The Canada-listed craft cannabis stocks we have discovered differentiate themselves on the quality of their cannabis products
SmallCapPower | May 7, 2019: Craft cannabis is exactly what you might think: cannabis that has been crafted with the highest quality of care. Just as a coffee connoisseur has high expectations for his quality of brew, or an aficionado of beer expects a superior smoothness and taste of his/her beverage, there is a segment of cannabis users who seek out the highest quality flower. The quality of cannabis is determined primarily by the growing technique used. Growing techniques, as well as the use of organic methods as opposed to harsh chemicals, may appeal to the health-conscious cannabis consumer more than a large-scale producer relying on mechanically-operated systems and pesticides. Craft marijuana grown without pesticides requires extra care, ensuring that spider mites or mold don’t infect the plants. Additionally, maintaining steady temperature control, as well as other factors related to humidity and air filtration, can also significantly increase the yield and quality of a crop. A strategy cultivators of craft cannabis use is producing their products in smaller batches. Often cannabis companies focus on building large facilities capable of cultivating large quantities of cannabis, resulting in lower quality control. Manufacturers of craft cannabis cultivate their product in smaller batches, making it easier to monitor the cultivation process for quality control. There is significant demand for these premium products, as the craft cannabis market is forecasted to comprise up to 15% of the total cannabis market, based on numbers out of Colorado and Washington State. Today we have identified four Canada-listed craft cannabis stocks that have differentiated themselves on a basis of their premium product offerings.
*Share prices as at close Friday May 3, 2019, data obtained from S&P Capital IQ
Cannex Capital Holdings. (CSE:CNNX) – $1.89
Cannex Capital Holdings provides a wide range of services, including real estate, management, financial, branding, and IP to licensed cannabis business operators domestically and internationally. Cannex is focused on premium indoor cultivation, extraction, manufacturing and branding of edible and derivative products as well as retail operations. Based in Vancouver, BC, Cannex is managed by a team of experienced industry and capital markets experts who are committed to aggressive, cost-effective growth. Cannex grows premium cannabis through their operating tenant, Northwest Cannabis Solutions, in Washington State. Northwest operates two 60,000 ft2 facilities in Tumwater and Elma, each with 30,000 square feet of flowering canopy. These facilities have a total capacity of 19,000kg/year, with industry-leading yields of 400 grams/sq. ft. Northwest Cannabis puts a strong emphasis on both quality control and efficiency of their cultivation and extraction operations. The Company produces 16 brands, including 7/10 of the top edibles brands in Washington State.
- Market Cap: $374.2 Million
- YTD Return: 103.33%
- 30-Day Average Volume: 140,859
- 90-Day Average Volume: 171,711
Supreme Cannabis Company Inc. (TSX:FIRE) – $1.94
The Supreme Cannabis Company engages in the production of medical cannabis in Canada. The Company is committed to providing premium brands and products that proudly reflect their consumers, people, and uniquely innovative culture. Supremes cultivates premium cannabis through its 7ACRES facility, which is a 40,000 sq. ft facility that produces 13,330 kg of cannabis annually. The Company announced that it is developing a 342,000 addition to the 7ACRES facility, which would ramp up production to 50,000 kgs annually. On April 22, the Company announced the launch of Cambium Plant Sciences. Cambium Plant Sciences will be focused on developing the next generation of premium cannabis strains for recreational and medicinal purposes, aiming to lead the agricultural revolution of cannabis genetics, redefining consumer experiences and cultivation economics across global cannabis industry.
- Market Cap: $568 Million
- YTD Return: 29.53%
- 30-Day Average Volume: 578,101
- 90-Day Average Volume: 1,112,481
Beleave Inc. (CSE:BE) – $0.10
Beleave is a Canada-based biotech company that focuses on the production of medicinal marijuana. The Company works toward the development of patented research and the research of cannabis-based therapies, such as smoke harm reduction products, portable & stationary vaporizers, and accessories. On April 8, Beleave announced that its wholly-owned subsidiary, Beleave Kannabis Corp, has commenced sales of cannabis oil products at its facility in Hamilton, Ontario. This follows an announcement, on April 5, where the Company announced that is has received a building permit for its 85 acre and 250,000 feet2 facility in London, Ontario, moving the facility forward in the Health Canada Licensing process.
Beleave continuously applies scientific methods and innovation to develop high-quality cannabis flower & oil cultivation. The Company’s R&D team consists of leading experts and includes partnerships with academic institutions, such as Ryerson University. Beleave’s dedicated research and development team are currently focusing most of their efforts on developing products to capitalize on concentrates and edibles when legalized in Canada. Products in development include vape cartridges, tinctures, and topicals.
- Market Cap: $44.8 Million
- YTD Return: 11.76%
- 30-Day Average Volume: 1,925,530
- 90-Day Average Volume: 1,818,857
Vivo Cannabis Inc. (TSXV:VIVO) – $0.81
Formerly known as ABcann Global Corporation, Vivo Cannabis manufactures and distributes medical cannabis. The Company gained its production and sales license from Health Canada in April 2018. Vivo’s capacity estimates for 2019 include 1,500 kg of cannabis grown indoor with 14,000 kg being grown in greenhouse facilities. On April 30, Vivo Cannabis reported Q4/18 results: revenue and net loss was $5.8M and ($8.0M), respectively. Q4 revenue of $5.8M represents a 152% increase compared to Q3.
This follows an announcement on April 25, where VIVO reported that its wholly-owned subsidiary, Canna Farms Limited, received local municipal approval for its Phase 5 expansion, which will add an extra 2,500kgs of indoor capacity to its facility in British Columbia. Canna Farms premium craft strain Pink Kush was runner up in the Top Highest THC Flower category at the 2017 Canadian Cannabis awards. Canna Farms Limited was acquired by VIVO in August 2018, for an aggregate purchase price of about $133M, comprised of approximately $22.5M in cash and the issuance of 92.5M common shares at a deemed price of $1.20 per share.
- Market Cap: $238.3 Million
- YTD Return: 10%
- 30-Day Average Volume: 561,865
- 90-Day Average Volume: 894,778
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Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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