Weekly Cannabis Commentary

Cannabis Industry Performance

Source: FRC

Last week, both U.S. and Canadian cannabis stocks fell, although Canadian companies had a steeper fall. Key sector developments below (all positive):

According to BDSA, cannabis sales were up MoM in Arizona, California, Colorado, Oregon, Illinois, Maryland, and Massachusetts. Nevada experienced a 0.9% decline, as the state gets most of its cannabis sales from tourists. Tourism has not yet fully recovered due to travel restrictions.
Treasury Secretary, Janet Yellen, expressed her support for the SAFE Banking Act last week. The banking act would allow state-legal marijuana companies to access federal banking services.

Valuation
As of December 6, 2021, the Canadian big four LPs were trading at a 31% premium (down from 45% in the previous week) over their U.S. peers.

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 $0.01, to $10.98, last week.

Source: Online Provincial Cannabis Stores, FRC

Canadian Retail Cannabis Stores
As of December 6, 2021, there are 2,821 retail cannabis stores in Canada, a WoW increase of 11 stores, including three in Alberta, four in Quebec, and four in B.C. For two weeks in a row, store-count growth has been significantly below the historic weekly average. If growth remains low for another few weeks, we can confirm that the sector is slowing down for real. Note that we believe there is room for 1,500+ stores in the country.

Source: Provincial Websites, FRC

Weekly Psychedelic Commentary

Psychedelic Industry Performance

Source: TMX Money, FRC

 

Today, the Drug Enforcement Administration (DEA) and the National Institute on Drug Abuse (NIDA) came out supporting a White House proposal to streamline the research process of Schedule 1 drugs like psilocybin, MDMA, and other psychedelics. The agencies testified at a House Energy and Commerce subcommittee hearing saying “it is critical that the scientific and medical community study Schedule 1 substances, as some may turn out to have therapeutic value.”