another bnn articleWhile the Canadian cannabis market continues to grow, RBC Capital Markets Analyst Douglas Miehm notes that the valuations of many Canadian licensed producers are down materially from their highs last seen in February during frenzied speculation about the U.S. moving closer to legalizing cannabis. He sees that decline occurring from weaker-than-expected results from several cannabis companies as well as how COVID-19 restrictions and changes to how some provincial wholesalers manage their inventory. Overall, share prices of a basket of Canadian cannabis companies are still up roughly 32 per cent since the beginning of the year, Miehm noted.
"On a fundamental level, we believe valuations can be supported by a recovery from COVID-19 leading to a resumption in growth within the Canadian cannabis market," Miehm said in a report to clients this week. "Additionally, increased balance sheet strength, and cost reduction initiatives should support further valuation upside." Miehm forecasts Canada's cannabis sales to hit $3.8 billion this year, trimming a previous estimate of $3.9 billion, while the country should see 2,700 licensed cannabis retailers by the end of the year