan our operations due to uncertainties in the cannabis industry.
- We are subject to risks related to growing an agricultural product.
- We may encounter unknown environmental risks.
- We may not be able to adequately protect our intellectual property.
- Our property is subject to risk of civil asset forfeiture.
- Our internal controls over financial reporting have not historically been effective, and our independent auditors may not be able to certify as to their effectiveness, which could adversely affect our business results and operations.
- We are highly dependent on certain key personnel.
- We face inherent risks of liability claims related to the use of our products.
- We face risks related to our products.
- Our medical marijuana business may be impacted by consumer perception of the cannabis industry, which we cannot control or predict.
- Product recalls could result in a material and adverse impact on our business, financial condition and results of operations.
- We are subject to security risks related to our products as well as our information and technology systems.
- We face exposure to fraudulent or illegal activity by employees, contractors, consultants and agents, which may subject us to investigations and actions.
- We may have increased labor costs based on union activity.
- We could be subject to criminal prosecution or civil liabilities under RICO.
- Our significant indebtedness may adversely affect our business, financial condition and financial results.
- We may be unable to obtain adequate insurance coverage.
- We rely on key utility services.
- A return on our securities is not guaranteed.
- Additional issuances of Multiple Voting Shares or Subordinate Voting Shares may result in further dilution and could have anti-takeover effects.
- Sales of substantial amounts of Subordinate Voting Shares by our existing shareholders in the public market may have an adverse effect on the market price of the Subordinate Voting Shares.
- The market price for the Subordinate Voting Shares has been and is likely to continue to be volatile.
- There may not be sufficient liquidity in the markets for our Subordinate Voting Shares.
- We are subject to increased costs as a result of being a U.S. reporting company.
Management Discussion
- Revenue for the year ended December 31, 2023 was $1.13 billion, a decrease of $89.0 million or 7.3%, from $1.22 billion for the year ended December 31, 2022. The decrease in revenue is due to a $74.9 million decrease in retail revenue and a $11.7 million decrease in wholesale revenue. The Company operated 192 and 178 dispensaries as of December 31, 2023 and December 31, 2022, respectively. We experienced increased competition and promotional activity in certain retail markets and also shed underperforming retail assets. The reduction in wholesale revenues is primarily due to a focus on higher margin retail sales in certain markets.
- Cost of goods sold for the year ended December 31, 2023 was $540.6 million, an increase of $11.5 million or 2.2%, from $529.1 million for the year ended December 31, 2022. Cost of goods sold as a percentage of revenue was 47.9% for the year ended December 31, 2023 as compared to 43.4% for the year ended December 31, 2022. The increase was primarily due to increased depreciation related to capital expenditures to support business growth totaling $10.3 million. Additional factors impacting the change include inventory reduction efforts to right-size inventory levels, the continued ramping of new production facilities in existing markets where additional economies of scale are anticipated in the future, and expansion into new markets which are not fully vertical, resulting in the sale of third-party products, which yield lower margin than our vertical markets. The Company also incurred additional costs related to excess capacity in certain temporarily idled facilities.
- Gross profit for the year ended December 31, 2023 was $588.6 million, a decrease of $100.5 million or 14.6%, from $689.1 million for the year ended December 31, 2022. Gross profit as a percentage of revenue was 52.1% for the year ended December 31, 2023 as compared to 56.6% for the year ended December 31, 2022, resulting from increased promotional activity in certain retail markets, price compression in certain markets, a change in product mix to value tier brands driven by customer demand, initiatives to reduce inventory levels and costs related to excess capacity in certain temporarily idled facilities.