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.
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.
The following chart shows the average EV/R of the companies we track in both sectors:
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 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.
Weekly Psychedelic Commentary
Psychedelic Industry Performance
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.