U.S. markets closed
  • S&P 500

    3,768.25
    -27.29 (-0.72%)
     
  • Dow 30

    30,814.26
    -177.26 (-0.57%)
     
  • Nasdaq

    12,998.50
    -114.14 (-0.87%)
     
  • Russell 2000

    2,123.20
    -32.15 (-1.49%)
     
  • Crude Oil

    52.04
    -1.53 (-2.86%)
     
  • Gold

    1,827.70
    -23.70 (-1.28%)
     
  • Silver

    24.83
    -0.97 (-3.77%)
     
  • EUR/USD

    1.2085
    -0.0071 (-0.58%)
     
  • 10-Yr Bond

    1.0970
    -0.0320 (-2.83%)
     
  • GBP/USD

    1.3583
    -0.0108 (-0.79%)
     
  • USD/JPY

    103.8000
    -0.0160 (-0.02%)
     
  • BTC-USD

    36,361.41
    +580.24 (+1.62%)
     
  • CMC Crypto 200

    701.93
    -33.21 (-4.52%)
     
  • FTSE 100

    6,735.71
    -66.25 (-0.97%)
     
  • Nikkei 225

    28,519.18
    -179.08 (-0.62%)
     

Cannabis Analyst Reviews Sluggish Canadian Data: 'MSOs Will Outperform Again'

Wayne Duggan
·2 min read

Hifyre Canadian cannabis sales data for the month of December is in, and the numbers suggest the Canadian retail cannabis market remains sluggish heading into 2021.

What Happened? Hifyre data suggests Canadian recreational retail cannabis sales grew 8% in the fourth quarter. That's down from 31% growth in the third quarter. Flower prices were down 30% year-over-year and 6% compared to the third quarter. Vape cartridge prices are now down 26% from the first quarter of 2020.

Related Link: Analyst Initiates Coverage Of 3 Cannabis MSOs, Talks Risks Of US Legalization

Why It’s Important: Cantor Fitzgerald analyst Pablo Zuanic said Tuesday that Canadian cannabis stocks like Canopy Growth Corp. (NASDAQ: CGC) and Aurora Cannabis Inc. (NYSE: ACB) have been red-hot in recent months due to high expectations for U.S. cannabis reform.

However, the latest Canadian sales data suggests U.S. multi-state operators are still the best way to invest in cannabis for the time being.

“As the investment debate starts to evolve to what the new US Congress may or may not achieve, and to a closer look at the Canadian LPs actual US positioning (via contingent deal, or non-THC products), we think US MSOs will outperform again,” Zuanic said.

Average Canadian flower prices dropped to just C$7.20 ($5.64) per gram, down from C$10.30 ($8.06) a year ago. Flower prices in the U.S. Northwest are around $8 per gram, and prices east of the Mississippi range in the mid-teens per gram, Zuanic explained.

Earlier this month, Zuanic named Trulieve Cannabis Corp. (OTCQX: TCNNF) and Curaleaf Holdings Inc. (OTCQX: CURLF) his top two MSO stock picks heading into 2021.

Benzingas Take: Cannabis stocks will likely continue to be volatile in the near term while the industry matures. Given the unpredictability of the political environment in the U.S. and the lackluster recreational market growth in Canada, long-term investors should consider diversifying into several different names rather than putting all their cannabis eggs in one basket.

Latest Ratings for TCNNF

Date

Firm

Action

From

To

Nov 2020

Cantor Fitzgerald

Maintains

Overweight

Sep 2020

Cantor Fitzgerald

Maintains

Overweight

Aug 2020

Needham

Maintains

Buy

View More Analyst Ratings for TCNNF
View the Latest Analyst Ratings

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.