Read entire article at Technical 420

To follow up on the first publication from a planned series of articles that are focused the global cannabis opportunity in 2021, we want to highlight the Canadian cannabis concentrate market.

In our opinion, this is an under-appreciated vertical of the Canadian cannabis market that has substantial growth prospects. Following the legalization of cannabis 2.0 products in late 2019, we noticed a substantial increase in demand for cannabis concentrates as well as products that are made by cannabis concentrates.

In 2021, we expect to see increased demand for cannabis concentrates and this is a trend that we believe is flying under the radar. During the last year, several Canadian cannabis companies have benefited from the increased demand for concentrates and products and we expect these operators to continue to benefit from the trend.

One of the reasons we are bullish on this vertical is related to the developments we have seen in international markets. From Australia to Germany, new markets are starting to emerge and this is a trend that we are bullish on. Going forward, we expect to see increasing demand for cannabis concentrates in several key international markets and will be monitoring how leading Canadian concentrate producers benefit from it.

While several large-scale Canadian Licensed Producers (LPs) operate large extraction facilities for their own benefit, there are a few companies that are only focused on extraction and we are favorable on the structure of these businesses. By only focusing on extracting, these companies are able to keep costs down which in our opinion also lowers the risk.

MediPharm Labs Corporation (LABS.TO) (MEDIF) has been laser focused on the cannabis concentrate market and has been a major beneficiary of the increased demand. From an international standpoint, the company has been leading the charge on the cannabis concentrate side of the business.

During the last year, MediPharm has been executing on a multi-national growth strategy and we believe the market is discounting the amount of value that can be generated through it. In Canada, the company has been nothing short of an execution story and the recent decline in revenue was related to the way the business was changing.

Read entire article at Technical 420