Mathieu Martin - Stocks and Stones Substack To learn more, you can listen to this recent fireside chat I did with Nicholas Sosiak, Cannara’s CFO:
My major foray into the Canadian cannabis sector began when I purchased Cannara shares in December 2024 (through the Rivemont MicroCap Fund). My initial thesis was simple: the company was growing revenues at 25%+ per year, was profitable, was trading at a very low multiple of free cash flows, and held enough real estate on its balance sheet to protect the downside completely.
After buying a starter position, I began conducting classic Peter Lynch-style research, digging deeper into the entire sector. I interviewed several management teams, spoke with suppliers, employees (below the C-suite), and other investors. My goal was to map out the industry and figure out which LPs were considered the strongest. Time and again, Cannara came up as a best-in-class competitor among its peers.
‘‘The ultimate commendation is when a company talks positively about a competitor. I always put a strong weight on such a view.’’
– Anthony Bolton, former Fidelity fund manager
To me, hearing competitors and other industry insiders talk so positively about Cannara was significant validation.
It’s hard to compete against Cannara for several reasons. Here’s why:
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Low-cost inputs: 70% of the costs of cultivating cannabis are electricity and labour. In Quebec, Cannara benefits from the lowest electricity costs in Canada and some of the most affordable labour costs.
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State-of-the-art facility: Cannara owns and operates one of the most sophisticated cultivation facilities in Canada. The Valleyfield facility was built for over $250 million by another LP before it was repossessed by the bank and subsequently liquidated. Cannara bought it for 10 cents on the dollar ($27 million) in 2021.
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Relationship with the SQDC: Everyone I’ve spoken to has confirmed that it is very challenging to compete in the Quebec market if you’re not based in the province. The SQDC, a government-owned provincial retailer, tends to support local LPs. Cannara is currently the second-largest LP in Quebec, a market where competition is significantly limited compared to other provinces.
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Strong management team: Cannara’s team has proven its ability to execute, ramping net revenues from $2 million in 2020 to over $100 million in the last twelve months, while maintaining profitability for four consecutive years. I’ve heard (and witnessed myself) that Cannara’s team likes to do things differently than most other LPs and thinks outside the box. Since the success of a microcap company often relies on the quality of its management team, I believe shareholders are well-served in this regard.
A short-term catalyst that investors can watch for is the launch of the new vape category in Quebec next week. The SQDC will initially carry only 25 vape SKUs, and Cannara has secured 5 out of these 25 listings. I expect this category to make a significant contribution to Cannara’s growth over the coming quarters.
Now, what could hold the company back, you ask?
The primary challenge for Cannara has been and will continue to be expanding outside of Quebec. The company has a 12.5%+ market share in Quebec but only 3.8% nationally (as of June 2025). Continued revenue growth over the coming years will have to come from the rest of Canada.
Considering that Cannara currently utilizes only 50% of its cultivation capacity, the organic growth pathway is straightforward as long as demand for the products continues to increase.
The company has been expanding its sales team and refining its strategy to penetrate the rest of Canada further. Although success isn’t guaranteed, I like my chances here.
Cannara is a long-term compounder that I could see myself holding for the next three to five years.