The graph shows 2023 EBITDA consensus estimate revisions since 9/1/22 for 18 cannabis companies. The chart decomposes 2023 EBITDA revisions into the portion attributable to lower revenues (blue bars) and the portion attributable to lower EBITDA margins (red bar).

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Estimate cuts range from a reduction of over 50% for Lowell Farms (OTC: LOWLF) to a drop of only 6.9% for Cresco (CL: CSE).

Over the last few months, we have been saying that we did not believe analysts had sufficiently factored in margin pressures from commoditization and inflation. The chart bears out our theory. 4Front (OTC: FFNTF) is the only company with positive EBITDA margin revisions, and half of the companies had more significant EBITDA declines from margin reductions than revenue reductions. Year to date, analysts have cut 2023 revenue and EBITDA estimates for the group by 29% and 44%, respectively. 

2022 has been a problematic year operationally for cannabis companies. Wholesale prices have fallen sharply in nearly every mature market, preventing inflationary cost increases from being passed on. New York, the most highly …

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