The Canadian cannabis stocks we’ve dug up either have outdoor cultivation operations or are currently awaiting full licensing to cultivate outdoor farms
SmallCapPower | May 28, 2019: In an industry with low barriers to entry and undifferentiated products, such as cannabis, companies are constantly searching for ways to get a competitive advantage. One of the ways we have started to see cannabis companies try to get an edge over their competition is low-cost outdoor cultivation. Generally, outdoor plants are larger than indoor ones. This is because the plants have more space and can grow larger leaves, which in turn can help them capture more of the sun’s energy. Additionally, the sun’s natural light spectrum creates a more robust terpene and cannabinoid profile. Outdoor cultivation also carries a lower carbon footprint than indoor. A 2011 study, published in the Journal of Energy Policy, found that indoor grow operations use ~1% of the U.S. annual energy consumption, which is equal to the electricity consumption of two million homes. As a result, outdoor grown cannabis is cheaper to produce per gram than indoor. That being said, we have identified four Canadian cannabis stocks with plans to grow marijuana outdoors.
*Share prices as at close Friday, May 24, 2019, data obtained from S&P Capital IQ
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Aleafia Health Inc. (TSX:ALEF) – $1.59
Cannabis
Aleafia Health brings Canadians medical cannabis care through nationwide clinics, cultivation, and innovative research. ALEF’s experience and knowledge of medical cannabis therapy helps ensure physicians make appropriate recommendations. Aleafia produces a robust portfolio of products, including oils, capsules, and sprays. Aleafia currently has three cultivation/extraction facilities, 138,000 kg of funded cultivation capacity, and 50,000kg of funded extraction capacity. Of the three facilities one is a 26-acre outdoor cultivation site. On April 30, 2019, Aleafia Health announced that it has brought its outdoor facility to a plant-ready state with all securing measures finally in place. The Company submitted a final evidence package to Health Canada and is currently still waiting on approval to start growing. Aleafia expects its outdoor cultivation facility to produce approximately 60,000 kg of dried flower annually, at a cost per gram significantly lower than a traditional greenhouse or indoor growing facility.
- Market Cap: $436.7 Million
- YTD Return: 11.2%
- Average 90 Day Trading Volume: 1,630,000
48North Cannabis Corporation (TSXV:NRTH) – $1.08
Cannabis
48North Cannabis is a vertically-integrated cannabis company focused on the health and wellness market through cultivation and extraction. NRTH also focuses on the creation of unique and innovative brands for next-generation cannabis products. Not only is 48North developing formulations and manufacturing capabilities for its own proprietary products, but the Company is also positioning itself to contractually manufacture similar products for third parties. In addition to operating two indoor-licensed cannabis production sites in Ontario with more than 86,000 square feet of production capacity, 48North plans to operate Good Farm, a 100-acre organic farm providing 48North with organic, sun-grown cannabis. On May 18, 2019, 48North announced that it was approved to operate Good Farm, positioning the Company to produce over 40,000 kg of outdoor-grown cannabis this year.
- Market Cap: $179.9 Million
- YTD Return: 74.2%
- Average 90 Day Trading Volume: 2,080,000
WeedMD Inc. (TSXV:WMD) – $1.72
Cannabis
WeedMD produces and sells medical marijuana, including dried marijuana, cannabis oil, cannabis resin, marijuana plants, and marijuana seeds in Canada. WeedMD reports that it is fully funded for over 600,000 square feet of indoor and greenhouse production. WMD also has multiple distribution channels, including a Shoppers Drug Mart supply agreement, a supply agreement with the Ontario Cannabis Retail Corporation, the BC Liquor Distribution Branch, and a variety of other agreements. The Company is fully vertically integrated from cultivation to sale in both its recreational and medical channels. On March 27, WeedMD announced it has applied for an amendment to its Strathroy license to expand with a 25-acre, large scale outdoor cannabis growing farm with the capacity to increase up to 50 acres. Pending Health Canada approval, the outdoor grow is expected to increase WeedMD’s total production footprint to up to 2.7 million sq. ft. with the potential to yield over 100,000 kg of cannabis in 2020E.
- Market Cap: $196.7 Million
- YTD Return: 31.3%
- Average 90 Day Trading Volume: 620,000
CannTrust Holdings Inc (TSX:TRST) – $7.68
Cannabis
CannTrust Holdings is a distributor and producer of medical cannabis. With the help of healthcare practitioners, the Company sells dried cannabis and oil extracts to clients. The Company has a 60,000 sq. ft facility, producing 3,600 kg of cannabis annually. The Company received approval in January 2019 from Health Canada to build a 450,000 sq. ft. facility in the Niagara Region of Ontario. Additionally, CannTrust has an 81-acre outdoor growing facility located in British Columbia with an expected capacity of 75,000 kg annually. The license to grow at this facility is currently pending approval from Health Canada.
- Market Cap: $1.1 Billion
- YTD Return: 16.9%
- Average 90 Day Trading Volume: 2,220,000
Aleafia Health Inc. (TSX:ALEF) is a featured sponsored company and has paid SmallCapPower.com a fee for coverage. To learn more, see our full disclosure HERE >>
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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