Canada’s Liberal government has paved the way for recreational use in the near future, boosting the value of these Canadian marijuana stocks or pot stocks
Below you will find 10 of the best Canadian marijuana stocks covered by our analysts
SmallCapPower | May 21, 2019: The Horizons Marijuana Life Science Index ETF (TSX:HMMJ) has recovered ~49% to $20.90 since it’s most recent bottom of $14.04 on December 21, 2018, however, it is still down from its all time high of $26.05 on October 15, 2018. Major catalysts driving this recovery include;
- The passing of the US Farm Bill on December 21, 2018, which legalized industrial hemp (defined as cannabis with <0.3% THC),
- Florida Governor Ron DeSantis announcing that the state will appeal its ban against smokable flower in its medical cannabis program,
- Israel and Columbia both announcing that they would allow cannabis exports,
- The U.S. House Financial Services Committee approving the SAFE Banking Act, Increasing Access to Banking Services for Cannabis-Related Businesses on March 28 by a 45-15 vote, which will open up the US cannabis industry to financial services.
Another catalyst driving this recovery includes the increased M&A activity in the sector that has sparked investor interest. Cresco Labs’ (CNSX: CL) recent announcement to acquire of Origin House (CNSX: OH) for C$1.1 billion is the largest public company acquisition in the U.S. cannabis sector to date. In addition to the $3.4B Canopy Growth Corporation (TSX:WEED) and Acreage (CNASXACRG.U) deal. If you are in the market for strong potential returns and are willing to stomach some risk, then check out our top 10 Canadian marijuana stock picks.
*Financial data as of May 17, 2019 close*, sorted by best YTD Return
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1. MediPharm Labs Corp. (TSXV:LABS) – $7.00
MediPharm Labs is the first company in Canada under the ACMPR without first receiving a cultivation license to become a licensed producer for cannabis oil production. MediPharm Labs produces purified, pharmaceutical-like cannabis oils and concentrates through its cGMP and ISO standard clean rooms laboratory. The Company currently has a 70,000 sq. ft. facility with 150,000 kg capacity and is planning to expand to 250,000 kg capacity by Q2/19. MediPharm Labs has invested in expert, state-of-the-art technology and extraction methods to deliver safe and precisely-dosed cannabis products to consumers and patients. Through its subsidiary in Victoria, Australia, MediPharm Labs Australia Pty. Ltd., MediPharm Labs has completed its application to extract and import medical cannabis products in Australia. On May 10, 2019, the Company reported Q1 2019 results, stating a revenue of $20 M, and adjusted EBITDA of $4.3M. On May 14, 2019, MediPharm Labs announced they entered into a multi-year supply agreement with Cronos Group Inc. It is expected that MediPharm Labs will supply Cronos Group with about $30.0M of cannabis concentrate over 18-months, and depending on renewal and purchase options, possibly up to $60 M over 24-months.
- Market Cap: $783.4 Million
- Revenue: $ 22.0Million (Q1 2019)
- 1-Month Total Return: +33.8%
- YTD Return: +309.2%
2. Curaleaf Holdings, Inc. (CNSX:CURA)- $13.17
Curaleaf Holdings is a vertically integrated multi-state cannabis operator (MSO) in the United States. It is a high-growth cannabis company that focuses on quality, trust, and reliability. The Company operates in 12 states and has 42 dispensaries, 12 cultivation sites, and 11 processing sites. Curaleaf is experienced in the medical and adult-use cannabis markets, as well as the CBD and hemp sector. The Company has the largest footprint of branded retail stores in the US and has an average of 2.32 visits per patient per month. On March 21, Curaleaf opened its 23rd Florida dispensary which featured Miami’s first medical cannabis drive-thru. The Company announced the signing of a definitive agreement to acquire Cura Partners, Inc., the owners of the Select cannabis brand on May 1, 2019. The acquisition is expected to include Select’s manufacturing, processing, distribution, marketing, retail operations and intellectual property. On May 10, 2019 the Company announced their entrance into the CBD pet market with their new Bido Brand.
- Market Cap: $6.54 Billion
- Revenue: US$34.9 Million (Q4 2018)
- 1-Month Total Return: -1.9%
- YTD Return: +103.1%
3. Cannex Capital Holdings Inc. (CNSX:CNNX)- $1.67
Cannex Group Holdings Inc. is a Canada based company with cannabis operations in Washington and California. Cannex is focused on premium indoor cultivation, extraction, manufacturing and branding of edible and derivative products, as well as retail operations. The Company’s subsidiary, BrightLeaf Development LLC, is the largest producer/processor in Washington State. Cannex is also in the process of acquiring Jetty Extracts, one of the largest processors and extractors in California. Cannex plans to produce from two indoor cultivating facilities with a combined 30,000 sq. ft. and 19,000 kg/year capacity, equating to one of the highest yields in the industry at 633 grams/sq. ft. On January 2, the Company announced financial results for Q2 2019, reporting a 223% revenue increase from Q2 2018 to $3.1 million. On March 1, Cannex announced that it signed a definitive agreement with 4Front Holdings, LLC whereby the two companies will join forces and operate as one.
