Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud

Over the past week, Canopy (TSX: WEED) announced it will be acquiring Supreme (TSX: FIRE) for $435M. The deal implies an EV/R of 9x, which is lower than the industry average of 18x, and 11x of the Apria (TSX: APHA) – Tilray (NASDAQ: TLRY) deal. As all other large Canadian cannabis players have announced M&A deals in 2021, we expect Aurora (TSX: ACB) and Cronos (TSX: CRON) to seek similar opportunities in the near term.

Cannabis Industry Performance

Source: FRC

Valuation

As of April 9, 2021, the Canadian big four LPs were trading at a 109% premium (down WoW from 119%) over their U.S. peers.

Valuation of the Canadian big four LPs

Source: S&P Capital IQ, FRC

The following chart shows the average EV/R of the companies we track in both sectors:

Average EV/R (October 2019 – April 2021)

Source: S&P Capital IQ, FRC

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

The average retail price per gram remained the same week-over-week at $11.32. The chart below 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 April 12, 2021, there are 1,808 retail cannabis stores, a week-over-week increase of 10 stores across Canada, with four each in B.C. and Saskatchewan, and two in Manitoba.

Nationwide Store Count

Source: Provincial Websites, FRC

Source: Provincial Websites, FRC

Weekly Psychedelic Commentary

Psychedelic Industry Performance

Psychedelic Industry Performance

Source: TMX Money, FRC

Over the past week, PSYK stayed flat. There was no significant news in the industry last week.

Weekly Cannabis Commentary:

Source: https://www.researchfrc.com/weekly-cannabis-commentary-79/