Weekly Cannabis Commentary
Author: Sid Rajeev, Iftekhar Mahmud
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 returns of -4%, -4%, and -5%, respectively. There were no noteworthy developments in the industry in the past week.
Valuation of Select Canadian LPs
The following chart shows the average Enterprise Value to Revenue (“EV/R”) ratio of the Canadian cannabis companies we track.
The average EV/R, as of December 31, 2020, was 13.3x – a WoW decrease from 14.6x. The average EV/R, from October 7, 2019 to December 31, 2020, was 11.9x.
The average retail price per gram remained unchanged week-over-week at $11. The below chart shows Canadian retail dried cannabis flower pricing since we initiated price coverage.
Canadian Retail Cannabis Stores
As of January 4, 2021, there are 1,421 retail cannabis stores, a week-over-week increase of 37 stores across Canada; all new stores came from B.C. We note that, due to the holidays, store count data was not updated on most provincial websites. We expect to get a more precise update next week.