Canada’s medical marijuana space, due to the country’s first mover advantage over many other nations, has attracted international attention. The sector has not disappointed, delivering solid, sometimes spectacular, returns to investors at home and abroad.
Under Canada’s new MMPR (Marihuana for Medical Purposes Regulations) there have been just 34 licenses awarded to grow and/or sell marijuana and 22 licenses to sell cannabis oil. Many of these companies have chosen the public route to raise capital, and their continued growth looks probably, if not nearly certain. Pacific International (PI) Securities analyst Jason Zandberg thinks the next few years will be ones of strong growth for the Canadian marijuana market, with demand originating from both recreational and medicinal users. The analyst thinks that in 2019, which he estimates to be the first user after recreational use is permitted, the medical marijuana market will be worth $4.6-billion. Zandberg expects this will grow 10 per cent annually, reaching $7.4-billion within the first five years, with a roughly even split between medicinal and recreational users.
But opportunity still reigns in the space, says the analyst. It will be a “jump ball” for marketplace domination, he says. “A strong brand and strong product will prove to be invaluable,” says Zandberg, adding that a low cost of production will be of “critical” importance.
We count down the ten best performing Canadian medical marijuana stocks so far this year. We omitted those that began the year trading at less than five cents.
1. THC Biomed Intl Ltd (CSNX:THC)
Price on December 31, 2015: $.095
Price on September 30, 2016: $.77
Percentage Gain: +710.5%
Vancouver-based THC Biomed has an enviable ticker symbol and, as of this past summer, the most enviable stock chart of all Canadian medical marijuana players. The company recently announced the $1-million acquisition of U.S.-based Clone Shipper,a company that specializes in packaging products used to transport live plants. It’s a move the company says will keep it in-line with international laws while meeting the growing global demand for shipping live plants.
2. Maple Leaf Green World (TSXV:MGW)
Price on December 31, 2015:$.09
Price on September 30, 2016: $.41
Percentage Gain: +356%
Maple Leaf Green World has a Calgary address, but has its gaze fixed squarely south. The company recently annunced the the first shipment of product from its initial harvest in California. “This is a landmark achievement for Maple Leaf and is proof that the Company’s growing methodology is successful,” said CEO Raymond Lai. “We are ready to expand our operations both in California and other American states. We believe we can capitalize on new opportunities available to us, pending the outcome of the upcoming referenda on the legalization of marijuana for recreational use in various jurisdictions in the United States.”
3. Emerald Health Therapeutics (TSXV:EMH)
Price on December 31, 2015: $0.22
Price on September 30, 2016: $0.84
Percentage Gain: +282%
Victoria-based Emerald Health came to public attention in November of last year after the company announced its wholly owned subsidiary, Emerald Health Botanicals, had received a supplemental license from Health Canada authorizing it to produce cannabis oils and capsules. The company also received approval for two additional production rooms, something management says would “significantly” increase its growing capacity. The company recently announced the launch of three cannabis oil products – THCA oil, THC oil, and THC:CBD oil.
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4. Tetra Bio-Pharma (CSNX:TBP)
Price on December 31, 2015: $.06
Price on September 30, 2016: $.225
Percentage Gain: +275%
Tetra Bio-Pharma, until very recently known as Grow Pros, is looking to develop cannabis-based products for the treatment of pain. The company’s wholly-owned subsidiary, PhytoPain Pharma, thinks a prescription drug that can be smoked and is backed by the scientific research and development of pharma industry is a winner. “By implementing this approach, we believe that PPP is addressing the missing link that has existed for years as the major barrier of access to medical cannabis by both patients and physicians across the globe”, commented Ryan Brown, Tetra’s Vice-President of Business Development.
5. PharmaCan Capital (TSXV:MJN)
Price on December 31, 2015: $.315
Price on September 30, 2016: $.89
Percentage Gain: $182.5%
Scale. Toronto’s PharmaCan Capital is clearly preoccupied with a ramp up that appears to be right on track. The company recently anounced an agreement to acquire approximately 17 acres of land adjacent to the existing campus of its wholly-owned subsidiary In the Zone Produce Ltd. in B.C.’s the Okanagan Valley. “This purchase will more than double our acreage at ITZ,” said CEO Mike Gorenstein. “This is another important step in executing our strategic vision for the ITZ platform and preparing the Company to take full advantage of the coming recreational market.”
