On Thursday, Cantor Fitzgerald analyst Pablo Zuanic offered an update on New Jersey’s recreational cannabis market. Zuanic analyzed the competitive landscape and the changes in the recreational cannabis market in The Garden State. Although the report is not a second-quarter preview, the analyst offered an estimation of the evolution of the state market.
Recreational cannabis sales reached $24.2Mn. There were 212,433 transactions, for an average basket size of $114 for the first month of legalization (starting 4/21), as per official state data. Zuanic compared market shares from cannabis operators in the state and estimated that NJ sales could have added ~16% to the sales base of Acreage Holdings (OTCQX:ACRHF) and two other companies in 2Q22, which saw low-teens sequential growth, with everything else remaining equal.
“As more stores and SKUs for rec were added, we believe monthly sales have grown, although no official data has been released. We estimate that NJ rec sales amounted to $60Mn for 2Q22,” Zuanic said in his recent industry report.
“Although this report is not a 2Q preview, we would estimate that Green Thumb (OTC:GTBIF) and Verano (OTC:VRNOF) had ~18% share in 2Q; Curaleaf, Acreage, and Ascend 15%; TerrAscend (OTC:TRSSF) (parking is an issue) 10%; and Columbia Care (OTC:CCHWF) and Ayr Wellness (OTC:AYRWF) the rest (9% combined),” he added.
What Has Changed Since Recreational Cannabis Was Legalized In NJ?
Zuanic highlighted that there have been “material changes” since his last analysis of the recreational market in New Jersey. He pointed out that at the time there were only 12 dispensaries, very limited cannabis offerings to consumers, and there were problems in the supply chain such as online menus that were often outdated.
“Now just three months after the program began, there are 17 operational dispensaries which all offer a much larger variety of SKUs compared to when they started sales in April (total SKU count increased from 283 to 1,322 as of today),” Zuanic said.
Curaleaf opened its second recreational dispensary in New Jersey. Meanwhile, new stores were approved by the CRC: Three AYR stores commenced rec sales after gaining approval from the CRC on June 15th. Additionally, TerrAscend’s Lodi location was approved for recreational sales as of July 27th.
Top Cannabis Brands in NJ
Zuanic also noted the top 5 brands in the NJ rec market account for 80% of the total SKUs available. Verano brand accounts for 28% (376 SKUs), Curaleaf brand 24% (321), TerrAscend’s Kind Tree brand 16% (215), Green Thumb’s Rhythm brand 6%, and Ascend Wellness’s Ozone brand 5% (69).
The vape category accounts for the largest share of total SKUs in the NJ recreational market with 39% (519 SKUs), followed by flower 29% (380), edibles 12% (153), prerolls 11% (150), concentrates 8% (100), tinctures 1% (12), topicals 1% (8). The Verano brand accounts for 29% of vape SKUs, followed by TerrAscend’s Kind Tree brand at 23%, Green Thumb’s Rhythm at 13%, and Curaleaf’s Curaleaf, and Select brands at 13% and 11%, respectively. The Curaleaf brand accounts for 37% of flower SKUs, followed by the Verano brand at 17%, and TerrAscend’s kind Tree brand at 13%.
“The Curaleaf brand also dominates the preroll category, accounting for 70% of pre-roll SKUs while the Verano brand dominates the edible category accounting for 67% of edible SKUs,” he said.
In an attempt to accurately forecast the 2Q22 market share in the NJ recreational market, Zuanic investigated four scenarios: “Market Share Based on Weekly Hours,” “Market Share Based On ‘Weekend’ Hours,” “Store SKU Count, ”and “Wholesale.”
During 2Q22, Zuanic estimated that the 12 operational recreational dispensaries combined for 8,810 total hours of operation. If the market share was defined based on company share of total hours, Green Thumb and Verano would lead with 19%, followed by TerrAscend at 18%, and Acreage with 15%.
Defined as “Thurs – Sun,” weekend days tend to have different recreational hours compared to the rest of the week. “If we were to define market share based on company share of “weekend” hours, Verano would lead with 19% (984 weekend hours of operation during 2Q22, or 96 per week), followed by Green Thumb and TerrAscend both 19%,” he said.
In terms of store SKU count, Zuanic canvased online recreational menus to determine the total SKU count per dispensary, controlling for dispensaries that were not open for the entire quarter, he applied weights to SKU count based on operational hours. He discounted Columbia Care based on its reduced hours for the first 47 days of recreational sales. “If we were to define rec market share based on SKU count at company stores with the discount, Green Thumb would lead with 24% (273 SKUs in its stores), followed by Verano 23% (259) and Ascend Wellness 17% (190),” Zuanic added.
“If we were to define market share based on wholesale SKUs, Curaleaf would lead with 37% (298 company-branded products sold in a competitor’s retail store compared to 109 private labels), followed by Verano 33% (265; 135), TerrAscend 17% (132; 80), Green Thumb 7% (56; 28), Ascend Wellness 3% (27; 83), and all other companies accounting for the remaining 2% (19; 0),” he concluded.