Weekly Cannabis Commentary

Author: Sid Rajeev

Cannabis Industry Performance

Cannabis Industry Performance

Source: FRC

Amazon announced its support for cannabis legalization. Recently released data by BDSA, an analytics company providing data on cannabis sales across Arizona, California, Colorado, Nevada and Oregon, showed record sales growth in April, ranging from 24% YoY in Oregon to 129% YoY in Nevada.

Health Canada added four new LP licenses, two in B.C., and two in ON, increasing the total number of issued licenses to 681. We maintain our belief that there will be consolidation within the sector.

Valuation
As of June 4, 2021, the Canadian big four LPs were trading at a 116% premium (down from 150% in previous week) over their U.S. peers. We believe Amazon’s support and strong sales growth in the U.S. pushed U.S. cannabis stocks higher last week. We continue to believe this valuation gap will diminish as the U.S. moves closer to legalization.

Source: S&P Capital IQ, FRC

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

Average EV/R (October 2019 - May 2021)

Source: S&P Capital IQ, FRC

Canadian Retail Cannabis Pricing

Source: Online Provincial Cannabis Stores, FRC

The average retail price per gram decreased week-over-week from $11.26 to $11.25. The chart below shows the Canadian retail dried cannabis flower pricing trend:

Canadian Retail Dried Cannabis Flower Pricing

Source: Online Provincial Cannabis Stores, FRC

Canadian Retail Cannabis Stores

As of June 7, 2021, there are 2,132 retail cannabis stores, a week-over-week increase of 29 stores across Canada. The new stores opened in the past week were in Ontario (14), Alberta (4), B.C. (2), Saskatchewan (3), and Manitoba (6).

Nationwide Store Count

Source: Provincial Websites, FRC

Weekly Cannabis Commentary:

Source: https://www.researchfrc.com/weekly-cannabis-commentary-87