Curaleaf Holdings CEO Matt Darin joins Yahoo Finance Live to discuss cannabis regulation by policymakers and the outlook for the industry.
- Wakefield, Massachusetts-based Curaleaf Holdings hitting the tape on Monday, reporting earnings and revenue of about $338 million in the second quarter, as the company continues to open up more stores. Let's get a little bit more color on exactly what the strategy is with Matt Darin, Curaleaf Holdings CEO who joins us live on the program. Matt, great to have you on the show. Unpack your earnings for us. Obviously, the growth in this industry continues to kind of go nuclear here. But what are you seeing as kind of the big story for the industry in the next few quarters ahead?
MATT DARIN: It was a record-breaking quarter for us in the second quarter. We had record-breaking revenues of $338 million, record-breaking profitability. And we're seeing some great momentum coming out of that earlier in the year, where it was a little bit more challenging. So we're really pleased with the results and the trends for the industry.
- So in the last quarter, a lot of interesting stories happening in the cannabis industry, when you consider, for example, the commencement of adult use for marijuana in New Jersey. How important are those new markets for you? And how aggressive are you getting in-- it's expensive to open up into these new markets. But you want to be kind of early movers, do you not?
MATT DARIN: It is important to be early movers. That's been Curaleaf's strategy since the beginning. We've been part of some of these programs in the early days of medical before they've moved to adult use. New Jersey is a great example for that and been a great success with that adult use launch that's been live now for a little over three months.
- What about the legislative aspect federally? Because we know that Congress, there was a lot of anticipation with the Democratic-led Congress that maybe they would be able to move on a Safe Banking Act, on maybe even federal legalization. Have you seen anything that tells you they could get anything done prior to that critical midterms this year that would be good for your industry, given that there seemed to be some momentum that maybe some concern now that things might not get done down in DC?
MATT DARIN: We're very encouraged by what's coming out of Washington, DC currently. There's never been more bipartisan support for sensible reforms. There's a lot of momentum going on. I'm not going to predict exactly when and how it plays out. But the signs are encouraging that there's momentum behind some sensible reforms coming, hopefully, soon.
- So when we talk about just kind of the bottom line, not just for your company, but for cannabis companies across the board, it's still very much a growth stage, right? It's not unusual to see companies with a negative bottom line here. What are the major expenses for your company and maybe comparable companies at this time?
Because we know marketing spend is a big part of this, you just try to get your name out there, and then the production ramp up and the CapEx that I imagine that's required in that is certainly no small change at all as well. So what do you think is the story for 2022 when it comes to expenses for your company?
MATT DARIN: We're doing a lot of work to optimize the business currently. It's been a very high growth industry. The trend line has been exponential over the last number of years. Our biggest expense is personnel and payroll. So that's something that we're really looking closely at, gaining efficiencies, continuing to invest in our team, but doing it intelligently. But the biggest one for us is certainly on the personnel side.
- So on the product diversification, I kind of want to focus on what you've been doing in terms of strategically to differentiate yourselves. Endless coast cannabis infused seltzers, this is something we've heard perhaps some companies also just getting interested in as well. What's the demand for products like that, as we kind of think about outside of just smoking the bud itself, other ways of people engaging with your brands?
MATT DARIN: We believe the future is in innovation. And many of these new categories that are coming online are really driving a lot of the growth in the industry. So we launched Endless Coast as a seltzer THC infused beverage, sold out everywhere it was released, very encouraging signs. You know, beverages today are still a small component of the market. But we see that as one category that's going to continue to increase over time as new innovation occurs and as they become more widely distributed throughout the country.
- And then lastly here, it seems like there's just been a lot of volatility. I mean, well, it's been a rough 2022 overall for the stock market. But specifically for cannabis companies as well, it's been particularly rough. I guess I'm just wondering, do you feel like the markets have been unfairly punishing your stock here and kind of where do you think that the proper valuation for your company should be, given all the volatility so far?
MATT DARIN: Well, I'd say despite some of the volatility in the markets, Curaleaf continues to get stronger and stronger. The industry continues to grow. And while there's a disconnect today between the stock market and the fundamentals of these businesses, our heads are down. We're executing. We're really focused on continuing to drive growth and profitability. And we think ultimately, once federal legislation and other things work themselves out, the markets are going to identify and really reward purely for all the work that we're doing today.
- All right, Matt Darin, CEO of Curaleaf Holdings. Thanks so much for the time. Really appreciate you taking time to stop by.