WEBVTT - Curaleaf CEO Sees Immense Demand in Florida

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<v Speaker 1>These sees Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stenovic on Bloomberg Radio. Now, over the years, we have

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<v Speaker 1>touch base with the CCWEE team at cure Leaf, including

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<v Speaker 1>the company's chairman, Boris Jordan many times. Cure Leaf, as

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<v Speaker 1>you know, approximately two point seven billion dollars cannabis holding

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<v Speaker 1>company based in Canada, and we wanted to get more

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<v Speaker 1>on the business, including last week's news that Twitter would

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<v Speaker 1>allow cannabis ads, becoming the first major social platform to

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<v Speaker 1>do so. So we welcome cure Leaf CEO Matt Darren

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<v Speaker 1>joining us via zoom in Florida. Matt, good to have

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<v Speaker 1>you here with Mattie and myself. How are you and

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<v Speaker 1>how is business doing? Great? Thank you. Business continues to

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<v Speaker 1>be brisk. It's we're continuing to see that cannabis is

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<v Speaker 1>a recession resistance stable and despite many of the inflation

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<v Speaker 1>crashers and other things going on the economy, people are

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<v Speaker 1>prioritizing their cannabis purchases, which is encouraging to see. All right, optimism,

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<v Speaker 1>you sound optimistic, but in January, you guys did release

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<v Speaker 1>that you're cutting your payroll by about ten percent. You

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<v Speaker 1>were closing operations in California, Colorado, and Oregon at the

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<v Speaker 1>same time, though there's some news just last week that

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<v Speaker 1>you opened another dispensary in Florida. I think it's your

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<v Speaker 1>fifty eighth in that state, one hundred and forty eighth

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<v Speaker 1>nationwide in the US. So, first of all, kind of

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<v Speaker 1>square some things for me. Why the cuts in payroll,

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<v Speaker 1>Why the shutdowns in California, Colorado, and Oregon. So a

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<v Speaker 1>few things. First. You know, Pure got more than doubled

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<v Speaker 1>for a number of consecutive years, and with that hypergrowth

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<v Speaker 1>comes opportunities to continue to optimize the business. So many

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<v Speaker 1>of the decisions that we're making, I think are natural

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<v Speaker 1>for high growth companies that are going through its next

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<v Speaker 1>phase of evolution and is something we're seeing really throughout

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<v Speaker 1>throughout the industry as it relates to our markets in

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<v Speaker 1>the West Coast. Look, there are in a resource constrain,

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<v Speaker 1>capital constrained environment. We want to make sure that we

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<v Speaker 1>are allocating our coal in our resources to the markets

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<v Speaker 1>where we see the greatest opportunities, Florida being one of them,

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<v Speaker 1>with the largest medical market and adult use. On the

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<v Speaker 1>horizon in the coming years, you have some markets such

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<v Speaker 1>as California on the West Coast that have just experienced

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<v Speaker 1>some major challenges for a variety of reasons, from lack

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<v Speaker 1>of enforcement of the illicit market to high tax structures

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<v Speaker 1>in place that have really made it challenging to to

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<v Speaker 1>be profitable in California. So for the time being, we're

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<v Speaker 1>continuing to go asset light in those markets and hopefully

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<v Speaker 1>they're going to stabilize in the coming years and you know,

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<v Speaker 1>we'll be there. You tease this out a little bit,

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<v Speaker 1>but can you talk to me a little bit more

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<v Speaker 1>about why you like Florida as a market to continue

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<v Speaker 1>to expand in. So Florida has been a wildly successful

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<v Speaker 1>medical program with over seven hundred thousand patients in the

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<v Speaker 1>medical program. You know, the licensing structure allows you to

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<v Speaker 1>expand your cultivation and manufacturing capacity as much as you

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<v Speaker 1>would like, as well as to open up as many dispensaries,

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<v Speaker 1>so you can really build scale in the Florida market,

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<v Speaker 1>which we've continued to do by investing in our manufacturing

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<v Speaker 1>and processing capabilities and continuing to open new dispensaries as

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<v Speaker 1>you've seen. So it's really an attractive market and that's

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<v Speaker 1>just in a medical environment. So with adult use on

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<v Speaker 1>the horizon at some point and one hundred and thirty

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<v Speaker 1>million tourists that come to Florida every year, not to

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<v Speaker 1>mention the demographic shift taking place with many people relocating

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<v Speaker 1>to the state. It really is an attractive climate operating.

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<v Speaker 1>How strong is the demand in Florida that you guys

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<v Speaker 1>have so overweighted your exposure to that state. The demand

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<v Speaker 1>is immense. I think part of what we've seen is

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<v Speaker 1>that there's certain parts of the state that have been

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<v Speaker 1>slower to communities flower to zone for dispensaries, and so

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<v Speaker 1>while there are you know, hundreds of dispensaries throughout the state,

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<v Speaker 1>there's some are areas that have really not had much

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<v Speaker 1>accessibility for medical cannabis up until recently. So we're seeing

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<v Speaker 1>some greenfield opportunities in areas outside of Orlando and other

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<v Speaker 1>parts of the state that we're excited to now be

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<v Speaker 1>represented in where we weren't before. Same thing in you know,

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<v Speaker 1>south in Miami Dade County, there's areas that are new

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<v Speaker 1>areas that have been opening up that are now zoned

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<v Speaker 1>for medical dispensaries, whereby previously that was not an option available.

