Why the cannabis industry is booming quarter over quarter

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The cannabis industry is booming quarter over quarter and may further grow this year, according GrowGeneration CEO Darren Lampert.

GrowGeneration operates dozens of specialty hydroponic and organic garden centers in the US. Lampert told CNBC’s Jim Cramer that the cannabis industry will bring in even more business this year than previously thought in an emerging industry.

GrowGeneration has been dealing in the ancillary side of the cannabis industry since 2014. Last week, the company reported record quarterly revenues of $43.5 million and increased its forecast for the current fiscal year to between $170 million and $175 million. This is an increase from the $130 million to $135 million the company first forecast earlier this year.

“We saw a 50% increase in walk-in business quarter over quarter. Business is booming,” Lampert said. “We’re in such an early stage of a multi-billion dollar industry. GrowGeneration is just getting started.”

GrowGeneration, valued at $770.5 million, saw its revenue soar more than twice in the three-month period ending June 30. The $43.5 million the company distributed last quarter was a 123% rise from the $19.5 million it reported in the year-ago quarter. The figures came amid a quarter hit by lockdowns which were imposed to curb the spread of the coronavirus.

GrowGeneration runs 28 hydroponic and gardening stores as well as an online store. It has presence in 10 states including California, Colorado, Nevada, and Michigan. The company aims to enter more locations in the Northeast part of the country, catering to cannabis, hemp and organic grower markets, Lampert said.

The company aims to open 50 locations in 15 states by the end of 2021, a year where GrowGeneration established guidance at $260 million in sales on the high side. Such growth would account for a 232% increase from the $79.7 million in revenue the company posted in 2019.

“We’re a one-stop solution for all cannabis growers from the small craft growers to the large MSOs around the country,” Lampert said.

FDA warning

In April this year, the US Food and Drug Administration (FDA) issued a warning to 15 companies that have illegally sold cannabidiol products, also known as CBD.

FDA is apprehending the companies for adding cannabidiol products to food or marketing them as a dietary supplement.

The agency also published a consumer update about CBD. CBD refers to the non-psychoactive ingredient in marijuana. People use it to cure pain and anxiety.

FDA has yet to learn more about the effectiveness and safety of cannabidiol products. Meanwhile, it cannot generally consider the ingredient as safe or approve products that contain it.

“We remain concerned that some people wrongly think that the myriad of CBD products on the market, many of which are illegal, have been evaluated by the FDA and determined to be safe, or that trying CBD ‘can’t hurt,'” FDA Principal Deputy Commissioner Amy Abernethy said.

The agency emphasized that CBD is not an approved additive. It is also not categorized as a dietary supplement under the Food, Drug and Cosmetic Act.

The FDA noted that some of the companies marketed products to infants and children. These children may be exposed to higher risk for negative side effects of CBD due to their metabolism and ability to consume and excrete the ingredient.