Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud and Lavish Ramrakhani 

Cannabis Industry Performance

Cannabis Industry Performance as for October 19, 2020

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 -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)

Average EV/R (October 2019 – October 2020)

Source: S&P Capital IQ, FRC

The average EV/R (chart), as of October 19, 2020

Source: S&P Capital IQ, FRC

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

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

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 Dried Cannabis Flower Pricing

Source: Online Provincial Cannabis Stores, FRC 

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.

Nationwide Store Count

Source: Provincial Websites, FRC

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

Number of retail cannabis stores by province/territory

Source: Provincial Websites, FR

Weekly Cannabis Commentary:

Source: https://www.researchfrc.com/weekly-cannabis-commentary-54/