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 | August 27, 2019: The Canadian cannabis sector has seen significant pressure on share prices since March with the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) down ~28% since its most recent high of $23.65 on March 19, 2019. The selling pressure is likely due to bloated valuations and regulatory headwinds with the slow retail roll-out in Ontario and Quebec. The slow industry growth can be evidenced through financial results of HEXO Corp (TSX:HEXO), Canopy Growth Corporation (TSX:WEED), and Organigrams (TSXV:OGI), which all reported sequentially lower cannabis revenues. Over the next 3-month period potential catalyst that could drive a recovery include;
- Ontario adding more retail location with an additional 50 expecting to come online by October 1, 2019
- Legalization of edibles and derivatives products on October 17, 2019 (Cannabis 2.0)
- Continued M&A Activity in the space
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 July 19, 2019 close, *sorted by best YTD Return
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1. MediPharm Labs Corp. (TSXV:LABS) – $5.08
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 $30M of cannabis concentrate over 18-months, and depending on renewal and purchase options, possibly up to $60 M over 24-months. The Company reported its Q2/19 financial results on August 12, 2019 which showed adjusted EBITDA was $7.7M which is 79% higher than Q1/19.
- Market Cap: $662.6 Million
- Revenue: $ 31.5 Million (Q2/19)
- 1-Month Total Return: -10.8%
- YTD Return: +179.9%
2. Charlotte’s Web Holdings, Inc. (TSX:CWEB) – $22.88
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 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. On May 28, 2019 the Company announced its Q1/19 financial results which showed that its Q1 revenue has increased 66% YoY to US$21.7M. The Company announced on June 19, 2019 its final hemp planting for the 2019 growing season which showed total acres planted increased by 187% to 862 acres from the 300 acres planted in 2018. On August 8, 2019, the Company announced expansion plans have commenced with the signing of a lease for a newly built 136,610 sq.ft industrial building. The building will be used for production, distribution and R&D expansion.
- Market Cap: $2.3 Billion
- Revenue: US$25 Million (Q2/19)
- 1-Month Total Return: 15.0%
- YTD Return: +51.0%
3. Curaleaf Holdings, Inc. (CNSX:CURA)- $8.54
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. 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. On June 27, 2019 the Company announced it completed two separate acquisitions in Arizona for a combined consideration of $25.5M, allowing Curaleaf to open its 7th and 8th stores in the Phoenix Metro area. On August 26, 2019, the Company announced it signed a sale-leaseback agreement with Freehold Properties valued at around $28.3M for six of its properties in Florida, Massachusetts and New Jersey.
- Market Cap: $ 4.06 Billion
- Revenue: $75.1Million (Q1/19)
- 1-Month Total Return: -19.8%
- YTD Return: +28.5%
4. Aurora Cannabis Inc. (TSX:ACB)- $7.52
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. On May 14, Aurora announced its Q3/19 financial results. The Company reported revenues of $65.1 million. The Company announced on July 15, 2019 that it had received Health Canada licenses for two outdoor cultivation sites in Canada. One license is for is a 207 acre operation in Westwold, British Columbia, the other is at a 21,000 sq.ft operation in Lachute, Quebec. This will be the first outdoor approved grow operation in Quebec. On August 19, 2019 Aurora announced it completed its acquisition of Hempco Food and Fiber Inc. for around $63.4M. This acquisition provides Aurora with access to low-cost, high volume raw hemp material for extraction.
- Market Cap: $7.7 Billion
- Revenue: $65.1 Million (Q3/19)
- 1-Month Total Return: -8.5%
- YTD Return: +13.9%
5. Cronos Group Inc. (TSX:CRON)- $15.11
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 July 11, 2019 the Company announced it has entered into an agreement to acquire an 84,000 sq.ft GMP compliant fermentation and manufacturing facility in Winnipeg, Canada from Apotex Fermentation Inc. On August 2, 2019 the Company announced that it entered into a definitive agreement to acquire four of Redwood Holding Group’s operating subsidiaries for around USD $300M.
