SmallCapPower | April 12, 2018: Today we have identified seven Canadian cannabis producers based on sale cost and production efficiency. As cannabis has not been produced on this scale until recently, companies have room to develop new ways to produce in a more cost-efficient manner. Companies that can significantly outcompete their peers' production efficiency could see high profit margins when the recreational market opens up. For reference, the average forward EV/EBITDA multiple for 2019 and 2020 is 16.7x and 7.8x, respectively.
For Our Complete Coverage Of Canadian Marijuana Stocks Click Here
Canopy Growth Corp. (TSX:WEED) – $27.51Cannabis
As Canada's largest publicly-traded cannabis company, Canopy Growth operates two producing facilities with ~540,000 sq. ft. and has 5.7M sq. ft. in developing facilities. In addition, the Company owns a variety of diverse brands that include Tweed, Spectrum Cannabis, and Bedrocan. Canopy currently serves ~69,000 patients across Canada.
Market Cap: $5,475.1 MillionForward EV/EBITDA FY2018: N/AForward EV/EBITDA FY2019: N/MForward EV/EBITDA FY2020: 23.4xCash Cost/Gram, Last Reported: $2.53Annualized Grams Sold/Production Square Foot, Last Reported: 17.2Aurora Cannabis Inc. (TSX:ACB) – $7.89Cannabis
Aurora Cannabis is a licensed producer and seller of medical marijuana and cannabis oil under the ACMPR. Aurora sells its products over the phone, online or through its mobile app and offers a delivery service to its customers. Currently, the Company is engaged in the construction of its new 800,000 square foot production facility in Alberta called Aurora Sky. On January 24, Aurora announced the acquisition of CanniMed Therapeutics Inc. (TSX:CMED) for $1.1 billion.
Market Cap: $4,426.3 MillionForward EV/EBITDA FY2018: N/MForward EV/EBITDA FY2019: 3.2xForward EV/EBITDA FY2020: 1.7xCash Cost/Gram, Last Reported: $1.74Annualized Grams Sold/Production Square Foot, Last Reported: 48.8Aphria Inc. (TSX:APH) – $9.89Cannabis
Aphria is a licensed producer and supplier of medical marijuana under the ACMPR. Aphria's flagship greenhouse production facility is located on a 169-acre property in Leamington, Ontario. The Company currently produces 9,000kg and plans to expand its production facility to add an additional 90,000kg.
Market Cap: $2,066.3 MillionForward EV/EBITDA FY2018: N/MForward EV/EBITDA FY2019: N/MForward EV/EBITDA FY2020: 23.4xCash Cost/Gram, Last Reported: $2.13Annualized Grams Sold/Production Square Foot, Last Reported: 15.4MedReleaf Corp. (TSX:LEAF) – $15.62Cannabis
MedReleaf is a licensed producer of medical marijuana under the ACMPR. MedReleaf currently produces 7,000 KG/year out of a 55,000 sq. ft. facility in Markham. The Company started to produce 5,600 KG/year out of a 210,000 sq. ft. facility in Bradford in October. The Company plans to expand its Bradford facility to reach 28,000 KG/year from it by August 2018. The Company has partnered with Shoppers Drug Mart to sell medical marijuana.
Market Cap: $1,516.8 MillionForward EV/EBITDA FY2018: N/MForward EV/EBITDA FY2019: N/MForward EV/EBITDA FY2020: 27.3xCash Cost/Gram, Last Reported: $1.83Annualized Grams Sold/Production Square Foot, Last Reported: 19.1CanniMed Therapeutics Inc. (TSX:CMED) – $30.42Cannabis
CanniMed Therapeutics is a Canada-based company that produces pharmaceutical grade cannabis, licensed under the ACMPR to sell up to 7000kg of medical marijuana to patients. The Company offers a range of cannabis-related products that include cannabis oil, dried cannabis, vaporizers and other related accessories. Aurora Cannabis (TSX:ACB) currently owns 95.9% of CanniMed.
Market Cap: $742.0 MillionForward EV/EBITDA FY2018: N/MForward EV/EBITDA FY2019: N/MForward EV/EBITDA FY2020: N/ACash Cost/Gram, Last Reported: $1.30Annualized Grams Sold/Production Square Foot, Last Reported: 18.8CannTrust Holdings Inc. (TSX:TRST) – $6.30Cannabis
CannTrust is a Canada-based licensed producer of medical cannabis. The Company's products are sold online and delivered to registered patients. CannTrust's original 50,000 square foot production facility located in Vaughan, Ontario uses hydroponic technology to produce at an annual capacity of 3,600 KG. Furthermore, CannTrust has set aside a 46-acre property, where it plans to add capacity with a 430,000-square foot expansion.
Market Cap: $578.0 MillionForward EV/EBITDA FY2018: 28.7xForward EV/EBITDA FY2019: 17.7xForward EV/EBITDA FY2018: 13.2xCash Cost/Gram, Last Reported: $6.18Annualized Grams Sold/Production Square Foot, Last Reported: 75.8OrganiGram Holdings Inc. (TSXV:OGI) – $3.62Cannabis
OrganiGram is a Canada-based marijuana producer operating in New Brunswick. The Company currently produces 22,000 kg/year out of its 130,000 sq. ft. facility. OGI plans to expand this facility, increasing production to 65,500 kg by April 2019 and 113,000 kg by April 2020. The Company has signed Memorandums of Understanding with New Brunswick and Prince Edward Island to supply cannabis to the recreational market.
Market Cap: $431.9 MillionForward EV/EBITDA FY2018: N/MForward EV/EBITDA FY2019: 20.8xForward EV/EBITDA FY2018: 10.9xCash Cost/Gram, Last Reported: $5.81Annualized Grams Sold/Production Square Foot, Last Reported: 24.7Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
To read our full disclosure, please click on the button below: