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Glass House: California, no doubt about it

California is the biggest cannabis market in US and maybe even the world. It is also the toughest cannabis market in the entire world. It is likely the market whose product is in most demand. And it is the market that has the worst flower price.

For the last 1.5-2 years, the California cannabis flower prices have been the worst anywhere. In the toughest market with the worst flower price was a suicide land for businesses. Many California cannabis companies have closed house. It has been a deadly place to do business. The companies that have survived, have likely grown stronger and will flourish with what is about to come.

Glass House reported preliminary Q4 numbers recently. The most interesting thing that the company reported was

Overall, wholesale biomass pricing stabilized during the quarter with the projected average selling price per pound increasing to approximately $231 per pound, up from $204 per pound in Q3. 

The word “increasing” and “California cannabis market” haven’t been used in the same sentence in a long time. Also using the word “increasing” in Q4 is very rare. Typically Q4 is the toughest market, price wise, in the California cannabis market due to Croptober.

I believe we might be at a huge turning point in the California cannabis market. The wholesale biomass prices increasing in Q4 is huge. It means the supply has dried out and in Q2 / Q3 of 2023 we will see even more price increases.

Glass House is all about the COGS. The cost of production has decreased for the company every quarter and will likely see even more decrease in the coming quarters. So you will have a decrease in COGS and an increase in selling price. This is going to have a dramatic impact on the profit and loss for Glass House. Add the fact that all this is happening at the largest production scale in the cannabis market (Glass House owns the biggest greenhouse dedicated to cannabis).

I think we are going to be a very remarkable 2023 for Glass House and likely for California cannabis market.

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