- Market Cap: $5.08 Billion
- Revenue: $10.2 Million (Q2/19)
- 1-Month Total Return: -21.6%
- YTD Return: +6.6%
6. The Supreme Cannabis Company Inc. (TSX:FIRE) – $1.47
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 13, 2019, Supreme released their financial and operating results for Q3/19, featuring net revenue of $10 Million, a 382% increase from Q3/18, and a 29% increase from Q2/19. The Supreme Cannabis announced it has launched a premium cannabis oil that was created in a partnership with Wiz Khalifa and Khalifa Kush Enterprises Canada on June 25, 2019. On August 13, 2019 the Company announced the completion of its acquisition of Truverra. The transaction was done through a three-cornered amalgamation pursuant to which 2708300 Ontario Ltd., a wholly-owned subsidiary of Supreme Cannabis, amalgamated with Truverra to form a newly amalgamated company that will operate under the name Truverra Inc. Consideration for the Transaction was the issuance of approximately 14.7 million common shares of Supreme to shareholders of Truverra.
- Market Cap: $503.6 Million
- Revenue: $10 Million (Q3/19)
- 1-Month Total Return: -5.4%
- YTD Return: 6.1%
7. Nextleaf Solutions Ltd. (CNSX:OILS) – $0.59
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. On June 24, 2019 the Company announced that it entered into an agreement to acquire a US patent pending hydrocarbon extraction process and award-wining formulation for a shatter, a cannabis concentrate. The Company announced the completion of two research and development projects with the National Research Council of Canada’s Industrial Research Assistance Program and the Natural Science and Engineering Council on August 12, 2019.
- Market Cap: $63.6Million
- Revenue: N/A
- 1-Month Total Return: 42.9%
- YTD Return: +0%
8. 4Front Ventures Corp. (CNSX:FFNT)- $0.79
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 June 28, 2019 the Company reported its Q4/19 financial which showed adjusted EBITDA was a loss of $631,174, which was primarily driven by the 4Front Transaction cost. On July 31, 2019 Cannex announced the completion of its merger with 4Front, a next generation cannabis company. 4Front is a retail and brand development company focused on the U.S. Cannabis industry. It operated a national platform that had a multi-state footprint that encompassed its Mission-branded retail operations, and a diverse network of partnership relationships. The merger between the two companies formed 4Front Ventures, which owns and operates the assets of Cannex and 4Front. 4Front Ventures was formed through an all-stock merger where the shareholders of 4Front will be entitled to gain a fixed ratio of Cannex Common shares. The shareholder ratio will proportionally equal 1:1.75 Cannex shareholder to 4Front shareholders.
- Market Cap: $424.7 Million
- Revenue: N/A (Q2/19 expected to be reported on August 29, 2019)
- 1-Month Total Return: -34.2%
- YTD Return: -14.1%
9. The Flowr Corporation (TSXV:FLWR)- $ 2.88
The Flowr Corporation operates a 16,000 sq.ft indoor production facility in Kelowna, B.C, which is capable of producing an annual capacity of 3,100 kg. The Facility is customized for an “enhanced sea-of-green” growing style, utilizing equal-sized plants to target maximum yields and produce the highest-quality products. An expansion project on the Kelowna facility is currently under progress. On July 15, 2019 the Company announced that it received a second site cultivation license from Health Canada for its Flowr Forest Project. The Company expects to produce around 10,000kg per annum from Flowr Forest once it is completed. Flowr Forest, located at the Kelowna campus, has 189,000 sq.ft of greenhouse space within a total licensed outdoor grow area of more than 530,000 sq.ft. On June 17, 2019 the Company announced that it had secured a $50M senior credit facility from ATB Credit Facilities for the purpose of general working capital and the development of its facility in Kelowna. On August 20, 2019 the Company announced it completed its acquisition of Holigen which will add operations in Portugal and Australia. The cash consideration for the acquisition was approximately $6.3M.
- Market Cap: $ 289.3 Million
- Revenue: $2.8 Million (Q2/19)
- 1-Month Total Return: -35.3%
- YTD Return: -34.4%
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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