Weekly Cannabis Commentary

Cannabis Industry Performance

Source: FRC

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.

Valuation

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.

Source: S&P Capital IQ, FRC

Source: S&P Capital IQ, FRC

Source: Online Provincial Cannabis Stores, FRC

 The average retail price per gram fell WoW from $11.04 to $11.00.  

Source: Online Provincial Cannabis Stores, FRC  

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.

Source: Provincial Websites, FRC

Source: Provincial Websites, FRC

Weekly Cannabis Commentary:

Source:https://www.researchfrc.com/weekly-cannabis-commentary-109