All amounts in C$ except otherwise noted; market data as of Friday, Jan 5.
We are excited to launch our Complete Guide to The Cannabis Industry series that aims to equip investors with the knowledge they will need to analyze cannabis companies and make informed investment decisions in this sector as Canada is heading for full legalization by July 2018. In this article, we will discuss production cost, a metric cited by many but few understand fully given the non-IFRS nature and different definitions employed by producers. We will examine the top 4 producers but also wanted to point out that most other producers still don't publish cash cost per gram (such as Kronos Group (MJN.TO) and CanniMed (CMED.TO)).
For the cannabis industry, production costs are important, given it is the single largest cost of producing cannabis. Management uses this measure to track production cost trends and assess the sensitivity and tolerance for pricing changes. For investors, it is important to understand which producers have cost advantage in order to help assess competitiveness and profitability. While the Canadian cannabis industry is still relatively new and investors are avidly awaiting full legalization in July 2018, we will try to break down the various cost metrics being reported by the top 4 Canadian producers based on market capitalization. While we can't analyze every cannabis company out there, we hope this article provides a useful and practical framework for investors to analyze any producers you find interesting going forward.
Follow us for more Cannabis industry analysis and investment ideas! Also, for a detailed overview of the Canadian marijuana industry and analysis on the market leader, Canopy Growth (TWMJF), take a look at our recent article "Canopy Growth: Best Way To Play the Cannabis Industry".
Canopy Growth (WEED.TO)
Canopy is the largest publicly traded
