Weekly Cannabis Commentary
Author: Sid Rajeev
Cannabis Industry Performance
Following the acquisitions announced earlier this year, of Zenabis Global Inc. (TSX: ZENA) for $235M, and 48North for $50M, HEXO Corp (TSX: HEXO) announced plans (last week) to acquire Redecan (Canada’s largest privately-owned licensed producer, operational since 2014) for $925M ($400M in cash and $525M in common shares). If approved by shareholders, this deal will make HEXO the largest company by market share in Canada, overtaking Tilray-Aphria (TSX: TLRY).
As of May 28, 2021, the Canadian big four LPs were trading at a 150% premium (up from 122% in previous week) over their U.S. peers. We believe the HEXO acquisition news directly impacted the premium gap.
The following chart shows the average EV/R of the companies we track in both countries:
The average retail price per gram declined week-over-week from $11.27 to $11.26. The chart below shows the Canadian retail dried cannabis flower pricing trend:
Canadian Retail Cannabis Stores
As of May 31, 2021, there are 2,103 retail cannabis stores, a week-over-week increase of 59 stores across Canada. New stores opened in the past week were in Ontario (20), Alberta (13), B.C. (12), Saskatchewan (11), and Manitoba (3).
Weekly Psychedelic Commentary
Psychedelic Industry Performance
Over the past week, PSYK stayed flat.