The Canadian cannabis producers on our list grow a large proportion of Canada’s medical cannabis
SmallCapPower | April 12, 2018: Today we have identified seven Canadian cannabis producers based on sale cost and production efficiency. As cannabis has not been produced on this scale until recently, companies have room to develop new ways to produce in a more cost-efficient manner. Companies that can significantly outcompete their peers’ production efficiency could see high profit margins when the recreational market opens up. For reference, the average forward EV/EBITDA multiple for 2019 and 2020 is 16.7x and 7.8x, respectively.
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Canopy Growth Corp. (TSX:WEED) – $27.51
Cannabis
As Canada’s largest publicly-traded cannabis company, Canopy Growth operates two producing facilities with ~540,000 sq. ft. and has 5.7M sq. ft. in developing facilities. In addition, the Company owns a variety of diverse brands that include Tweed, Spectrum Cannabis, and Bedrocan. Canopy currently serves ~69,000 patients across Canada.
- Market Cap: $5,475.1 Million
- Forward EV/EBITDA FY2018: N/A
- Forward EV/EBITDA FY2019: N/M
- Forward EV/EBITDA FY2020: 23.4x
- Cash Cost/Gram, Last Reported: $2.53
- Annualized Grams Sold/Production Square Foot, Last Reported: 17.2
Aurora Cannabis Inc. (TSX:ACB) – $7.89
Cannabis
Aurora Cannabis is a licensed producer and seller of medical marijuana and cannabis oil under the ACMPR. Aurora sells its products over the phone, online or through its mobile app and offers a delivery service to its customers. Currently, the Company is engaged in the construction of its new 800,000 square foot production facility in Alberta called Aurora Sky. On January 24, Aurora announced the acquisition of CanniMed Therapeutics Inc. (TSX:CMED) for $1.1 billion.
- Market Cap: $4,426.3 Million
- Forward EV/EBITDA FY2018: N/M
- Forward EV/EBITDA FY2019: 3.2x
- Forward EV/EBITDA FY2020: 1.7x
- Cash Cost/Gram, Last Reported: $1.74
- Annualized Grams Sold/Production Square Foot, Last Reported: 48.8
Aphria Inc. (TSX:APH) – $9.89
Cannabis
Aphria is a licensed producer and supplier of medical marijuana under the ACMPR. Aphria’s flagship greenhouse production facility is located on a 169-acre property in Leamington, Ontario. The Company currently produces 9,000kg and plans to expand its production facility to add an additional 90,000kg.
- Market Cap: $2,066.3 Million
- Forward EV/EBITDA FY2018: N/M
- Forward EV/EBITDA FY2019: N/M
- Forward EV/EBITDA FY2020: 23.4x
- Cash Cost/Gram, Last Reported: $2.13
- Annualized Grams Sold/Production Square Foot, Last Reported: 15.4
MedReleaf Corp. (TSX:LEAF) – $15.62
Cannabis
MedReleaf is a licensed producer of medical marijuana under the ACMPR. MedReleaf currently produces 7,000 KG/year out of a 55,000 sq. ft. facility in Markham. The Company started to produce 5,600 KG/year out of a 210,000 sq. ft. facility in Bradford in October. The Company plans to expand its Bradford facility to reach 28,000 KG/year from it by August 2018. The Company has partnered with Shoppers Drug Mart to sell medical marijuana.
- Market Cap: $1,516.8 Million
- Forward EV/EBITDA FY2018: N/M
- Forward EV/EBITDA FY2019: N/M
- Forward EV/EBITDA FY2020: 27.3x
- Cash Cost/Gram, Last Reported: $1.83
- Annualized Grams Sold/Production Square Foot, Last Reported: 19.1
CanniMed Therapeutics Inc. (TSX:CMED) – $30.42
Cannabis
CanniMed Therapeutics is a Canada-based company that produces pharmaceutical grade cannabis, licensed under the ACMPR to sell up to 7000kg of medical marijuana to patients. The Company offers a range of cannabis-related products that include cannabis oil, dried cannabis, vaporizers and other related accessories. Aurora Cannabis (TSX:ACB) currently owns 95.9% of CanniMed.
- Market Cap: $742.0 Million
- Forward EV/EBITDA FY2018: N/M
- Forward EV/EBITDA FY2019: N/M
- Forward EV/EBITDA FY2020: N/A
- Cash Cost/Gram, Last Reported: $1.30
- Annualized Grams Sold/Production Square Foot, Last Reported: 18.8
CannTrust Holdings Inc. (TSX:TRST) – $6.30
Cannabis
CannTrust is a Canada-based licensed producer of medical cannabis. The Company’s products are sold online and delivered to registered patients. CannTrust’s original 50,000 square foot production facility located in Vaughan, Ontario uses hydroponic technology to produce at an annual capacity of 3,600 KG. Furthermore, CannTrust has set aside a 46-acre property, where it plans to add capacity with a 430,000-square foot expansion.
- Market Cap: $578.0 Million
- Forward EV/EBITDA FY2018: 28.7x
- Forward EV/EBITDA FY2019: 17.7x
- Forward EV/EBITDA FY2018: 13.2x
- Cash Cost/Gram, Last Reported: $6.18
- Annualized Grams Sold/Production Square Foot, Last Reported: 75.8
OrganiGram Holdings Inc. (TSXV:OGI) – $3.62
Cannabis
OrganiGram is a Canada-based marijuana producer operating in New Brunswick. The Company currently produces 22,000 kg/year out of its 130,000 sq. ft. facility. OGI plans to expand this facility, increasing production to 65,500 kg by April 2019 and 113,000 kg by April 2020. The Company has signed Memorandums of Understanding with New Brunswick and Prince Edward Island to supply cannabis to the recreational market.
- Market Cap: $431.9 Million
- Forward EV/EBITDA FY2018: N/M
- Forward EV/EBITDA FY2019: 20.8x
- Forward EV/EBITDA FY2018: 10.9x
- Cash Cost/Gram, Last Reported: $5.81
- Annualized Grams Sold/Production Square Foot, Last Reported: 24.7
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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