Bullboard - Stock Discussion Forum Choom Holdings Inc CHOOF

Healthcare Cannabis

Choom Holdings Inc. is a Canada-based retail cannabis company, which is established as store networks in Canada. The Company’s Choom brand is inspired by Hawaii's Choom Gang, a group of buddies in Honolulu, who loved to smoke weed or, as the locals call it, Choom. The Choom Gang pursued a ‘live in the moment’ lifestyle and their energy has helped shape the Choom culture, which is rooted in the... see more

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Choom Holdings Inc > Could Choom play any part in this?

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Post by CANNABISCANADA on Feb 19, 2022 7:24am

Could Choom play any part in this?

Analyst Call of the Week - ATB Capital Markets looks at retail consolidation

Canada's cannabis retail sector is going through some growing pains. With nearly 3,000 legal stores operating across the country, many retailers are struggling to make money and consolidation appears to be a looming threat, according to ATB Capital Markets Analyst Frederico Gomes.

Gomes expects bigger retailer chains like Nova Cannabis' Value Buds, High Tide and Fire and Flower to sweep up underperforming retailers over the next 12 to 18 months. He noted in a report to clients earlier this week how store openings are causing retail saturation across provinces, leading to more competition and lower margins and sales per store. "Smaller players - the 'Mom's and Pop's' - have no access to capital and they can't stay in this market for too long," Gomes said in an interview.

Those sales pressures are expected to trickle down to Ontario, the country's biggest market. Taking cues from Alberta - a saturated market with 744 licensed stores, or roughly 1.67 outlets per 10,000 residents - the average retailer's sales has been hit so hard that if the same density would be applied to Ontario, stores there would see a 20 per cent revenue decline.

That said, Gomes pointed out that no pot shop owner has more than five per cent market share in the country and expects consolidation to help push those numbers closer to low double-digits. "I think it's going to be a march towards 10 per cent market share for these larger players," he said.

CANNABIS SPOT PRICE: $5.17 per gram -- This week's price is up 0.7 per cent from the prior week, according to the Cannabis Benchmark’s Canada Cannabis Spot Index. This equates to US$1,844 per pound at current exchange rates.

WEEKLY BUZZ

$3.92 billion

The amount of cannabis sold in Canada in 2021, according to Statistics Canada.

Top image: THE CANADIAN PRESS/Giordano Ciampini

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