Weekly Cannabis Commentary
Author: Sid Rajeev, Iftekhar Mahmud and Lavish Ramrakhani
Cannabis Industry Performance
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 -3%, -4%, and -8%, respectively. This past week, Aphria Inc. (TSX: APHA) reported a $5.1 million loss in its latest quarter (quarter ended August 31, 2020), compared to a $16.4 million profit in the same period a year ago. Its reported revenue also fell short of consensus ($145.7 million actual vs $159.6 million estimate).
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)
The average EV/R, as of October 19, 2020, is 10.4x – a decrease from 11.2x a week ago. The average EV/R, from October 7, 2019 to date, is 11.46x.
Canadian Retail Cannabis Pricing
The average retail price per gram remained the same week-over-week at $10.98. The below chart shows Canadian retail dried cannabis flower pricing since we began price coverage.
Canadian Retail Dried Cannabis Flower Pricing
Canadian Retail Cannabis Stores
As of October 19, 2020, there are 1,186 retail cannabis stores, a week-over-week increase of 13 stores across Canada, including eight in Ontario, three in B.C., and two in Alberta.
The following shows the number of retail cannabis stores by province/territory: