Analyst Predicts Growing Cannabis Market in Canada
Store Openings in Ontario and BC, and More Product Offerings to Drive Growing Cannabis Market – LPC
Alan Brochstein, CFA of New Cannabis Ventures, predicts a growing cannabis market in Canada over the next couple of years. He points to more store openings and more cannabis products as the main drivers.
“Friends,” Brochstein wrote in a recent opinion piece. “Two years ago, just ahead of legalization in Canada, Deloitte projected 2019 sales would exceed $4 billion. In fact, they came in less than $1.2 billion, far short of expectations. In May, sales of $186 million, which would be an annual rate of about $2.2 billion, show that the market still has not lived up to its potential.” (Please see link to the full opinion piece below.)
But that’s changing, Brochstein said. Ontario passed 100 cannabis store licences in June, for example. The province also saw Cannabis 2.0 sales surpass $19 million in the first quarter. Meanwhile in BC, it seems that the so-called “thriving black market” is actually shrinking.
However, Brochstein said, many investors have already soured on cannabis stocks. Because of that, they may miss out on today’s new era of a growing cannabis market.
“We think that many investors have become overly negative about the outlook for the Canadian market,” he said. “(They) may be missing some of the structural improvements as well as capacity reductions across the sector.”
COVID-19 is sure to throw off the numbers. Cannabis sales soared in Ontario during the height of the pandemic. But there has always been a direct connection between the number of cannabis stores and an increase in legal cannabis sales. If that trend continues, a growing cannabis market in Canada is a near certainty.
This editorial content from the LPC News Team provides analysis, insight, and perspective on current news articles. To read the source article this commentary is based upon, please click on the link below.
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