The cannabis industry has been in the middle of a major transition that has been highlighted by increasing interest in U.S. multi-state operators (MSOs) and decreasing interest in Canadian Licensed Producers (LPs). This trend marks a stark shift from previous years where Canada was considered to be the most attractive cannabis market.
The easiest metric to explain the trend is related to the amount of capital that is being raised or is available for companies. Canadian LPs do not have the access that they once had to capital markets and most of the capital that is being raised is in the form of debt.
When we compare the state of capital markets between Canadian LPs and U.S. MSOs, the numbers speak for themselves, and more money continues to flow into the U.S. market. We attribute the steady increase to the improving numbers that are being reported by leading operators and believe that our readers need to be aware of this.
Here are some key metrics of the five largest (by market cap) Canadian LPs and U.S. MSOs according to research from Technical420. We believe that these metrics are pretty impactful when you analyze each cohort of companies from a growth and a profitability standpoint.
- Revenue growth for the Canadian LP cohort is slowing and was in the low single digits when compared to the prior quarter. For the U.S. group of companies, revenue growth is ramping up and was more than 40% higher than the prior quarter.
- The total amount of revenue that was generated by the group of U.S. companies was higher than the group of Canadian companies in the quarter that ended on June 30. In the following quarter, the difference in the amount of revenue between the two groups increased by more than 200% and we find the rate of change to be of significance
- The best performing company from the Canadian group recorded a 23% increase in revenue when compared to the prior quarter. The top performer in the US group recorded a 72% increase in revenue and we find the difference to be significant
- The median for quarterly revenue growth for the Canadian and the U.S. groups were 2% and 31%, respectively
- The average revenue growth that was reported by the Canadian and the US groups was 4% and 41%, respectively
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