- Market Cap: $307.2 Million
- Revenue: $3.1 Million (Q2 2019)
- 1-Month Total Return: -23.0%
- YTD Return: +83.7%
4. Aurora Cannabis Inc. (TSX:ACB)- $11.71
Aurora Cannabis is a licensed producer and distributer of medical cannabis. To prepare for the legalization of the adult consumer market for cannabis, the Company is substantially increasing its production capacity. ACB expects to have just under 1,000,00 sq. ft. of licensed production space and plans to produce at least 270,000 kilograms of cannabis annually. The Company also has 20% ownership interest in Liquor Stores N.A., the dominant alcohol retail chain in Western Canada. It intends to convert several existing outlets, as well as develop new stores, for the sale of cannabis to the recreational market. Additionally, the Company has signed supply agreements with 12 provinces and territories comprising over 98% of the Canadian population. Aurora has also embarked on an aggressive international expansion strategy that aims to have operations and/or sales in Germany, Denmark, Italy and Australia. The Company announced on May 9, 2019 their subsidiary Aurora Deutschland has been chosen by the Luxembourg Health Ministry to be the exclusive supplier in a public bid to supply a second delivery to Luxembourg for medical cannabis. On May 13, 2019, the Company announced they received the first delivery of Radient’s first commercial batch of finished cannabis derivatives. The partnership between Radient and Aurora was first established in 2017 after a successful Joint Venture which validated Radient’s MAPTM extraction technology that offers superior cannabinoid extraction at the commercial scale. On May 14, Aurora announced its Q3 2019 financial results. The Company reported revenues of $65.1 million.
- Market Cap: $12.2 Billion
- Revenue: $65.1 Million (Q3 2019)
- 1-Month Total Return: -2.7%
- YTD Return: +73.0%
5. Canopy Growth Corp. (TSX:WEED)- $ 60.02
Canopy Growth Corporation is a diversified multi-brand cannabis and hemp company, offering distinct brands and curated cannabis products with varieties in dried, oil and soft-gel capsule forms. The Company’s extensive supply agreements with Canadian provinces allow Canopy to lock in sales of 67,500 kg of product per year. The Company has the largest licensed production platform in Canada, with over 600,000 sq. ft. of production space. To further solidify their leading position in the market, the Company expects to have up to an additional 5,000,000 sq. ft. of production over the next 12 months. On August 15, the Company announced a $5 billion-dollar investment by Constellation Brands (NYSE: STZ) to establish a global position and development of cannabis infused beverages. On January 14, the Company was granted a license by New York State to process and produce hemp. Canopy Growth intends to invest between US$100 million to US$150 million in its New York operations. On May 2, 2019, the Company announced the acquisition of Germany’s C3 cannabinoid compound company. This acquisition will tie Canopy Growth’s medical business with Europe’s largest cannabinoid-based pharmaceuticals company. Canopy Growth announced on May 7, 2019 the introduction of Spectrum Therapeutics, a worldwide brand which will encompass all of the Company’s ongoing commercial medical and clinical operations.
- Market Cap: $20.9 Billion
- Revenue: $83.1 Million (Q3 2018)
- 1-Month Total Return: +0.7%
- YTD Return: +63.7%
6. Cronos Group Inc. (TSX:CRON)- $20.11
Cronos Group is a vertically integrated, Canada-based cannabis company with a diversified global presence. The Company invests in establishments that are licensed or are seeking a license to produce and sell marijuana. Focusing investment efforts on firms located in Canada, Cronos Group operates through its subsidiaries and producers. The Company has several international distribution and production platforms and strives increase its global presence through developing intellectual property and building an international portfolio. The portfolio includes Peace Naturals, Original BC, and Whistler Medical Marijuana Company, all companies licensed to produce, sell, and cultivate medical marijuana or cannabis oil. The Company’s existing capacity is 355,500 sq. ft., with an annual estimated production capacity of 40,150 kg. With an expansion underway, Cronos Group expects an increase of 910,000 sq. ft. of its production facility, with an estimated annual production capacity of 77,000 kg. On March 8, the Company announced the close of its ~C$2.4 billion strategic investment agreement with Altria Group, Inc. (NYSE:MO). Cronos Group released Q1 2019 results on May 9, 2019 reporting net revenues of $6.5 M, a 120% increase from Q1 2018. On May 7, 2019 Cronos announced the opening of its Cronos Device Labs a cannabinoid device R&D facility that is based in Israel. This will help with the Company’s development of next-generation vaporizer products designed specifically for cannabinoid applications.
