Canadian licensed medical marijuana producers have raised more than $1 billion ahead of the opening of the proposed legal recreational market (expected by July 2018).
Some of the larger producers have used the funds for acquisitions and for entering new international markets, while most have used them to increase production capacity to capitalize on an expected increase in demand when the recreational market opens.
Over the last week, Canadian licensed medical marijuana producers have rallied off its July lows and we are keeping a close eye on this turnaround.
We highlighted three of the leading Canadian licensed medical marijuana producers below and have provided a short explanation on why we think they are positioned for success.
- Canopy Growth (WEED.TO) (TWMJF) is the largest and most diverse licensed Canadian medical marijuana producer. The company was the first publicly traded licensed Canadian medical marijuana producer and is also levered to emerging international medical marijuana markets (Australia, Brazil, Chile, and Germany). With more than 58,000 registered Canadian patients on its online store, Canopy possesses some of the most attractive growth prospects and we expect the company to continue to be a leader for years to come.
- Aurora Cannabis Inc. (ACB.V) (ACBFF) has been executing flawlessly and is one of the world’s leading marijuana producers. From Australia to Germany, this Canadian licensed producer has significantly increased its market share and is levered to new legal cannabis markets across the globe. Aurora has a very strong balance sheet and has more than 16,000 registered patients in Canada. We are favorable on the company’s focus on increasing capacity, its leverage to legal international cannabis markets and view it as a company investors need to watch.
- Aphria (APH.TO) (APHQF) is well positioned to capitalize on the current medical cannabis sector as well as the proposed legal recreational market, expected to be implemented by July 2018. The company should record significant revenue growth over the next year after Health Canada approved its Part II expansion in May, which increased the amount of medical cannabis Aphria can produce. The company recently reported strong fourth quarter earnings and its seventh consecutive quarter of positive earnings before interest, tax, depreciation and amortization (EBITDA). Aphria is levered to several significant growth trends and the shares are up more than 20% in the last week.
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