Weekly Cannabis Commentary
Author: Sid Rajeev
Cannabis Industry Performance
Last week, both Canadian and U.S. cannabis stocks retreated despite some positive sector-related developments.
- Cronos Group (TSX: CRON) announced that they purchased an option to acquire a 10.5% stake in U.S. cannabis company PharmaCann (“PharmaCann”) for $110M. PharmaCann operates six production facilities, and 23 dispensaries across six states in the U.S.
- Quebec’s government-run cannabis store operator, the Société Quebecoise du Cannabis (SQDC), posted annual sales of $537M for FY2021 (YE: March 2021), a major increase of 72% YoY. We maintain our belief that Canadian cannabis operators will see increased revenue growth as more retail stores are opened across the country.
As of June 14, 2021, the Canadian big four LPs are trading at a 120% premium (up from 106% in the prior week) over their U.S. peers. We continue to believe this valuation gap will diminish as the U.S. moves closer to legalization.
The following chart shows the average EV/R of the companies we track in both countries:
The average retail price per gram decreased week-over-week from $11.25 to $11.24. The chart below shows the Canadian retail dried cannabis flower pricing trend:
Canadian Retail Cannabis Stores
As of June 14, 2021, there are 2,136 retail cannabis stores, a week-over-week increase of four stores across Canada, including three in AB, and one in B.C.
Weekly Psychedelic Commentary
Psychedelic Industry Performance