Curaleaf CEO on how COVID-19 is impacting cannabis sector

Curaleaf CEO Joe Lusardi joins Yahoo Finance’s Zack Guzman to discuss the cannabis company's latest earnings results and how the cannabis sector is performing amid the spread of the coronavirus.

Video Transcript

ZACK GUZMAN: We're also watching shares of Curaleaf, one of America's largest cannabis companies practicing in a lot of different states, multistate operator here, reporting its latest results. We got those yesterday after the bell. Revenue grew 22.1%, $61.82 million in the third quarter, and, impressively, adjusted EBITDA profit was up to $13.8 million for the quarter as well. Joining us now to discuss that and the way that the business is navigating these uncertain times is Curaleaf CEO Joe Lusardi back with us again.

And, Joe, I guess-- I guess we'll start with the way that you guys were able to finish the quarter out strong, finish 2019 out strong. What did you see in terms of demand there that made it such a high jump? And what are you seeing as you continue to kind of consolidate the company after you guys acquired Select? Moving forward, how is that setting up for 2020?

JOE LUSARDI: Yeah, I think it's fair to say that, you know, cannabis is a-- it plays a vital role in people's lives. And we continue to see the demand build quarter over quarter. And so that's really a testament to our ability to deliver products to our customers across the country. We operate in a dozen states.

And, importantly, today, we're continuing to operate as an essential service in all the markets where we-- where we are. And so I think we'll continue to be able to deliver products to customers across the country.

ZACK GUZMAN: Yeah, that's a big piece of this too, right? When we're talking about businesses getting shut down, those that aren't deemed to be essential, in most of the states you guys operate in, I know with a few exceptions there, Nevada and Oregon-- though, these things are changing very quickly-- you guys have been deemed to be essential and allowed to service your customers.

You had to get a little tricky there in terms of dodging the concerns that every business is dealing with here in terms of transmission and making sure that you can actually service those orders by adding delivery options, as well as pickup from the curb options. How quickly have you been able to institute that? And are you seeing a downticks in demand now?

JOE LUSARDI: Yeah, it's interesting. I have to say that, first, we have to thank the governors across the country that have recognized cannabis as an essential service and the regulators that are working with us hand in hand to really cut the red tape and allow us to change our business on the fly so we can do things like mobile ordering, curbside pickup, and really cut down on the interaction between our employees and the customers.

But, you know, we're there for our customers. And we're going to continue to serve them across the country. And I also have to recognize our 2,200 employees across the country that come to work every day to help us fulfill our mission. And so I want to recognize those folks and thank them for everything they're doing to keep us on our-- on our mission.

ZACK GUZMAN: Yeah, and the amount of employees that you guys are having joining the company seems to be ticking higher as well. You were telling me just a little bit ago that because of that demand-- and, a lot of people, I guess the misconception is always out there, when we talk about cannabis, that people envision, you know, the recreational side.

But, for medical use here, when you think about cancer patients and other patients that depend on cannabis here, how is that kind of driving the need to actually staff up, despite the fact that we're seeing so many other businesses do the opposite here in cutting staff? How have you been planning for that demand?

JOE LUSARDI: Yeah, we've actually seen a surge in demand recently. And we're on schedule with all of our production facilities around the country. We actually announced we're adding staff up and down the supply chain to meet that demand. And, you know, I think it just shows that cannabis is a vital part of people's lives. And we're going to be there for our customers through these trying times.

ZACK GUZMAN: We got an update from Vivien Azer at Cowen. She's one of those closely watching analysts. She did cut her price target down from $9.50 to $7 for Curaleaf here just because of all the uncertainties regarding stocks across the board, cannabis no different when you look at it.

But, based on what you're saying here, it does sound like you haven't necessarily seen things fall off a cliff. When we look at revenue in some other industries, restaurant visits, everything like that shutting down, what makes the cannabis industry different than that?

JOE LUSARDI: Well, again, I mean, we're operating across the country because there's a recognition that, cancer patients and epileptics, they can't go without this medicine, right? And so we have to be there for those people. You know, I understand Vivien Azer's skepticism. It's hard to really predict the future, but the reality is, you know, medical cannabis is now part of the mainstream of our society, and we're going to-- we're going to keep going forward.

ZACK GUZMAN: As we talk about those regulations too, though, and how quickly they've been changing I guess on this front during the coronavirus shutdown, as you look forward beyond maybe 2020, I know we've got this election coming up, and things could change quickly. But how much do you think that, you know, a lot of different bills out there to address that problem getting pushed through might delay any changes on the regulatory front maybe on a state level, as well as the national federal level here, when we think about legalizing cannabis, both recreationally and medically in some states as well?

JOE LUSARDI: You know, this election cycle, I think we'll see a continuation of what we've seen every election cycle, which is that people will go to the polls and vote for cannabis. New Jersey and Arizona have adult use bills. You'll see more medical markets get approved in the fall.

You know, it's possible that we may get something at the federal level to resolve the conflict. Banking looks like the most likely federal fix we'll get, but there's no question the American people overwhelmingly now support cannabis for medical use and adult use. And so I think, you know, those are favorable trends for the industry.

ZACK GUZMAN: All right, there you go, Joe Lusardi, CEO at Curaleaf. Thanks again for joining us, man. I appreciate you taking the time.

JOE LUSARDI: Thanks, Zack.