6. Aphria (TSXV:APH)
Price on December 31, 2015: $1.28
Price on September 30, 2016: $3.43
Percentage Gain: +168%
In April, Clarus Securities analyst Noel Atkinson said a $6.5-million deal to scale its business by acquiring 360,000 square feet of production space was the last piece of the puzzle that made Aphria the leader in Canada’s medical marijuana space. “Aphria is already an industry leader in terms of production cost, profitability, registered clients, and sales volume,” said Atkinson. “This deal ticks the last box – scale of production facilities – to have Aphria now considered truly on equal footing with Canopy as the two top players in the Canadian MMJ sector and we would argue Aphria is more attractive than Canopy due to its much higher profitability.”
7. Aurora Cannabis (CSNX:ACB)
Price on December 31, 2015: $0.60
Price on September 30, 2016: $1.37
Percentage Gain: $128.3%
If removing risk is what separates the winners from the pack in the Canadian medical marijuana space, Vancouver-based Aurora Cannabis recently took a major step towards affirming itself as part of an elite group. On September 28, the company announced the completion of a $15-million debenture offering. “This financing provides Aurora with additional financial flexibility and a significantly improved balance sheet, and enables us to further increase our focus on reaching profitability and building long-term shareholder value”, said CEO Terry Booth. “With an improved working capital position and increasing revenues, Aurora continues to strengthen our financial foundation as we enter a pivotal and exciting period in the development of the cannabis sector.”
8. Cannabix Technologies (CSNX:BLO)
Price on December 31, 2015: $.16
Price on September 30, 2016: $.34
Percentage Gain: +106%
Driving high? Watch out for Cannabix. The Burnaby-based company is taking an entirely different direction than most other players in the space. The company is developing a marijuana breathalyzer for use by law enforcement and in the workplace. The company recently enlisted scientific Advisors Dr. Marilyn Huestis and Dr. Bruce Goldberger to work to try and meet the requirements of the Minster of Justice in Canada and the National Highway Traffic Safety Administration in the United States. “Cannabix is a leader in the development of a hand held marijuana breathalyzer and we are fortunate to have the guidance of Drs. Huestis and Goldberger as we move towards scientific field trials of our device,” said Cannabix president Kal Malhi. “Both are a vital part in helping Cannabix to move towards this milestone and get closer to delivering a highly accurate and court accepted evidence gathering tool that law enforcement can use to enforce marijuana impaired driving.”
9. Supreme Pharmaceuticals (CSNX:SL)
Price on December 31, 2015: $0.50
Price on September 30, 2016: $1.01
Percentage Gain: +102%
Supreme Pharma, which has a production facility in Kincardine, Ontario, recently closed nearly $15-million in a recent three-tranche financing. “This financing represents a big step in the growth of Supreme,” said CEO John Fowler. “We are well positioned to complete our phase 1 expansion of the hybrid greenhouse to satisfy wholesale demand in excess of current capacity. The participation from existing shareholders, directors, management and local investors from Kincardine demonstrates our stakeholders’ confidence in our organization and business plan. We are fortunate to have such a strong and supportive shareholder base moving forward.”
10. Mettrum Health (TSXV:MT)
Price on December 31, 2015: $1.90
Price on September 30, 2016: $3.65
Percentage Gain: +92.1%
A recent property sale that fortified Mettrum Health’s balance sheet has PI analyst Jason Zandberg feeling more optimistic about the company’s future. On September 20, after the company announced it had entered into an agreement to sell one of its facilities for $7-million in cash, the analyst maintained his “Buy” rating, but raised his one-year price target on Mettrum Health from $3.50 to $4.25. “The infusion of cash adds to our confidence behind MT’s expansion plans which include increasing annual capacity to 26,000kg/year by March 2018,” explained the analyst. “The supply agreement represents an additional channel of sales that Mettrum will have the production capacity to support. Although this is a three-year agreement, we expect the majority of the sales to fall into FY18 and FY19.”