Globe & Mail On the decline
Tilray Inc., Canopy Growth Corp. and Cronos Group Inc. all fell after an equity analyst at Barclays expressed concern about their growth potential south of the border.
“The Canadian cannabis market is ultimately small,” Guarav Jain said in a research note. “We estimate a FY30 legal market of C$10-billion, which we see supporting manufacturer fiscal 2030 EBITDA of C$1-2-billion and FY29 EV of C$7-23-billion. “This implies that Canada accounts for 30 per cent of Canopy’s and Tilray’s operating EV, and 40 per cent of Cronos’. The rest of their EV is attributable to optionality in the U.S. market. However, Canadian companies cannot directly invest in the U.S. market. They are entering into structured transactions with US MSOs that would convert into minority stakes upon US federal legalization. We think the benefit of these deals accrues to the shareholders of MSOs rather than those of the Canadian companies.”