Canopy Growth (NYSE:CGC) and Aurora Cannabis (NASDAQOTH:ACBFF) are locked in a heated battle to dominate the Canadian marijuana market. The two companies boast the biggest marijuana production capacity in Canada, and that means they’re both in line to win a significant share of Canada’s fast-approaching recreational marijuana market. Is one of these two cannabis companies a better buy now…
Prepping for the future
Canada’s medical marijuana market is tiny compared with the potential size of its adult-use market. Last year, only about 10% of the $4.3 billion spent by Canadians on marijuana was for medical marijuana. The rest was spent on black-market purchases for recreational use.
The size of the black market has many expecting a surge in sales for Aurora Cannabis and Canopy Growth when Canada’s adult-use market opens for business on Oct. 17.
To make sure that they capture as much of the legal recreational market as they can, Aurora Cannabis and Canopy Growth have been investing heavily in acquisitions and production capacity.
At Aurora Cannabis, management is building state-of-the-art, highly automated greenhouses that can drive down marijuana production costs. For instance, at a cost of $150 million, its Aurora Sky greenhouse is adding 100,000 kilograms of annual production capacity with a forecast production cost below $1 per gram. It’s also adding capacity via acquisitions, like its massive MedRelief merger earlier this year, which added about 140,000 kilograms of capacity. Altogether, Aurora Cannabis’ production capacity is on its way to an estimated 570,000 kilograms per year.
Canopy Growth isn’t sitting on its hands, either. It’s on target for about 500,000 kilograms of production space across 10 facilities next year. Therefore, both companies appear…
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