Canadian Provences Issue Recreational Licenses: What does it mean for Marijuana Stocks?

0
218

Individuals watching marijuana stock in Canada have a lot to talk about right now. Indeed, of the number of marijuana stocks available, some are generating a lot of heat. One of Canada’s largest insurers, Sun Life Financial, announced that it will add medical marijuana to group benefit plans for Canadian companies. This will undoubtedly increase the market value of marijuana stocks. Also, in this past week, Quebec and Manitoba both announced winning bids for their respective supply deal and retail licenses.

Canopy has been the undisputed winner, as it has secured every major provincial deal.

When compared to competitors Aurora and Aphria, Canopy further secured its market leader position. Canopy has also finished scaling its operations, shifting its execution focuses to building up inventory and signing up provincial supply and retail deals. This news gives individuals looking for marijuana stocks to invest in a lot to consider.

Marijuana retailers Canopy and Aurora reported their latest quarter, but we are struck by the fact differences between the companies and what that means for marijuana stocks. Aurora’s production can only match its sales (1,200 kg sold and produced), but Canopy was able to significantly boost its inventory (2,300 kg sold and 8,000 kg produced).

This difference tells us that Aurora is still months away from being able to supply additional cannabis for the recreational market in Canada.

In the mean time, Canopy has pulled ahead by building up inventory in preparation for the legalization this summer. Of course, all of this shapes which marijuana stocks individuals choose to invest in.

The impact of these disparate levels of readiness is clear. Canopy has secured every single provincial deal announced so far, while Aurora has failed to participate in the RFP for Quebec and the Maritime regions. Additionally, Canopy has a smaller allocation in the Quebec deal.

Aurora’s underwhelming EFP results can be attributed to the fact that the company is not ready to commit to large delivery targets, unlike its competitors.

For example, its Aurora Sky facility has yet to be licensed for sale and inventory takes time to build up. Canadian provinces also are less inclined to do deals with Aurora, given the company’s uncertain production profile and a lack of a guarantee regarding its ability to supply product. These are factors that investors looking for marijuana stocks to invest in should look at.

Attention is shifting to the provinces Ontario, British Columbia, and Alberta, predicted to be the three largest markets in Canada.

All three have not yet to announce their supply deals. It is predicted that Canopy will position well in Ontario, and that Aurora and Aphria might have an advantage in Alberta and British Columbia. However, Canopy has announced its West Coast production plans, which might also position it for success in those provinces.

Quebec’s liquor board has signed an LOI with six cannabis companies, guaranteeing products will be delivered to Quebecois residents interested in a legal high. These companies are, in order of decreasing amounts promised annually kilograms: Hydropothecary (20,000), Canopy (12,000), Aphria (12,000), MedReleaf (8,000), Aurora (5,000), and Tilray (5,000).

Manitoba, too, has announced for companies to provide legal weed to consumers, sparking more interest in Canadian marijuana stocks.

Unlike Quebec and Ontario, Manitoba has adopted a more hands-off approach. The four companies with winning bids are a consortium of Winnipeg-based Delta 9 Cannabis (4) and Canopy; National Access Cannabis, A company that operates medical cannabis care centers across Canada, and has partnered with Manitoba First Nations Brokenhead Ojibway Nation, Opaskwayak Cree Nation, Long Plain First Nation, Nisichawayasihk Cree Nation, and Peguis First Nation; Tokyo Smoke, in partnership with BOBHQ, a Manitoba-based hemp shop; and 10552763 Canada Corporation, a new entity including Avana Canada, Chippewas of the Thames of Ontario, Fisher River Cree Nation of Manitoba, MediPharm Labs of Ontario, and U.S.-based Native Roots Dispensary.

Which Canadian marijuana stocks are a better bet–Aurora or Canopy?

Or another, now smaller, less known marijuana stock? Only time will tell. Or perhaps a marijuana stock in Canada that has yet to appear? Regardless of which marijuana stock ultimately achieves market dominance in Canada, this is a great time to discover marijuana stocks to invest in.

LEAVE A REPLY

Please enter your comment!
Please enter your name here