Last month marked the four- year anniversary since marijuana was legalized in Canada, and British Columbia’s cannabis market appears to be settling down after experiencing sharp spikes in revenue, assets and market capitalization follow- ing initial legalization.
The sector’s market cap has crashed, according to data collected on Business in Vancouver’s list of B.C.’s biggest cannabis companies (page 15). Over the past year, the average market capitalization for the companies on the list fell 92.5 per cent from $351.3 million in 2021 to $26.3 million in 2022.
In 2021, the list’s top company was Tilray Brands Inc. – then based in B.C. – with a market cap of $5.9 billion. This year, Village Farms International Inc. (No. 1) had a significantly smaller market cap of $184 million.
Although average market cap for the industry has dropped significantly since cannabis was legalized in Canada, the median market cap for B.C.’s largest cannabis companies has increased 155.6 per cent to $9.3 million in 2022 from $3.6 million in 2020.
This suggests that while larger companies higher on BIV’s list might be shrinking, smaller cannabis companies lower on the list are boosting their market cap growth. Along with market cap, assets held by companies on the list have also declined over the past two years. After a massive spike in 2019, assets held by B.C.’s biggest cannabis companies dropped 40.2 per cent to $82.7 million in 2021 from their peak of $138.2 million in 2019.
Despite declines in market cap and assets, the industry’s overall revenue is growing, and while no companies on the list reported profits in 2021, losses have de- creased significantly.
Average revenue has grown 7.8 per cent over the past year to $102 million in 2021 from $95 million in 2020. Over the past five years, average revenue has increased 1,322 per cent from just $7.2 million in 2018. The increase in revenue over the past year has helped to reduce the average net loss for the province’s largest cannabis companies by 65.3 per cent to $15.1 million in 2021 from $43.6 million in 2020.
Rubicon Organics Inc. (No. 5) reported the largest one-year revenue increase: Up 140.9 per cent to $22.6 million in 2021 from $9.4 million in 2020.
The Valens Company Inc. (No. 2) reported the largest asset growth. It increased 105.7 per cent to $344.7 million in 2021 from $167.6 million in 2020.