Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud

Cannabis Industry Performance

Cannabis Industry Performance - February 5,2021

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 returns of 21%, 21%, and 20%, respectively. Aphria (“APHA”) and Tilray (“TLRY”) both had notable returns, as they announced their plans to expand in Europe (Germany, Portugal, and Spain). We also believe that rising optimism for federal legalization in the U.S. was a factor for the price run-up.

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.

Average EV/R (October 2019 – February 2021)

Source: S&P Capital IQ, FRC

January 29, 2021 and February 05, 2021

Source: S&P Capital IQ, FRC 

The average EV/R, as of February 5, 2021, was 27.8x – a WoW increase from 23.0x. The average EV/R, from October 7, 2019, to February 5, 2021, was 12.7x.

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

 The average retail price per gram increased week-over-week from $11.28 to $11.29. The below chart shows Canadian retail dried cannabis flower pricing since we initiated price coverage.

Canadian Retail Dried Cannabis Flower Pricing

Source: Online Provincial Cannabis Stores, FRC

Canadian Retail Cannabis Stores

As of February 8, 2021, there are 1,547 retail cannabis stores, a week-over-week increase of 25 stores across Canada, including 17 in ON, five in AB, and three in B.C. As we noted before, we continue to see Ontario’s store growth significantly outpace other provinces due to the recent mandate of the Alcohol and Gaming Commission of Ontario (AGCO) to increase retail store authorizations.

Nationwide Store Count

Source: Provincial Websites, FRC

Canadian Retail Cannabis Stores by Province feb 8 2021 chart

Source: Provincial Websites, FRC

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