Why Canadian Cannabis Retailers Are An Ultimate Investor Bargain
Why Canadian Cannabis Retailers Are An Ultimate Investor Bargain
Read More: https://theseedinvestor.com/marijuana-investing/why-canadian-cannabis-retailers-are-an-ultimate-investor-bargain
Marijuana stocks and Canadian cannabis stocks in particular are at abysmal valuations. A recent Seed Investor article noted that the (Canadian) Marijuana Index has reached a two-year low.
This comes despite the fact that the cannabis sector has progressed a long way, both in regulatory evolution and industry growth. Statistic Canada’s most recent numbers on cannabis retail sales (June 2019) show three consecutive months of double-digit sales growth.
This surge coincides exactly with Ontario (Canada’s largest province) finally opening up some cannabis retail stores. Meanwhile, Alberta, Canada’s cannabis leader now has more than 270 cannabis retail locations throughout the province.
Just ahead comes Phase 2 of cannabis legalization in Canada. This means not only (higher margin) value-added cannabis products like concentrates and edibles. It also means an estimated 3 million new cannabis consumers in Canada, increasing the consumer base by roughly 50%.
In short, Canada’s cannabis industry has turned the corner. Canadian cannabis retail is already booming. And there is every reason to expect continued acceleration as we move into 2020.
In addition to the new Phase 2 market, Ontario has promised to more-than-triple retail storefronts through awarding an additional 50 cannabis retail licenses. Several provinces, notably British Columbia, are also just starting to reach a critical mass in retail outlets.
This will strongly (and positively) impact revenues for the entire Canadian cannabis industry. However, investors looking for the best bargains may want to start with cannabis retail.
Several of Canada’s larger, vertically-integrated LP’s have retail exposure. But three companies currently stand out as pure plays in Canadian cannabis retail. National Access Cannabis (CAN:META), Choom Holdings (CAN:CHOO / US:CHOOF), and Fire & Flower Holdings (CAN:FAF / US:FFLWF) dominate the retail landscape in Canada, in terms of operating storefronts and near-term expansion plans.
