Excellent overview of the MJ market potential in CanadaExcellent summary of the Marijuana industry in Canada by Verdmont Capital: “We discuss the industry and give our current view on the company at VerdmontLive: https://verdmontlive.blogspot.hk/2014/05/tweed-marijuana-inc-update.html” “Is the Marijuana space still attractive? In short, yes …). Excerpts (without permission): In terms of the marijuana space, it appears as if we have a bit of a mini-mania on our hands. This is somewhat concerning, but there is no reason to completely freak out and miss out on the candy scramble. All of the factors that we liked about the sector, as outlined above, remain in place. To get an idea as to whether or not the marijuana producers are overextended, we believe it is worthwhile to forecast aggregate earnings for the space and then determine a decent multiple for those earnings. It the current combined value of all the public and private producers is less than the potential market cap of the companies based on aggregate forward earnings and a reasonable multiple, there is more upside left in the space. There are different estimates floating around on the potential size of the medical marijuana market. Some whacky and some that make sense. The most logical ones that we have seen are those that incorporate Health Canada's estimates for the potential number of prescription holders. Here are some relevant numbers provided by industry contacts and Health Canada that help illustrate the potential size of the medical marijuana market: There are currently 37,000 individual marijuana prescription holders in Canada and Health Canada estimates that this will grow to 450,000 by 2024. This is a 10 year compound annual growth rate of ~25%. Each user will consume between 0.7 to 1.5 grams per day on average. These estimates are based on a Health Canada study that incorporated daily usage of patients in the Netherlands and Israel. Each gram is supposed to sell between $7/g and $9/g on average for the next couple of years. This is based on discussions with various companies and Health Canada estimates. We have seen net profit margin estimates ranging between 20-25% from various companies we have looked at. Given that the medical marijuana market is an emerging industry with many unknowns, we believe that using 10 year estimates is somewhat irrelevant. For the purpose of this discussion, and due to the fact that we believe the market is focused on 2016 earnings, we will use 2016 for our exercise. Here are some relevant numbers and assumptions: There will be 72,000 prescription holders in 2016, based on 37,000 in 2013 and applying at 25% growth rate as indicated by Health Canada. Each holder will consume 1.1 grams per day (the midpoint of usage estimates above) and there are 365 days in a year. Each gram will sell for $8/g (the midpoint of prices from above). Net Profit margin will be 25% given that there will be limited competition in the first few years. So, in 2016, we could see industry wide revenues of $231 Million (72k x 1.1 x $8 x 365) for an aggregate profit of $57 Million ($231Mil x 25%). The above work suggests that there will be $60 million in profits to be shared amongst the marijuana producers in 2016. Assigning a 15X multiple to those earnings, we get a reasonable aggregate market cap for the producers of $900 million. Said differently, this means that the aggregate valuation of all of the medical marijuana producers combined should be roughly $900 million based on our near term forward earnings estimates and a 15X multiple. Given that the aggregate valuation of xxxx and all of the private medical marijuana companies does not come close to $900 million, we are of the mindset that there is still lots of upside in the market. Simple logic for sure, but not silly in our opinion.”