This week, we were joined by Nicholas Gastevich, Vice President of V. Gastevich Investments, known as CannaVestments on X and Reddit. Gastevich is a seasoned cannabis investor known for his excellent earnings analysis and industry perspective.
The conversation began by discussing 2Q earnings results. We saw more differentiation this quarter between the tier 1 and tier 2 MSOs, especially in gross and adjusted-EBITDA margins. Tier 1 gross margins averaged 52%, versus 41% for tier 2s.
Gastevich shared how CapEx has been declining since 2021. 2Q averaged $128 million, which is up 33% sequentially, but down 67% since 2021. We debated the tradeoff between spending more on growth versus focusing on generating cash flow.
Ohio opened for adult-use sales and is the biggest state-led catalyst this year. The Buckeye state is an approximately $600 million medical market bordered by four non-adult-use states. We expect the Ohio market to triple in size quickly, and sales may accelerate in September when pre-rolls and concentrates begin being sold in dispensaries. We covered who is best positioned to succeed in Ohio and who may be leaders in the wholesale market.

Finally, we explored opportunities for cannabis companies to participate in the hemp market. We’ve seen Curaleaf begin producing hemp-derived beverages and edibles, and Glass House Brands is considering entering the THCA flower space and potentially using a similar direct-to-consumer model. On the show, we talked about risks and opportunities in this growing category.