Lowest cost producer Zena! Oncoming supply from low-cost producers is about to put the majors and other inefficient non-premium LPs at serious risk of becoming insolvent. One LP we spoke with estimated the marginal cost of production at the supply level necessary to meet demand sits at $1.50-$2.00
Meanwhile, the majors (no names *cough cough $cgc*) sit north of $4.50. Within 12-24 months, wholesale cannabis prices on the low end of the market will drop from their current $3 price point to sub $2. For cost efficient producers this won’t be a problem. For others, it’s death.
We believe that
@Zenabis
will be the LP with the most to gain in the scenario I see playing out. During a conference panel,
@CEO_Zenabis
pointed out that there’s a significant portion of the Canadian population that can’t afford a $15 gram, and he’s going to attack that market.
Despite their balance sheet issues, $ZENAis producing all-in well below our anticipated $2 price point, and their strong relationships with the provinces and 140k+ kgs of capacity coming on by the end of the year make them a potential force to be reckoned with.@greenycapital