Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud

Cannabis Industry Performance

Cannabis Industry Performance - February 19, 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 -2%, -2%, and -1%, respectively. Tilray (NASDAQ: TLRY) reported its Q4 financials, and missed consensus earnings estimates (actual: -$0.45 vs estimate: -$0.15) despite improved YoY net losses (2020: $2.9M vs 2019: 219M).

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

Average EV/R, as of February 19, 2021

Source: S&P Capital IQ, FRC 

The average EV/R, as of February 19, 2021, was 29.0x – a WoW increase from 28.7x. The average EV/R, from October 7, 2019 to February 19, 2021, was 13.2x.

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

The average retail price per gram decreased week-over-week from $11.27 to $11.26. 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 22, 2021, there are 1,601 retail cannabis stores, a week-over-week increase of 44 stores across Canada, of which, Ontario had 22. 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

Source: Provincial Websites, FRC

Weekly Cannabis Commentary: