Canada’s Biggest Cannabis Producers
Canada is going to become the first industrialized nation in the world to legalize recreational marijuana for adult consumption and, in the process, open the door to an unprecedented amount of demand. According to Prime Minister Justin Trudeau, legalization will become official in Canada on Oct. 17. Once that date passes, projections see the industry becoming a juggernaut in the nation, with billions of dollars in revenue each year.
So who are the companies poised to become the leaders in Canadian cannabis?
Canopy Growth Corporation
Canopy Growth Corporation (NYSE:CGC and TSE:WEED) is the largest marijuana stock by market cap and output. Unlike its competitors who are primarily focused on the medical market domestically and abroad, Canopy Growth Corp. is angling to hit both markets in full force. It's been boosting capacity through acquisitions to pump out significantly more cannabis,as well as investing in new products to meet medical demand, such as its fast-growing line of softgel capsules. It has the biggest investment from a large cap stock in the US by Constellation Brands (NYSE:STZ) with a recent purchase of more than $4B in stock, which is a 30% equity stake. Canopy owns a number of recreational subsidiaries including Hiku Brands, so its well-positioned to meet the growing demands of recreational users.
As of this momentt, Aurora Cannabis (OTC:ACBFF) is on pace to produce 430,000 kilograms (kg) of cannabis-equivalent production a year. However, should its $2.5 billion, all-share deal to acquire Ontario-based MedReleaf (NASDAQOTH:MEDFF) be finalized, it'll raise Aurora Cannabis's capacity up to 570,000 kg. Though Aurora Cannabis has a lot going on within the company, including a key focus on the medical side of the market, which is far less likely to face product-based pricing pressures over time, we're essentially talking about a company with four key projects. he Aurora Sky project, which is an 800,000-square-foot facility slated for completion this summer and will produce around 100,000 kg at full capacity. The Aurora Nordic project in Denmark, with is a joint venture with Alfred Pedersen & Son. This 1-million-square-foot facility, which is being retrofit from produce production to cannabis growth, should yield 120,000 kg or more a year. The Aurora Sun project was recently announced in Medicine Hat, Alberta, and it'll involve a 1.2-million-square-foot growth space that'll yield 150,000 kg of cannabis. The Exeter facility, which is owned by MedReleaf and would come under the ownership of Aurora Cannabis if the buyout goes through. Exeter is a produce facility sitting on 69 acres of land that's being retrofitted by MedReleaf to produce around 105,000 kg of cannabis annually.
If all goes as planned, Aurora Cannabis could be the nation's largest marijuana producer.
Though there's a pretty significant drop-off in annual production between the second- and third-largest pot producers, Aphria's (OTC:APHQF) estimated 255,000 kg of yearly yield is nothing to sneeze at. Aphria has really been growing its capacity by every means possible: organically, through partnerships, and by acquisition. Organically, it's building out the Aphria One project which, when complete, will span 1 million square feet and allow the company to generate around 100,000 kg a year. It's slated for completion in January 2019. Also, it recently announced its intent to construct an extraction center capable of producing cannabis concentrates. When fully operational, this high-margin facility should yield 25,000 kg of cannabis-equivalent production annually.
The Green Organic Dutchman
Finally, there's the newcomer: The Green Organic Dutchman (OTC:TGODF). Not only was this the largest marijuana IPO in history, but The Green Organic Dutchman has been turning heads with the pace of its capacity expansion. It recently upped its output forecast three times in a matter of 13 days. Initially, TGOD, as the company is also known, was expected to be working with its Quebec Project, capable of 102,000 kg a year, and its fully built-out Ontario Project, which should yield 14,000 kg. Combined, this 116,000 kg placed it firmly among the class of growers below the big three.
Headquartered in Nanaimo, Canada, Tilray (NASDAQ:TLRY) is one the most well-capitalized producers in the world with facilities and properties all over Canada. The company operates one of the largest and most sophisticated federally licensed, GMP-certified medical cannabis cultivation facilities in the world, offering a range of products to patients, physicians, pharmacies, governments, hospitals and researchers in Australia, Canada, the European Union, New Zealand and Latin America. Recently, it was reported that the DEA asked Tilray to provide them with samples to study in an effort to better understand it's Schedule I status. Tilray has also made the news over it's extremely high market valuation, at one point surpassing Canopy at a $16B CAD valuation.
While it's nearly impossible to predict demand, supply by the end of 2020 might hit 2.5 million kg of cannabis-equivalent production. If that's the case, these licensed cannabis producers could be responsible for more than two-thirds of all Canadian marijuana.