All amounts in C$ unless otherwise noted.
Welcome to Part III of our Complete Guide to Cannabis Industry (MJX) Series. Recall that in Part I of the series we compared cash cost and all-in cost among the top four largest publicly traded cannabis companies in Canada. We found that Aphria (APHQF) is the lowest cost producer while Aurora (ACBFF) has the highest cash cost among the top four producers. In Part II of the series, we discussed the difference between licensed and expansion capacity and implications for investors looking to invest in the sector; we also found Canopy (TWMJF) to have the largest licensed capacity at the moment.
In Part III of the series, we want to discuss the latest finding on the Canadian cannabis market from a consumption perspective. We will review the latest report released by Statistic Canada and examine implications on market prospect. In particular, we will examine two important sources of data:
- Statistics Canada's estimate of cannabis sales in Canada
- Health Canada's data on existing medical marijuana patients
Recall Our Last Article
In our article "Canopy: Best Way to Play The Cannabis Industry", we discussed the prevalent market sizing estimate for the Canadian cannabis market. To reiterate the observations:
- We estimated the medical marijuana market to have 800k consumers, average daily consumption of 0.6 gram and a $1.8 billion market.
- The recreational market is estimated by Canadian Parliamentary Budget Officer to have 3-6 million consumers, annual national demand for recreational pot at 650 to 690 tonnes, and total retail market of $5.5 billion to $5.8 billion based on $10 per gram retail price.
- Deloitte found the base market for the recreational market to be $4.9 billion to $8.7 billion assuming 22% of Canadians (~7 million) to consume pot at least occasionally and 7% (~2.5 million) to consume on a daily basis.
