Following the opening of Canada’s recreational adult-use marijuana market last October, top marijuana stocks could capture billions of dollars in sales as consumers shift their spending from the black market to licensed marijuana retailers. The potential to profit from pot is sparking a green rush of investment that has some marijuana growers already benefiting more than others.
Medical marijuana won approval in Canada years ago, but it wasn’t until a regulated licensing system was established in 2014 that medical marijuana sales there really took off. Canada’s medical marijuana market hauled in about 600 million Canadian dollars in sales in 2018, but that only hints at the opportunity associated with serving recreational marijuana users. Canadians spent over CA$5 billion on marijuana for recreational use last year.
Canada’s recreational adult-use marijuana market opened for business on Oct. 17, 2018, and sales are already brisk. Product shortages crimped recreational sales initially, but the CA$152 million in adult-use sales nearly matched the CA$154 million in medical marijuana market sales during the fourth quarter, according to Statistics Canada.
Over 100 growers are licensed to participate in Canada’s cannabis marketplace…
but Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Aphria (NYSE:APHA), Tilray (NASDAQ:TLRY), CannTrust Holdings (NYSE:CTST), HEXO (NYSEMKT:HEXO), and Cronos Group (NASDAQ:CRON) are the seven largest marijuana cultivators listed on a major U.S. stock exchange.
Canopy Growth was already Canada’s biggest pot company prior to the start of recreational market sales, with over 30% medical cannabis market share. It boasts 83,400 active medical marijuana users as customers as of Dec. 31, which is more than any other marijuana provider. So far, it’s been able to successfully leverage its platform to carve out a similar market share in the recreational market. Adult-use sales accounted for CA$58 million of its CA$83 million in net fourth-quarter sales after excise taxes, and overall, Canopy Growth sold over 10,000 kilograms and kilogram equivalents of marijuana last quarter, which was 44% more marijuana than its next-biggest competitor, Aurora Cannabis.
Aurora Cannabis wasn’t a slouch in Q4, though. Its aggressive M&A strategy, including the acquisitions of CanniMed and MedReleaf in 2018, allowed it to deliver the second-highest year-over-year revenue growth of these top cannabis companies. Its medical marijuana customer count totaled over 73,000 in December, and its net sales were CA$54.2 million in the fourth quarter, including CA$21.6 million in recreational adult-use sales.
Aphria needs to more than double its sales to catch up to Aurora Cannabis, but Aphria’s sales pace suggests it has a solid lock on third place.
Tilray and CannTrust appear…
Continue reading at THE MOTLEY FOOL