Cansortium Analyst Sees 'Dramatic Expansion' Potential In Canadian Cannabis Market

Cansortium Inc CNTMF is a vertically integrated multistate operator that is well-positioned for "dramatic expansion," according to Canaccord Genuity. 

The Analyst

Bobby Burleson initiated coverage of Cansortium's Canada-listed stock with a Speculative Buy rating and $2.50 price target.

The Thesis

Cansortium's focus is on the medical cannabis space in Florida, where it oversees 11 dispensaries and is considered a "large player" in the regulated cannabis market, Burleson said in the Friday initiation note. (See his track record here.) 

The company's market share in Florida is likely to increase from 6% in 2019 to 11% in 2020, with plans to open 19 more stores by the end of the year, the analyst said. 

Part of the growth story comes from Cansortium's expansion potential in new markets, Burleson said.

The company should see initial contributions from the province of Ontario and from Michigan in the fourth quarter, he said. Coupled with the opportunity in Florida, Cansortium could address a total addressable market of $3 billion in 2020, the analyst said. 

The company also faces "significant" longer-term opportunities in Pennsylvania from its application for a clinical registrant license, along with "rapidly evolving" regulations in Texas, Burleson said. 

Finally, Cansortium's ongoing operations in Puerto Rico and a subsidiary in Latin America create the potential to be a first-mover in the region, according to Canaccord. 

Price Action

Cansortium's over-the-counter shares were 4.47% higher at $1.62 at the close Friday. 

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