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<v Speaker 1>So we're really we're very very focused on opening up

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<v Speaker 1>a locations in these markets, but the opportunities are continuing

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<v Speaker 1>to open up for that. Well, we got some big

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<v Speaker 1>news last week that Twitter is allowing cannabis ads. I

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<v Speaker 1>imagine that that news was music to your ears. Can

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<v Speaker 1>you talk to me about how big of a deal

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<v Speaker 1>that is for you in the business. We see it

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<v Speaker 1>as a really big deal. Twitter being the first major

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<v Speaker 1>online social media platform to allow cannabis companies to advertise,

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<v Speaker 1>albeit subject to restrictions, I think is a real big

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<v Speaker 1>moment for the industry. Historically, we've been very limited in

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<v Speaker 1>terms of the digital marketing that we can do and

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<v Speaker 1>frankly all types of marketing, and so the notion that

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<v Speaker 1>we can now advertise and participate in social media channels,

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<v Speaker 1>including Twitter, which has been very active in the cannabis space,

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<v Speaker 1>is really a whole new opportunity and something that we're

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<v Speaker 1>really excited for to capitalize on. My understanding to advertise

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<v Speaker 1>on Twitter that cannabis companies must be pre authorized by

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<v Speaker 1>Twitter and meet many requirements. What are you learning about

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<v Speaker 1>those requirements? So, yes, there are a number of requirements. Uh,

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<v Speaker 1>you know, in the early stages here, we do need

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<v Speaker 1>to be pre authorized by the platform to post ads.

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<v Speaker 1>There's restrictions on what can be advertised. You know, we're

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<v Speaker 1>not advertising you know, most cannabis products in general, so

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<v Speaker 1>there's some significant limitations on you know, what can exactly

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<v Speaker 1>be advertised, and there's certain pre authorizations that are there

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<v Speaker 1>as well as jurisdictions where we are able to offer

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<v Speaker 1>these ads. So help me help me out. Is this

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<v Speaker 1>correct that one of the most significant restrictions is that

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<v Speaker 1>cannabis companies can't promote or offer for sale cannabis products.

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<v Speaker 1>Isn't that what advertising is? You are correct, We're able

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<v Speaker 1>to offer advertise certain products that are at a very

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<v Speaker 1>diminumous amount of THHC, things like our outstanding topicals, which

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<v Speaker 1>do quite well in places like Florida. But you're right, Um,

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<v Speaker 1>there are a lot of restrictions in terms of actually

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<v Speaker 1>advertising the products that we dispense. But I will say

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<v Speaker 1>that that is still progress from where we have been

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<v Speaker 1>at where we've not been able to have any sort

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<v Speaker 1>of advertising presence on these platforms. So while um, certainly

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<v Speaker 1>we're more limited than conventional CBG companies and others, this

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<v Speaker 1>is progress from what we've been dealing with the last decades.

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<v Speaker 1>So we'll take progress for the moment. Are you also

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<v Speaker 1>a little nervous? And it just harkens back to kind

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<v Speaker 1>of cigarettes, this whole idea that you can't target minors.

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<v Speaker 1>I mean, like, how do you not well? I think

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<v Speaker 1>there's something that we take very seriously. Curley's roots are

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<v Speaker 1>as a health and wellness company coming out of the

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<v Speaker 1>medical space, and that's still very much in our DNA,

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<v Speaker 1>even as we transition to adult use and are offering

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<v Speaker 1>products across a variety of ways. You know, there's certainly

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<v Speaker 1>ways to market and advertise that are not being directed

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<v Speaker 1>towards youth, and that in terms of the way that

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<v Speaker 1>products get presented and you know, many of those things.

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<v Speaker 1>So I think there's absolutely ways to market cannabis products.

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<v Speaker 1>And the reality is a huge portion of our customer

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<v Speaker 1>base is, uh, you know, kind of skewing older than younger.

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<v Speaker 1>There's a reality, And forgive me, I really probably should

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<v Speaker 1>have has phrased it more like it's hard to avoid

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<v Speaker 1>anybody from seeing the ads that are out there. And

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<v Speaker 1>I didn't mean to mean that you guys are necessarily

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<v Speaker 1>going to target young folks, but I mean once the

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<v Speaker 1>stuff is out there, pretty much anybody can see it.

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<v Speaker 1>Matt comeback because I'd love to continue this conversation and

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<v Speaker 1>love to know more as you guys find out about

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<v Speaker 1>the advertising rules. Matt Darren, He's chief executive officer of

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<v Speaker 1>Cure Leaf, joining USBA Zoom from Florida. This is Bloomberg Radio.