New York Weed Giant The Cannabist Is Selling Its Florida Business, Here's Why

The Cannabist Company Holdings Inc. (Cboe CA: CBST) CBSTF 3LP – formerly known as Columbia Care – announced on Monday a series of initiatives as it seeks to transform its business to improve profitability, enhance margin profile and enable cash flow generation.

What Happened

The company said in a press release that a planned corporate restructuring is expected to generate roughly $10 million in annual cost savings.

In addition, the Cannabist is in the process of divesting its entire asset portfolio and license in the Florida market, with LOIs for multiple transactions in place and $2.75 million of deposits in escrow.

Upon divesting these assets, including 14 retail locations, three cultivation and manufacturing facilities, and its license, the company will exit the Florida market, which represented less than 5% of total revenue in the first quarter of 2024.

The business transformation was supported by a special committee of the company's board of directors.

The cannabis business has been moving forward from its previous identity as Columbia Care for months. Jesse Channon, the company's president shed light on the company's latest strategic actions to rebrand are reshape the cannabis industry, at Benzinga's cannabis event this past spring.

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See also: NY Cannabis Giant Cannabist’s 2023 Revenue Consistent With Prior Year At $511M, Narrows Q4 Net Loss By 76% YoY

Why It Matters

David Hart, CEO of The Cannabist Company, explained what he expects from this business venture.

He said the corporate restructuring is expected to "simplify our business, reduce overhead expenses, and more appropriately align with our evolving operational footprint as we exit Florida and divest assets in other underperforming markets in the coming months.

"As we have made clear since the beginning of 2024, under new leadership, The Cannabist Company will look very different by the end of this year in terms of our operational footprint, overhead expenses, and de-risked financial profile," Hart continued. "Our focus is on building a better business, positioned for profitability and long-term sustainable growth."

The New York-based company kicked off 2024 by entering into a binding agreement with certain offshore institutional investors to effect a previously announced repurchase of up to $25 million of the principal amount of the company’s 6.0% senior secured convertible notes due June 2025.

What's Next

The final terms of the transaction(s) will be announced at a later date, upon execution of definitive documentation.

"We are decisively leaning into the markets that are best positioned for growth and strategic upside, while also monetizing underperforming and non-core assets," Hart said. "We will continue to capitalize on our strong asset base in profitable markets such as Virginia and New Jersey, and we are actively preparing for upcoming adult-use transitions in Ohio and Delaware."

CBSTF Price Action

Columbia Care's shares traded 3.8742% higher at $0.185 per share at the time of writing on Monday morning.

Now read: Evolving Cannabis Retail: The Cannabist Company’s Rebranding Strategy Unveiled