Weekly Cannabis Commentary

Weekly Cannabis Commentary

The number of stores across the country has increased by 63% since February to date. Ontario has experienced the highest growth (597%). The growth in Ontario is driven by the Alcohol and Gaming Commission of Ontario’s (AGCO) mandate to increase store count in the province, which has a significantly higher population per store vs the national average (see table on the next page). We note that the population to Beer-Wine-Liquor stores ratio across Canada is 10,821 in 2019. As the current population per cannabis store is 30k, we believe there is significant room for expansion of cannabis retail space in the country.

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Weekly Cannabis Commentary

In the past week, the cannabis market corrected slightly following a week of significant sector-wide price gain due to optimism around a Democratic victory in the U.S. elections. Over the past week, the Horizons Marijuana Life Sciences ETF (TSX: HMMJ / “HMMJ”), the Standard & Poor’s/MX International Cannabis Index (“MCAN”), and the Standard & Poor’s/TSX Cannabis Index (“XCAN”) generated a return of 3%, -3%, and -2%, respectively.

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Weekly Cannabis Commentary

Over the past week, the Horizons Marijuana Life Sciences ETF (TSX: HMMJ / “HMMJ”), the Standard & Poor’s/MX International Cannabis Index (“MCAN”), and the Standard & Poor’s/TSX Cannabis Index (“XCAN”) generated returns of 25%, 27%, and 31%, respectively. Cannabis stocks rallied in the past week due to the Democratic party’s victory in the U.S. elections, and voters in Arizona, Montana, New Jersey, South Dakota, and Mississippi voting to relax marijuana laws in their respective states. In addition, the governors of New York and Connecticut also spoke to the media about their intensions to legalize recreational marijuana in 2021. Cannabis is now fully legalized in 16 states in the U.S.

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Weekly Cannabis Commentary

Over the past week, the Horizons Marijuana Life Sciences ETF (TSX: HMMJ / “HMMJ”), the Standard & Poor’s/MX International Cannabis Index (“MCAN”), and the Standard & Poor’s/TSX Cannabis Index (“XCAN”) generated a return of 3%, 2%, and 7%, respectively. Most of the stocks gained strength today due to the growing optimism surrounding U.S. elections. A number of states in U.S., such as New Jersey, Arizona, Montana, South Dakota, and Mississippi, will have voters deciding this week whether to make recreational marijuana legal in their respective states.

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Weekly Cannabis Commentary

Over the past week, the Horizons Marijuana Life Sciences ETF (TSX: HMMJ / “HMMJ”), the Standard & Poor’s/MX International Cannabis Index (“MCAN”), and the Standard & Poor’s/TSX Cannabis Index (“XCAN”) generated a return of -5%, -4%, and -5%, respectively. There was no significant news in the industry in the past week.

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Weekly Cannabis Commentary

The average EV/R, as of October 5, 2020, is 8.9x – a decrease from 9.2x a week ago. Today’s share price gains are not reflected as the multiples were calculated based on share prices as of last Friday. The average EV/R, from October 7, 2019 to date, is 11.49x.

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