A Tale Of Two Cannabis Retailers

More than two years ago, California’s recreational cannabis market opened, and this represented a major milestone for the industry. When California went recreational, many analysts expected to start to see US cannabis companies grow faster than Canadian cannabis companies (from a revenue standpoint). Although cannabis was classified as a Schedule I substance and considered to be illegal at the federal level when California’s recreational market opened, Canadian analysts believed that the rewards outweighed the risks and billions of dollars were raised for US cannabis companies in a very short period of time.

The US cannabis industry is growing at rapid rates and is an industry that is barely in the first inning of a multi-decade growth cycle. So far this year, leading US cannabis retailers have been putting up impressive numbers and are generating more revenue than the leading Canadian cannabis companies. We find this to be significant since cannabis is legal at the federal level in Canada and companies can export to international markets where cannabis is legal.

Several leading Canadian cannabis companies are generating a substantial amount revenue from international markets and this is a trend that will not last forever. Once cannabis is legalized in the US, these operators will be able to expand into international markets and we expect to see US companies capture significant market share in international markets.

Operating a cannabis company in the US is not as easy as many people expect and when we analyze an operator, we conduct significant due diligence on the management team to better understand the previous industries that they have worked in and to learn about the track record that is associated with the team. We prefer management teams that are led by a team that have diverse skills sets and have proven track records as it relates to operating in the best interest of shareholders.

Today, we want to highlight two US cannabis companies that the market had high expectations for when they went public. The companies are Planet 13 Holdings Inc. (PLTH.CN) (PLNHF) and MedMen Enterprises (MMEN.CN) (MMNFF). We believe that Planet 13 has lived up to the hype while MedMen has not and want to provide an update on these operators.

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Disclosure: This report was authored by and is property of Technical420. All information and data relied upon in drafting this report is publicly available. The author believes and considers its ...

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