Canada’s cannabis market recorded more than $200 million of sales in each of the last four months and the milestone comes ahead of a planned shutdown in Ontario.
Measuring the potential impact of the shutdown on the cannabis industry is difficult. When the country shutdown earlier this year, the cannabis industry recorded impressive growth from a sales standpoint. Many analysts attribute the growth to the maturing of the cannabis 2.0 market, the increasing number of retail outlets that are open, and the changing nature of the types of branded products that are available to consumers.
From June to September, Canada’s cannabis industry has generated more than $930 million of sales. During the same period in 2019, the industry generated less than $450 million of revenue and we are favorable on the trend that we are seeing. When compared to the same period last year, Canada’s cannabis industry has seen a more than 100% increase in sales, and this is a metric that caught our attention.
If November and December of 2020 look similar to 2019, the cannabis industry should continue to record sales growth on a month-over-month basis. From a provincial standpoint, Ontario and British Columbia have been the biggest contributors to growth and we have been focused on operators that are levered to these markets.
In the coming weeks, we expect Health Canada to release data on the performance of the cannabis industry in October. Going forward, we expect to see a spike in sales volume in November as Ontario plans for another shutdown. Last time there was a shutdown, the cannabis industry saw a spike in demand, and we expect to see a similar response from consumers this time around.
One of the reasons we are bullish on the Canadian cannabis industry is related to how it has matured over the last year. From the launch of cannabis infused beverages by Molson Coors and HEXO Corp to big US brands entering the market, the Canadian cannabis industry is positioned to record strong growth on a going forward basis.
We believe that the market is undervaluing the cannabis retail side of the industry and this is a trend that we are following. While companies like Canopy Growth Corporation (WEED.TO) (CGC) and Aurora Cannabis Inc. (ACB.TO) (ACB) own or are invested in Canadian cannabis retailers, standalone operators are not receiving much love from the market and this is a vertical to be aware of.
If you are interested in learning more about the companies that are capitalizing and the Canadian cannabis retail market, please send an email to firstname.lastname@example.org with the subject “Canadian cannabis retail” to be added to our distribution list.