Analyst Dives Into Cannabis 2.0, Says There Are Fewer Suppliers And A More Concentrated Market

Nina Zdinjak

Wed, Jan 22, 2020, 7:59 AM

A survey of the provincial board’s online stores presented a more concentrated market for cannabis 2.0 products than for dried flower, Cantor Fitzgerald analyst Pablo Zuanic said in a Tuesday report.

The 2.0 market is also characterized by fewer suppliers and fewer SKUs, although often out of stock. The analyst noted they have claimed before this could lead to unequal market share gains for the bigger companies versus the smaller producer.

According to Zuanic, the dominant names in vape pens in terms of SKUs are Aphria Inc. (NYSE: APHA) and Auxly (OTC: CBWTF), with more balance in cartridges.

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The edibles category is best represented by Aurora Cannabis Inc. (NYSE: ACB) and Auxly, which lead in SKUs. Beverages are still limited, and there are mostly Tilray Inc. (NASDAQ: TLRY) CBD teas for now.

“Net, although we realize it is early days for the 2.0 phase, we think our findings are supportive of our OW ratings on APHA and ACB; OW-rated OGI has only launched three cartridge SKUs so far, but more should follow," Zuanic wrote in the report.

Zuanic noted that although online sales of recreational cannabis in Canada stand for less than 5% of industry sales, they have been informed the assortment presented there is often a good indicator of the assortment at brick-and-mortar stores.

Latest Ratings for APHA

Jan 2020	Maintains		Neutral
Jan 2020	Upgrades	Underperformer	Neutral
Jan 2020	Initiates Coverage On		Neutral

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Analyst Dives Into Cannabis 2.0, Says There Are Fewer Suppliers And A More Concentrated Market

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