Sundial, Canopy Growth And More: Analyst Examines The Race For The US Cannabis Market

US legal cannabis sales are predicted to exceed $28 billion in 2023, with promising regulatory developments such as the recommendation to "reschedule" cannabis by the HHS.

Canada's cannabis exports have surged to C$160 million, a 50% increase year-on-year, and with new international markets opening up, Canadian producers stand to benefit from export opportunities.

However, according to a recent report from Zuanic & Associates the Canadian LPs (licensed producers) now face a strategic dilemma: Should they focus on exporting to capitalize on the C$160 million opportunity or actively seek partnerships with U.S. companies to tap into the $28 billion U.S. market?

Cannabis industry analyst Pablo Zuanic, from Z&A, is set to take the stage as a featured speaker at the highly anticipated Benzinga Cannabis Capital Conference in Chicago, scheduled for September 27-28. Attendees can look forward to hearing about Zuanic's expertise in the dynamic cannabis market and its evolving landscape.

Canadian LPs' US Expansion And Export Growth

Some Canadian LPs have made strides in the U.S. market, such as Canopy Growth's ownership of Wana edibles and Jetty extracts, and Acreage Holdings, Inc. ACRHF and Cronos' Group's CRON option to acquire a stake in PharmaCann.

Sundial Growers Inc. SNDL is also exploring opportunities to enter the U.S. market. Tilray TLRY has invested in U.S. beer and spirits assets for potential future revenue synergies once cannabis is legalized in the U.S., while other Canadian operators have invested in U.S. CBD assets.

Canopy Growth CGC has outperformed other LPs since the news of cannabis rescheduling. This raises the question of whether investors will favor LPs with U.S. exposure, potentially prompting others to follow suit.

Canada's cannabis exports reached C$160 million in FY23, a 50% increase from the previous fiscal year. Export prices remained stable to slightly up, with flower volumes growing by 48% year-on-year.

Dynamics Of Cannabis Exporters And Market Expansion

• Among LPs, Tilray accounted for 35% of exports, Aurora for 30%, Canopy Growth for 23% and Organigram Holdings Inc. OGI for 15%. Growth rates suggest that other LPs are gaining export share, despite exports being concentrated among a few players.
• Tilray and Aurora experienced a decrease in exports, while Organigram and Canopy Growth saw growth.
• Several other companies are also exporting cannabis, including Village Farms International, Inc. VFF, Decibel Cannabis Company Inc. DBCCF and Avant Brands Inc. AVTBF.
• Discussions indicate that some companies source from smaller craft growers in Canada, while others, like Aleafia Health Inc. ALEAF and HEXO, scaled back their export businesses due to profitability concerns.
• Most companies reported export sequential growth in the June quarter, potentially related to new GMP restrictions in the Australian market.
• Cronos reports sales for its Israeli subsidiary but does not disclose the origin of its products in the Israeli market.

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this September 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo by Braden Collum on Unsplash.