and their combined market cap is approximately $33B. Annualized and conservatively using straight line that is $800M revenue and a market cap of $33B for the top 3 but hiding in there is Aphria with over $70M ($280M annualized straight line) in reported quarterly revenue and a market cap of approximately $2.3B – that is just a hair over an 8 to 1 multiplier. Those looking at traditional valuation metrics using revenue may see value in Aphria but one cannot ignore any challenges unique to this company that could impair share price in the near term.
There are reports that are predicting that the Canadian cannabis industry will grow at over 44% per year through 2024. That 44% will not be evenly spread of course and one would assume the dominant players will have a favourable weighted share of that growth. Edibles and related products such as beverages will be legal in October and surveys indicate that more than 50% of the legal consumer market will try such a product. We are seeing reports that well over 66% of Canadians will use medical cannabis once there is medical insurance coverage and, on that front, we are seeing more and more coverage form the large providers such as Great West Life and Sunlife as well as from government agencies such as the WSIB and others. We also know that CBD and other cannabinoids are expected to be a dominant supplement and additive and we have not even touched the animal care sector.
My point being, is it not somewhat disingenuous to rely on historical numbers to form one’s basis for conclusion when the historical numbers are rooted in an era of prohibition, stigma, and closed markets? Is the historical data in this industry about as relevant, on a case by case basis, as the notion of “sunk costs”? Is it not more realistic to look to the future instead – at least for this industry? And again that is where they hang their hats because by definition the future is uncertain and that means volatility and speculation. Ironic that they rely on past performance to make their case all the while seeking safe harbor and stating as disclaimer that past performance is no guarantee of future performance.
The World Health Organization has declared the anti-vaccination movement as one of the greatest threats to health that we are facing. Not to diminish the role that ignorance plays in the propagation of such nonsense such as the anti-vaccine movement because, much like the prohibition of cannabis, this movement’s prohibition of vaccinations perspective is rooted in something other than science. I compare that nonsense movement to those that want this industry to fail because, to me, it is a valid analogy or parallel.
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