Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud and Lavish Ramrakhani

Cannabis Industry Performance

Cannabis Industry Performance Updated on October 26, 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 -5%, -4%, and -5%, respectively. There was no significant news in the industry in the past week.

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

Average EV/R chart, as of October 26, 2020, is 11.5x

Source: S&P Capital IQ, FRC

The average EV/R, as of October 26, 2020, is 11.5x – an increase from 10.4x a week ago. Note that EV/R increased WoW, despite the decline in share prices mentioned on the previous page. This is because the EV/R ratios are based on last week’s ending share prices, and the Wow performance is based on Monday’s prices (and today there was a large market correction). The average EV/R, from October 7, 2019 to date, is 11.5x.

Canadian Retail Cannabis Pricing updated on October 26, 2020

Source: Online Provincial Cannabis Stores, FRC

The average retail price per gram increased $0.04 week-over-week to $11.02. Retail cannabis dried flower prices (shown below) also increased this past week, by $0.06, the biggest YoY price increase for the year. We will closely monitor prices in the coming weeks to see if there is a change in trend.

Canadian Retail Dried Cannabis Flower Pricing updated on October 26, 2020

Source: Online Provincial Cannabis Stores, FRC

Canadian Retail Cannabis Stores

As of October 26, 2020, there are 1,200 retail cannabis stores, a week-over-week increase of 10 stores across Canada, including seven in Ontario and three in Alberta.

Nationwide Canada Cannabis Store Count updated on October 26 , 2020

Source: Provincial Websites, FRC

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

Retail cannabis stores by province/territory updated on October 26, 2020

Source: Provincial Websites, FRC

Weekly Cannabis Commentary:

Source:https://www.researchfrc.com/weekly-cannabis-commentary-55/