Ohio’s recreational cannabis market, launched on August 6th, is off to a roaring start. Early data reveals a remarkable 45% sales increase at marijuana shops within the first two weeks, and wholesale performance has also been strong. This rapid growth has positioned cannabis company Vext Science Inc. (VEXTF) as a rising contender among multi-state operators (MSOs).
Despite the positive trends in Ohio, Vext’s overall sales declined by 8% year-over-year in the second quarter, primarily due to challenges in Arizona. Arizona, which accounted for 61% of total revenue, experienced a 34% sales drop due to price deflation and increased competition. However, Vext’s Ohio sales surged by 141%, partly fueled by mergers and acquisitions.
Analyst Pablo Zuanic of Zuanic & Associates highlights Vext’s strong potential, especially in the context of Ohio’s booming market. He predicts a fivefold increase in Vext’s valuation by late 2025, with the company trading at 1.2x sales and 4.5x EBITDA by the end of 2025. Zuanic emphasizes the company’s compelling investment appeal within the MSO group, citing its high EBITDA torque to Ohio’s recreational market.
Vext’s growth strategy includes further store expansions in Ohio and improvements in Arizona, aiming to generate positive free cash flow in the coming quarters. With its strong presence in Ohio and a solid plan to overcome challenges in Arizona, Vext Science is poised for continued success in the expanding cannabis market.
