Cannabis Weekly Round-Up: Canadian Adult Sales to Reach C$4.8 Billion in 2022

Canadian market could produce C$4.8 billion in 2022

A new financial report from ATB Capital Markets shares a value line projection of C$4.8 billion for the Canadian adult-use cannabis market in 2022, according to a report from MJBizDaily.

“While the industry continues to struggle due to fragmentation and price competition, we believe that players with a lean cost structure, a robust capital position, and operational efficiency can successfully navigate this environment,” analyst Frederico Gomes said in the report.

The researchers indicate there is an expectation for the recreational cannabis market to have a compound annual growth rate of over 13 percent up to 2030. The study shows domestic sales could reach C$12.3 billion.

In the report, Gomes notes that the Canadian market has failed to see a stronger trend of consolidation despite the wide breadth of mergers and acquisitions.

Analyst rings bell of caution for cannabis investments

Cantor Fitzgerald analyst Pablo Zuanic issued a note to investors warning against cannabis investments in 2022, a report from BNN Bloomberg says.

Zuanic is concerned about the lack of progress for US cannabis regulations at the federal level.

"With U.S. cannabis stocks (including indexes, ETFs) now trading below pre-Nov. 2020 election levels, we believe the scenario that nothing happens in the U.S. at the federal level regarding marijuana reform is priced in," Zuanic said in his note. "That said, even though we are buyers here, we fear a ‘dead-money’ scenario for US (multi-state operator) stocks is likely in 2022.”

The hope of some form of cannabis policy change at the federal level in the US has become a beacon of sorts for investors, and would indicate a new era for cannabis investments.

For Zuanic, it is hard to see how politicians can come together in 2022 to accomplish something meaningful for the drug industry.

Cannabis company news

• Tilray (NASDAQ:TLRY,TSX:TLRY)informed shareholders of its plan to expand its market offerings in Australia, as well as to launch a medical cannabis e-learning platform for healthcare providers. “Cannabis education is paramount to everything we do and are therefore excited to offer healthcare professionals with the tools they need to learn about cannabis through our new e-learning platform,” said George Polimenakos, general manager of Tilray Australia and New Zealand.

• Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF)closed the second tranche of a private placement of 8 percent senior secured notes due in 2026. The deal will bring the company gross proceeds of US$75 million, with funds expected to be used for strategic initiatives. "Trulieve's strong financial profile and profitable track record afford us access to non-dilutive growth capital at industry leading terms for U.S. cannabis companies with multi-state operations," CEO Kim Rivers said.

• The Valens Company (NASDAQ:VLNS,TSX:VLNS)confirmed the launch of two new brands targeting different market sectors: the ultra-premium space with a brand called Contraband, and the value area with the relaunch of the Verse brand, which Valens acquired last year.

• HEXO (NASDAQ:HEXO,TSX:HEXO)shared a follow up to its previous business update on how it plans to achieve positive cash flow. The company announced new initiatives from subsidiaries to expand in the Canadian cannabis market.