CGC TO REPORT EPS
We are moving CGC to the LONG bias list.
Ahead of earnings, we are moving CGC to the LONG bench. CGC will report EPS on 2/9 BMO, and we expect another quarter of restructuring and plans for the future, but profitability is still an issue for the company. The company is in the midst of a turnaround, but the stock's performance over the past 6 months more than reflects that and a move into the US. Canopy shares gained 74% YTD, just ahead of Cronos (CRON), up 73%, but behind Aphria (APHA), up 141%, and Tilray (TLRY), 211%. TLRY has surged on the back of the APHA acquisition. Canopy trades at 34x EV/Sales, while CRON and APHA trade at 70x and 10x, respectively. The valuation differential can be explained by the cash positions, of CGC and CRON. CGC also continues to enjoy the halo effect from its ownership/partnership with Constellation Brands (STZ). Aphria shares now reflect its leadership position among the Canadian LPs positioned to move to the US market upon legalization. Last June, the CEO of CGC stated plainly the prospects of federal legalization in the United States could happen by year-end. Our updated position monitor is below:
WISCONSIN IS A HOT STATE
Wisconsin Gov. Tony Evers (D) on Sunday unveiled a plan to legalize marijuana as part of his forthcoming budget proposal, a policy change he said reflects the will of voters and would bring the state hundreds of millions of dollars in tax revenue that could be used to fund schools and equity initiatives. “Legalizing and taxing marijuana in Wisconsin—just like we do already with alcohol—ensures a controlled market and safe product are available for both recreational and medicinal users,” the governor said in a statement, “and can open the door for countless opportunities for us to reinvest in our communities and create a more equitable state." In December, Evers first signaled that he was considering adding legalization to his 2021–2023 budget proposal despite Republican lawmakers’ steady rejections in recent years of more modest marijuana reforms. Evers in 2019 tried to legalize medical marijuana and decriminalize small-scale cannabis possession in his first budget proposal as governor, but Republicans in the legislature stripped those provisions from the bill.
Market share trends in Florida (TCNNF, LHSIF/AYRWF, CURLF, GTBIF, CCHWF)
The Florida Office of Medical Marijuana Use (OMMU) releases updated cannabis data every Friday.
For the week ending February 5th, the number of qualified patients in Florida’s medical marijuana program grew 1.3% WoW to 475,943 qualified patients with active ID cards. THC in mgs sold decreased 1.3% WoW to 153.6 million mgs, CBD in mgs sold increased 1.5% WoW to 3.7 million mgs, and flower in oz. sold decreased 2.6% WoW to 51,295 oz. sold. Trulieve opened one dispensary last week and now has 75 in the state.
Florida’s medical marijuana marketplace has strong potential – the state’s medical marijuana program still has a runway for population penetration, edibles were just introduced to the market in August, and there’s a broad range of qualifying medical conditions, notably ‘severe and chronic pain.’ The rising tide that is patient volume growth lifts all ships.
