Curaleaf (CSE: CURA) is reeling this morning after a decision by New Jersey’s Cannabis Regulator Commission Board to not renew the firms adult use license in the state. The decision was handed down following the Board’s annual meeting.
The license renewal was denied on the grounds that Curaleaf winded down its operations at its Bellmawr facility in the state without sufficiently notifying the regulator of the action, which resulted in layoffs of approximately 40 employees. The company is suspected of attempting to union-bust in closing the facility, which when combined with this “lack of transparency,” resulted in members of the commission being unsatisfied with the performance of the firm in the State,
In voting, two commissioners voted No, while two elected to Abstain on the vote, resulting in Curaleaf’s renewal not passing.
READ: Curaleaf To Exit Most Operations In California, Oregon And Colorado Immediately
Curaleaf reacted furiously to this in an official release after the decision, stating that the decision was “an outrageous act of political retaliation for our need to consolidate production into one local facility,” and that ” this type of politicization will only serve to further undermine the state’s nascent cannabis industry.”
Curaleaf also stated that the decision overrode the Commission’s staff recommendation that its adult use license be renewed, and that they are in good standing with the CRC, although the latter claim appears to be questionable given the loss of the license.
The company then identified that the decision will adversely impact employees, which impacts “nearly 500 New jersey residents and Curaleaf team members.”
The decision will result in the firm being unable to sell adult-use cannabis after April 21 within the state.
Following the decision, Stifel issued a note indicating that it will need to revisit forecasts and its outlook on the company following the decision.
Financially, the decision is expected to hit the company rather hard. During the firms third quarter earnings call, the company highlighted that “New Jersey continued to be a bright spot,” with sales growing 21% sequentially, and the state being among its highest margin states. The Bellmawr retail location alone was reportedly “on pace to exceed $80 million in annual sales,” for this year, growing 16% quarter over quarter, with retail sales hitting $7 million per month. The firm also accounted for roughly 30% of the market share in the state.
Curaleaf has stated it intends to continue working with the Commission to secure the renewal of its adult use licenses, “including by any legal means necessary.”
Information for this story was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Views expressed within are solely that of the author. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
