Weekly Cannabis Commentary
Cannabis Industry Performance
Last week, both Canadian and U.S. cannabis stocks were up 9%. Key sector developments are listed below (all positive):
- Virginia lawmakers are pushing to begin legal sales of cannabis sooner than planned in order to decrease illicit sales in the state.
- Oregon has re-opened its recreational cannabis business license approval process, after putting it on pause for three years.
- New Jersey announced that it will commence accepting cannabis business license applications next month.
- 21 U.S. governors have voted to support the passing of the SAFE Banking Act, which would prohibit penalizing banking institutions from offering banking services to cannabis companies.
As of November 15, 2021, the Canadian big four LPs were trading at an 75% premium (up from 55% in the previous week) over their U.S. peers. Last week, Aurora (TSX: ACB) and Canopy (TSX: WEED) reported YoY revenue declines for the quarter ended September. However, their share prices were up 15%, and contributed to the higher premium (EV/R) for Canadian cannabis players. As mentioned in our previous reports, we expect this premium to shrink as the U.S. moves closer to federal legalization.
The average retail price per gram fell WoW from $11.04 to $11.00.
Canadian Retail Cannabis Stores
As of November 15, 2021, there are 2,774 retail cannabis stores in Canada, a WoW increase of 18 stores, including 13 in Ontario, six in Alberta, and one closure in B.C.