Weekly Cannabis Commentary

Cannabis Industry Performance

U.S Companies, Canadian Companies

Source: FRC

Last week, both Canadian and U.S. cannabis stocks fell. Key sector developments below (positive):

Pfizer entered the cannabis sector with a US$6.7B acquisition of Arena Pharmaceuticals (NASDAQ: ARNA), a San Diego-based bioscience firm with a dedicated cannabinoid R&D division.

➢ New York announced plans to move up the scheduled timeline for adult-use cannabis sales. Sales could now start by late 2022, rather than 2023 as was previously expected.

➢ Malta became the first European country to legalize cannabis for recreational use.

Valuation

As of December 20, 2021, the Canadian big four LPs were trading at a 42% premium (up from 35% in the previous week) over their U.S. peers.

Canadian Companies, U.S Companies

Source: S&P Capital IQ / FRC

Average EV/R

Source: S&P Capital IQ / FRC

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores / FRC

The average retail price per gram fell $0.01, to $10.97, last week.

Canadian Retail Dried Cannabis Flower Pricing

Source: Online Provincial Cannabis Stores / FRC

Canadian Retail Cannabis Stores

As of December 20, 2021, there are 2,915 retail cannabis stores in Canada, a WoW increase of 75 stores, including 76 in Ontario, with one closure in B.C. We were pleased to see higher store openings last week as openings were unusually low in the past few weeks, and we were starting to wonder if the sector is experiencing slower growth.

Store counts

Source: Provincial Websites / FRC

Update on Coverage:

We are suspending coverage on Kaya Holdings Inc. (OTCPK:KAYS) as we have not received a response to our questions from management. Our rating and fair value estimate are no longer valid.