Green Thumb Industries on Wednesday announced it has tapped into the key legal marijuana market of California with the launch of its first retail location in the southern part of the state.
Despite news of its expansion into the largest weed market, shares of the cannabis products company were down nearly 5% at their session lows in the afternoon.
The decline did not faze Ben Klover, the Chicago-based cannabis producer’s founder and chief executive, who said on CNBC it created an entry point for investors.
“This is a long-term game,” he said in a “Power Lunch” interview. “This stock price is just an opportunity for the buyers.”
With the opening of Essence in Pasadena, California, Green Thumb now operates 53 branded stores in 11 states. Essence is one of four retail brands, including Rise, under the company’s umbrella.
The new dispensary location gives Green Thumb access to the biggest recreational cannabis market in the world.
The legal market in California, whose overall economy ranks higher than that of most countries, reached $4.4 billion in sales last year, up 57% from receipts in 2019, according to data from Marijuana Business Daily. Marijuana sales doubled in 2019 from the $1.4 billion sales figure recorded in 2018, the year the legal market opened in the Golden State.
Green Thumb Industries, whose total sales in 2020 surged 170% through September, is hoping to gain a business advantage in California’s growing market. Experts expect the state to produce between $6.9 billion and $8.1 billion in adult-use sales by 2024. Green Thumb is scheduled to release full-year 2020 results next week.
The $6.9 billion company also has a presence in 10 other states, including states where cannabis is fully legal, such as Illinois and Nevada, and medicinal-only markets such as Florida and Maryland.
The U.S. cannabis industry as a whole could reach $100 billion by 2030, up from $61 billion in 2020, according to research from investment bank Cowen.
Marijuana is now legal for adult recreational use in 14 states, though it remains illegal at the federal level, which continues to be a headwind for the cannabis industry. While ending prohibition has grown popular among the public and is gaining traction among lawmakers, Klover said he is less focused on the workings of Congress than he is on activity in state legislatures.
“What’s happening at the state level is governors and legislators … are all banging the table for jobs and tax revenue for legal cannabis markets in the U.S.,” he said. “We think the federal government is a laggard. They don’t move very fast, they’re not a forward indicator, and that’s OK.”
Shares of Green Thumb closed down 2% at $30.81.