Released this week, the third quarter results from Canopy Growth Corp (Canopy Growth Corp Stock Quote, Chart TSX:WEED) reveal it is the third multi-billion dollar Canadian LP to reflect sales into the adult-use market, says Paradigm Capital analyst Rahul Sarugaser.
This, the analyst says, is important to parse, because his thesis is that companies which target clinical uses will have a clear margin advantage of those he says are pursuing “adult use” cannabis, or products consumed for recreational purposes. The pharma buy-in, he says, is a gateway to a (US) two-trillion dollar global market.
With three large LPs now separating this data, the analyst says the evidence is becoming clearer.
“With an average COGS of $6.41/g*, contribution margins per gram for Canadian adult-use, Canadian medical, and international medical were $0.55/g, $3.36/g, and $6.87/g, driving contribution total margins of $4.6M, $5.5M, and $1.3M from each,”