Although the Canadian cannabis industry has been under pressure and has not grown as fast as many analysts forecasted, the sector has contributed $43.5 billion to Canada’s national gross domestic product (GDP) since recreational cannabis was legalized in 2018 (according to a Deloitte Canada). According to the report, Canada’s recreational cannabis industry has created 98,000 jobs, contributed $15.1 billion into the government’s coffer, and added approx. $1.09 to Canada’s GDP for every dollar for revenue and capital expenditure. We find these numbers to be significant, however, Canadian cannabis companies have been some of the hardest hit since early 2021. (Click here to view article)

ATB Capital Markets recently published the results of a study on the Canadian cannabis market. The broker-dealer expects Canadian cannabis sales to increase to $3.8 billion by 2022 and we will monitor how the industry continues to perform. 

Leading Canadian LPs are Going Through a Major Shakeup

The Canadian cannabis industry has gone through a major transformation and the largest Licensed Producers (LPs) have been losing market share. According to Hifyre, a leading cannabis data analytics firm, the top five LPs accounted for less than 40% of the Canadian market in August 2021. 

In the prior year, the top 5 Canadian LPs accounted for more than half of all retail sales and we find the change on a year-over-year basis to be significant. Hifyre also reported that the top nine Canadian LPs accounted approx. 80% of the market in 2020,. Last year, this number fell to 62% which made the market more fragmented and competitive. 

Smaller Canadian LPs like Indiva Limited (TSX-V: NDVA) (OTC: NDVAF) and Auxly Cannabis Group (TSX: XLY) (OTC: CWBTF) have been able to capture more market share while larger operators have lost market share by focused on emerging verticals like the cannabis 2.0 market. 

We believe firms like Indiva and Auxly are better positioned to capitalize on the rising demand for smokeless cannabis products and cannabis infused products and will monitor the trend on a going forward basis. 

During the last six months, the cannabis sector has been under considerable pressure and many investors have fled the market due to the uptick in volatility. We continue to have a bullish outlook on the cannabis sector and will monitor how it continues to evolve in the years ahead. (Click Here to View the Entire Article)