Weekly Cannabis Commentary
Author: Sid Rajeev
Cannabis Industry Performance
Last week, Canadian and U.S. cannabis stocks were down 5% and 4%, respectively, amid the overall market weakness post the Fed’s meeting. On a positive note, a new research study, published today by the Dalhousie University Agri-Food Analytics Lab (AAL), found that the number of Canadians buying cannabis solely from legal outlets has doubled since 2019 (38% vs. 60%).
As of June 21, 2021, the Canadian big four LPs were trading at a 135% premium (up from 120% in previous 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 fell week-over-week from $11.24 to $11.23. The chart below shows the Canadian retail dried cannabis flower pricing trend:
Canadian Retail Cannabis Stores
As of June 21, 2021, there are 2,140 retail cannabis stores, a week-over-week increase of four stores across Canada.
Weekly Psychedelic Commentary
Psychedelic Industry Performance
On June 18, 2021, Atai Life Sciences (NASDAQ: ATAI), a biotech company backed by investor Peter Thiel and involved in the research of psychedelic use in mental health treatments, went public on the NASDAQ raising US$225M at US$15/share. We believe deals like this will continue to attract investors to the sector.