Supply chain challenges cause expensive build-out delays for MariMed

Supply chain challenges cause expensive build-out delays for MariMed

The ongoing delays caused the CEO to offer lower guidance than expected.

The cannabis industry faces many unique business challenges, but it is not immune from everyday struggles that mainstream industries face either.

For example, ongoing global supply chain issues with construction equipment and supplies has cost multistate operator MariMed Inc. (CSE: MRMD) (OTCQX: MRMD) months in delays at various expansion projects in multiple states, CEO Jon Levine said during the company’s most recent call.

The company reported a $16 million net loss last year, as those expansion plans got derailed.

Build-outs at cultivation facilities in both Illinois and Maryland that were scheduled to be completed last year were delayed, and the issue could affect the company’s launch in Ohio’s recreational market, Levine said.

The problem is in part thanks to red tape, he said, but also in a big way because of supply chain disruptions to the availability of construction necessities.

“We could not anticipate the magnitude of delays we experienced in securing basic construction materials,” Levine said.

“I’ve been in the real estate construction business for well over 25 years, and I have never seen anything like this,” he added. “When you’re trying to build out a cultivation or processing center, trying to get items such as an electrical panel. I mean, who would have ever thought an electrical panel would take you six months to get?”

Levine said the Illinois build-out was set back by about half a year, while the Maryland cultivation facility is now scheduled to be done later in 2024.

On top of that, he said, the company has faced a roughly year-long delay in Missouri just in obtaining a change of address for a production facility. Regulatory delays have also hampered some plans in Massachusetts.

The supply chain issues and regulatory setbacks to the expansion calendar were factored heavily into the company’s guidance for 2024, which Levine said he knows is short of investor hopes, but he said the projects underway “will help take us to that double-digit increase year-over-year for continued years.”

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