Weekly Cannabis Commentary

Author: Sid Rajeev, Iftekhar Mahmud

Cannabis Industry Performance

Over the past week, in the U.S., the Secure and Fair Enforcement (SAFE) Banking  Act passed the U.S. House of Representatives (for the fourth time) and will proceed to the Senate for approval. The SAFE Act is aimed at banking reforms,  allowing banks to provide services to cannabis companies in states where cannabis is legal. Even though the Act did not get Senate approval the last three times, there is optimism that a Democrat-led Senate will approve this time. 

In Canada, in 2020 (the first full year of edible sales), sales were C$109M, and grew  232% from Q1-2020 to Q4-2020, per Statistics Canada. Overall, edibles sales accounted for only 4.2% of C$2.6B recreational cannabis sales in Canada in 2020.  We estimate the edibles market will grow significantly in the near-term, as in mature markets, such as Colorado, edibles contribute over 50% of total sales. 

Valuation 

As of April 23, 2021, the Canadian big four LPs are trading at a 97% premium (same as the week before) over their U.S. peers.

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: Online Provincial Cannabis Stores, FRC 

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC 

The average retail price per gram decreased week-over-week, from $11.29 to $11.28. 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 26, 2021, there are 1,891 retail cannabis stores, a week-over-week increase of 35 stores across Canada, with 30 in Ontario, and five in Alberta. 

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 was up 17%. MindMed’s (NASDAQ: MNMD) stock ran up 45% last week, as its shares were uplisted to the Nasdaq, from the OTC.

Weekly Cannabis Commentary:

Source: https://www.researchfrc.com/weekly-cannabis-commentary-81