- Market Cap: $6.8 Billion
- Revenue: $6.5 Million (Q1 2019)
- 1-Month Total Return: -4.7%
- YTD Return: +45.2%
7. The Supreme Cannabis Company Inc. (TSX:FIRE) – $1.87
Supreme Cannabis Company is a licensed producer and distributor of cannabis under the ACMPR, focused on cultivating premium dried sun-grown cannabis flowers on a commercial scale through its subsidiary, 7ACRES. Currently, 7ACRES operates 120,000 sq. ft. of operational capacity expected to have an average output of approximately 17,500 kilograms of dried cannabis per year. Once completed, the Company expects the facility will span more than 440,000 sq. ft, producing 50,000 kilograms of premium dried cannabis per year at full capacity. On May 16th, 2019, Supreme announced that they have entered into a definitive arrangement agreement with Blissco Cannabis Corporation, under which Supreme Cannabis will acquire all the issued and outstanding shares of Blissco. The arrangement is an all-stock transaction with a total value of approximately $48 Million. On May 13th, Supreme released their financial and operating results for Q3, 2019, featuring net revenue of $10 Million, a 382% increase from Q3, 2018, and a 29% increase from Q2, 2019.
- Market Cap: $547.5 Million
- Revenue: $10 Million (Q3 2019)
- 1-Month Total Return: -4.1%
- YTD Return: 42.4%
8. Charlotte’s Web Holdings, Inc. (CNSX:CWEB) – $20.90
Charlotte’s Web Holdings is a leader in the production and distribution of hemp-derived cannabidiol (CBD) wellness products. The Company aims to deliver quality products through the use of proprietary hemp genetics which are manufactured into hemp-derived CBD extracts, containing a full spectrum phytocannabinoids. CWEB products include CBD Oil tinctures, CBD capsules, CBD topicals, and CBD pet products. Founded by the Stanley Brothers, the Company has over 4,000 retail locations and produced 675,000 lbs of hemp in 2018. The Company currently has a 40,000 sq. ft. manufacturing and R&D facility, with plans to expand to a 130,000 facility in the future. CWEB has 300 acres of hemp planted in 2018 and cGMP certified facilities specializing in CO2 extraction and alcohol extraction techniques. On March 28, the Company announced financial results for Q4 2018 and FY2018, stating a full year revenue growth of 74% to US$69.5M. On May 7, 2019 the Company announced the release of its new 12 SKU line up which will be an expansion of its canine-focused pet products.
- Market Cap: $1.89 Billion
- Revenue: US$21.1 Million (Q4 2018)
- 1-Month Total Return: -24.4%
- YTD Return: +40.6%
9. Nextleaf Solutions Ltd. (CNSX:OILS) – $0.67
Cannabis Extraction Technology
Nextleaf Solutions Ltd. is a Canadian extraction technology company that has developed a portfolio of issued and pending patents pertaining to the Company’s unique, industrial-scale process of producing purified cannabinoid distillate, a tasteless, odorless cannabis concentrate best suited for infusing premium value-added products. As of March 14, the Company closed its reverse takeover (RTO) financing of $5.0M, which will be used to complete the build out of its 6,540 sq. ft. processing facility located in the Greater Vancouver Area, B.C. Based on one shift per day, OILS expects the Phase One buildout of its facility to have an estimated annual processing capacity of 100,000 kg of dried cannabis biomass. All parts and components of the ethanol-based system are designed to run 24 hours a day, 7 days a week. Thus, the Company could theoretically increase output by more than double by operating around the clock. Nextleaf expects its purpose-built facility to be completed and licensed by Q3/19. The Company currently has an issued U.S. patent on the entire end-to-end process (from biomass preparation to molecular distillation), and to our knowledge, is currently the only publicly-traded cannabis company to have a cannabis-specific extraction patent granted by the U.S. Patent Agency.
- Market Cap: $67.6 Million
- Revenue: N/A
- 1-Month Total Return: +11.7%
- YTD Return: +0%
10. FSD Pharma. (CNSX:HUGE) – $ 0.24
FSD Pharma is an ACMPR licensed cannabis company utilizing hydroponic production techniques to cultivate and process cannabis. Operating out of Cobourg, Ontario, the Company’s potential 3.8 million sq. ft. production facility could become the world’s largest facility of its kind upon completion. FSD Pharma is involved in several partnerships that provide the Company with strategic exposure to a variety of cannabis products, including pharmaceuticals, beverages, and topicals. The Company aims to target all aspects of the cannabis industry – cultivation, processing, extracts and research and development. FSD Pharma maintains a strong balance sheet position with over $35 million in cash and equivalents, allowing the company to continue to meet its short-term obligations and make strategic investments. On May 7, 2019 FSD Pharma Inc. and Solarvest BioEnergy Inc., a technology company that created an algal-based flexible production platform that can produce health products, announced the signing of a definitive collaborative research and development agreement. At an initial budget of $1M, Solarvest will perform research using its algal expression technology to create pharmaceutical-grade cannabinoids.
- Market Cap: $333.6 Million
- Revenue: $13.8 Million (3 months ended September 30, 2018)
- 1-Month Total Return: +4.3%
- YTD Return: -15.8%
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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