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- š Is Inflation Starting To Hit Consumers?
š Is Inflation Starting To Hit Consumers?
Anthony Varrell & Shadd Dales
March 05, 2025
GM Everyone,
All was quiet on the western front yesterday as the sector seemed to get beaten like a red-headed stepchild on no news. Yes, the market was spooked by the Trump tariffs, which he has already alluded to partially rolling back and working with Canada and Mexico. We are getting tired of this song and dance, and the cannabis industry catching strays due to broad market volatility.
$TSNDF and $AYRWF are on deck with earnings coming out tomorrow.
A little more than a 7 minute read.
šø The Tape
In the ever-evolving landscape of cannabis consumption, inflation has become the latest buzzkill. According to a recent poll by NuggMD, two out of three marijuana consumers have had to tighten their belts and spend less on their beloved green due to broader economic pressures.
A whopping 66 percent of respondents admitted to cutting back on their marijuana spending as the country grapples with higher costs. On the flip side, 34 percent of consumers remain unfazed by inflation, continuing to indulge in their cannabis habits without a second thought. The reasons behind this belt-tightening are still up for debateāwhether it's due to the increasing prices of marijuana products themselves, general economic stress, or a combination of both.
Andrew Graham, head of communications at NuggMD, wasn't surprised by the findings. He pointed out that recent polling from Pew shows a growing concern among U.S. adults about healthcare affordability, which has increased by 10 percentage points compared to last year. Medical inflation has also been outpacing overall inflation since June 2021, making it harder for Americans to access the health and wellness care they need.
Graham suggests a straightforward solution to ease the financial burden on cannabis consumers: ending IRS Code 280E. This code causes cannabis businesses to pay an effective tax rate of up to 80 percent, which inevitably trickles down to the consumer. If Congress doesn't act on 280E, another policy fix could involve mandating insurance coverage for cannabis used to treat qualifying medical conditions under state-legal programs.
The NuggMD poll, conducted with 518 marijuana consumers, highlights the shifting spending habits in the cannabis market. Interestingly, the results differ from an earlier survey that found most Americans were spending more on cannabis in 2023 and expected to spend even more in 2025. Another survey by Bankrate and YouGov revealed that seven in 10 American marijuana consumers plan to maintain or increase their cannabis spending in 2025, despite ongoing industry barriers to financial services.
š Dog Walkers.
Curaleaf Enters The Energy Category
Whatās Going On Here: Say what you want about Curaleaf, but one thing is for sure: they have been ahead of the curve when it comes to product innovation. Yesterday, Boris took to Twitter to introduce Select Formula X. The first-of-its-kind energy drink will combine cannabinoids and an energy formula, reaching an entirely new market segment.
Why Should You Care: The TAM of the energy drink market is expected to be around $78 billion in 2025. That is a large pie, but it comes with an insane amount of competition and even more competitive duels for shelf space. We will see what the go-to-market strategy looks like for the beverage and reevaluate our bullishness on launch.
Nextleaf Reports Q1 2025
Whats Going On: Nextleaf Solutions Ltd. announced their Q1 FY2025 financial results, reporting $3.85M in gross revenue and $2.89M in net revenue. The company achieved a significant net income of $530,432 and improved its gross profit margin to 32%, highlighting enhanced efficiency. The cost of goods sold decreased by 11.5%, leading to a positive EBITDA of $405,390. Nextleaf launched eight new Glacial Gold products and prioritized toll-processing for Commercial Partners, emphasizing higher-margin activities for increased profitability and market impact.
Why You Should Care: Nextleaf is one of the smaller Canadian LPs that are gaining market share across several verticals and continuing to outperform.
šļø The News
šŗ YouTube
Changes Coming for Canadian Cannabis + Trulieve Management Rumors
What we will cover:
ā Coming up at 4 PM EST on our latest Trade to Black podcast. Here's what weāll be covering:
Rubicon Organicsā Bold Move: Reviewing their acquisition of a 47,500-square-foot cultivation facility and its impact on the Canadian cannabis landscape.
The 2025 Canadian Cannabis Market: Insights into premium product opportunities and OSC strategies favoring Canada-first companies.
OCS System Demystified: Understanding consumer scoring, shelf space dynamics, and how cannabis companies can navigate the process.
International vs. Domestic Challenges: Discussing competition in global markets and the importance of controlling product supply and quality.
Earnings Analysis and Industry Updates: Featuring Seth Yakatan to dissect Green Thumb Industries, Trulieveās management rumors, and Glass Houseās financial strategies