“Essentially, market capital is a sure indicator of a company’s power — the size/enormity of its assets definitely inspires trust in clients. However, what worth is it unless it continues to multiply?”
Since the legalization of cannabis in Canada in 2018, Canadian marijuana companies have flourished across the country in the past few years. As marijuana legalization continues to spread – including parts of the border with the United States and Canada – marijuana companies and investors see a significant opportunity. More and more companies have been launched, and some major non-cannabis companies, such as beverage manufacturer Constellation Brands (STZ), have invested heavily in marijuana focused businesses to support the future of the industry.
For many investors, the evidence of the success of marijuana companies is the same as any other company: it’s all about the financial situation. Now that the Canadian marijuana company has released its first set of financial results since the legalization of marijuana, analysts can better understand the rationality of the hype. Essentially, market capital is a sure indicator of a company’s power — the size/enormity of its assets definitely inspires trust in clients. However, what worth is it unless it continues to multiply? Below, we’ll take a look at the top revenue-generating Canadian marijuana companies, per the most recent financial information available.
1. Canopy Growth Corp.
Canopy Growth Corp. (CGC) is an Ontario-based company that has the distinction of having been the first federally-regulated and licensed publicly-traded cannabis grower in North America. Now, thanks in part to constellation’s nearly CAD$4 billion investment in August 2018, canopy growth has become the largest marijuana company by the time this article was written and has the largest per capita market value.
Canopy Growth Corp. reported on its final-quarter results from 2019 early in the new year, and the figures boast some impressive accomplishments. The company has revenue of CAD$90.5 million in the first quarter of 2020 and is preparing to introduce CBD products to the US market by the end of this fiscal year. As medical marijuana production increases and demand increases, canopy has been busy: so far, it owns 111 patents and 270 applications.
2. Cronos Group
Cronos Group (CRON)’s reach is astounding: the cannabinoid company is already boasting international production and distribution across five continents, building products from hemp-derived CBD for wellness to vape pens. Although there have been some volatility in Cronos shares due to the recent class action lawsuit against Klaus, their share prices also indicate that the sale and delivery of marijuana may rise
According to the company, Cronos group’s revenue in the third quarter of 2019 was $7.64 million (CAD), a significant year-on-year increase due to the introduction of the adult use market in Canada
3. Aurora Cannabis
Headquartered in Edmonton, Aurora Cannabis (ACB) is a major cannabis producer and a licensed distributor. Aurora has a strong international presence by acquiring Berlin based Pedanios GmbH and obtaining a supply agreement for the Italian hemp market through its subsidiary Pedanios. It also bought MedRelief and CanniMed in 2018
Compared with previous quarters, Aurora’s financial position in the fourth quarter of 2019 was also quite strong, generating a net income of about CAD$95 million. In fact, net income was up 61% from the previous quarter
It first obtained a license to produce and sell medical products, focusing on medical marijuana. In recent months, aphria has made some high-profile (and sometimes controversial) acquisitions to expand into the US market. In the last quarter of 2019, aphria reported net income of CAD$128.6 million.
The Bottom Line
With the rapid growth of Canadian marijuana companies and the spread of marijuana legalization around the world, eager investors are taking advantage of the wind. Any investor should be wary of claims that the marijuana industry is being exaggerated on a larger scale, that is, companies may over expand themselves by acquiring competitors, expanding growth and production capacity, and preparing for a globally dominant industry. The test of whether these enterprises can maintain their revenue growth on a month on month basis in the next quarter is the future.