Green Thumb's Lack of Moat Leaves It Susceptible to Continued Marketwide Price Compression

Green Thumb Industries cultivates and sells medicinal and recreational cannabis through wholesale and retail channels in the US. Unlike its Canadian peers, the firm is more vertically integrated, as it owns dispensaries in addition to the cultivation and processing of value-added products. It has a presence in 14 states through 20 production facilities, and 104 dispensaries, but lacks a moat as all cannabis producers do, in our view. In states with more mature cannabis markets, Green Thumb believes there are enough cultivators available and purchases cannabis from third parties. This helps reduce capital intensity for expansion without sacrificing exposure to widening legalization.