In total, these 10 companies alone have plans to grow capacity to over 2.2 million kg per year over the next 1 to 3 years. This is more than 2x the expected domestic cannabis consumption (inclusive of black market sales and independent growers).

Other companies, outside of the top 10 also have plans to add capacity over this period. A standout example is Village Farms (VFF), a publicly traded company on the TSX with a 30 year history of growing hydroponic tomatoes and cucumbers. VFF reports a potential 10x to 15x revenue enhancement by switching their agricultural production from vegetables to marijuana. The company has received its cultivation license and expects to grow 56,000 to 74,000 kg of cannabis in 2019. VFF reports that it could potentially increase its production to 300,000 kg per year (30% of expected market demand) if it converts its entire greenhouse operation to cannabis production.
There are already enough licenced producers to easily supply expected demand inside Canada and there is no reason to believe that additional licenses will not be granted. We believe that the Cannabis market has the potential to be massively oversupplied over the next 1 to 3 years. Such a scenario would make production cost competitiveness a key factor for success.

 

KeyStone’s 2019 Cannabis Report $599

This report provides an in-depth investment analysis of the Cannabis industry in Canada. The report includes a description of the Canadian Cannabis market, the supply and demand fundamentals as well as key risks and opportunities facing the industry over the next several years. Analysis is provided on all 101 individual, publicly-listed Canadian companies that operate in the industry. The industry’s top 3 companies are highlighted in the Monitor List – Top Tier section of the report. An additional 17 companies are highlighted in the Monitor List – Lower Tier section. Information is also provided on the remaining 82 stocks in the Research Notes section which investors can use as reference material when conducting their own research.This report was constructed so our research staff could get a look at each cannabis related public company in Canada. While no company makes our strict fundamental criteria at present for a recommendation due to lack of current cash flow, this will change dramatically in the coming years as business flows in from legal sales. We will continue to monitor each company and update this report as the Cannabis industry begins to take shape.

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