Born to be Wild? Curaleaf’s Retail Pivot to Hemp

Last week, Curaleaf announced the opening of the Hemp Co. store in West Palm Beach, Florida (pictured).

Curaleaf flipped a cannabis dispensary into their first hemp-only retail location. This new store will feature their own hemp products along with 3rd party hemp products.

I like this move (kudos Boris Jordan), and not because I was part of the decision-making process (I wasn't) or that I own their stock (I don't).

Let’s break down the reasons:

✔️ Pilots are prudent

If we assume the Hemp Co. is a test, this is a smart way gage the appeal of their retail execution as well as capture supply chain, location and consumer learnings. The cannabis industry doesn’t run enough tests.

Importantly, Florida’s licensing rules give you the flexibility to flip back to cannabis if the pilot yields poor results.

✔️ Financial attractiveness

The Hemp Co. is a low risk/low CapEx venture in a major market. The Company will be able to leverage some of its existing assets and capabilities.

Moreover, store profits would not be subject to 280E or payment processing issues that bedevil cannabis businesses.

If the previous cannabis dispensary was losing money, then this switch could lead to a (scalable) financial turnaround.

✔️ Strategic potential

A successful test could provide the firm with a strategic case study to outflank strong Florida competitors like Trulieve and Ayr.

Yes, not every state has Florida’s licensing flexibility plus there are big uncertainties with the legality of Hemp THC. However, Florida is a big, important market with a strong hemp lobby.

These factors justify special attention and unique strategic moves.

✔️ Political appeal

Dipping a bigger toe into the more politically acceptable hemp market can hedge some risk around the next adult use referendum. As well, this move could help the firm work better with the cannabis-hostile DeSantis administration.

Curaleaf’s launch may just be a test, or something more profound.

It begs 5 fundamental questions:

1️⃣ Is this a big strategic vote by a major MSO about where the cannabis industry is headed and how they will compete?

2️⃣ Will this move trigger other MSOs (or non-cannabis players) to open hemp-only retail stores?

3️⃣ What other smokeable and vape-based Hemp THC products are in the works to address potential consumer demand?

4️⃣ How difficult (or easy) will it be for an MSO to have a foot in two different (or similar) markets?

5️⃣ How do you assess and mitigate the risks associated with the growing but perilous Hemp THC market?

#Curaleaf #hemp #hempthc #HempCo #MSOS #Florida #retail