Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud and Lavish Ramrakhani 

Cannabis Industry Performance

Source: TMX Money, FRC

Note: MCAN and XCAN was launched on November 18, 2019 and January 20, 2020, respectively. Source: TMX Money, FRC

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 2%, 4%, and 6%, respectively. Most of the stocks experienced a positive return last week due to announcement of product launch and new expansion initiatives by Canopy (TSE: WEED) and Cronos (TSE: CRON), respectively. Also, there is optimism in the market regarding the release of quarterly financials from Aphria (TSE: APHA) scheduled on October 15th .

Valuation of Select Canadian LPs

The following chart shows the average Enterprise Value to Revenue (“EV/R”) of the Canadian cannabis companies that we track.

Average EV/R (October 2019 – October 2020)

Source: S&P Capital IQ, FRC

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.

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

The below chart shows Canadian retail dried cannabis flower pricing since we began price coverage. The average retail price per gram decreased slightly week-over-week to $10.98.

Canadian Retail Dried Cannabis Flower Pricing

Source: Online Provincial Cannabis Stores, FRC

Canadian Retail Cannabis Stores

As of October 5, 2020, there are 1,166 retail cannabis stores (up 11 stores WoW) across Canada.

Nationwide Store Count

Source: Provincial Websites, FRC

The following shows the number of retail cannabis stores by province/territory:

The following shows the number of retail cannabis stores by province/territory:

Source: Provincial Websites, FRC

The increase of 11 stores over the past week comes from 15 new stores (12 in Ontario, one in Alberta and two in B.C.), and four stores closed in New Brunswick.

Weekly Cannabis Commentary:

Source:http://www.researchfrc.com/weekly-cannabis-commentary-52/