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Market Share vs. Market Cap in Canadian Cannabis

Robin Lefferts

June 15th, 2021

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The adult-use cannabis market got off to a raging start before even one gram was sold. Many companies committed vast resources to greatly increase production capacity ahead of full legalization. Many of those companies achieved lofty valuations in the public capital market as a result. After about two and a half years, a look at the state of the industry might be due. Demand levels have been normalized a bit, consumers have had time to establish brand preferences, and there have been corrections in the valuations of many publicly traded licensed producers. Not to say the cake is fully baked, but it’s a lot farther along than it was even a year ago.

One producer that has been steadily rising through the market share ranks over the past year is Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF). Decibel did not take the path of huge initial investment into production capacity, choosing instead to round out all portions of its vertically integrated business more gradually. The company’s focus on premium craft cannabis (appealing to consumers) coupled with a disciplined approach to the bottom line (appealing to investors) looks to be paying off at this point.

Adult Use Market Share

The chart above reflects the top 12 companies in terms of recreational sales market share for Q1 2021 and for the first two months of Q2 2021, with each company’s market capitalization listed below the ticker symbols for a point of reference. At the top, industry giants Tilray, Canopy, and HEXO have separated themselves from the pack just a bit, with all three showing a slight decline in market share between the two periods. Village Farms, Organigram, Auxly, Decibel, Sundial, and The Green Organic Dutchman show market share growth over the time frame.

Decibel is really the up-and-comer in these figures. The company has more than quadrupled its market share over the past year, posting a 0.7% market share in June, 2020 and climbing to 3.1% in April/May 2021. For reference, the two companies just behind Decibel for April/May 2021 (Cronos and Sundial) posted market shares of about 3.3% in June 2020 and have remained relatively steady through the intervening year.

Decibel is currently executing on a growth strategy intended to keep it moving up the ranks. The company opened a second grow operation, the Thunderchild Cultivation facility in Saskatchewan, completing construction in Q2 2020 and producing its first revenue in March 2021. Thunderchild is now fully licensed and nearing completion, with about 40% of the 80,000 sf building planted. Decibel regularly experiences a shortage of product due to high demand and constrained supply. A fully functioning Thunderchild operation will presumably alleviate that problem and allow the company to further expand market share.

The company is also launching several new innovative products in the vape and concentrate categories to further complement its more established premium flower lines. From Decibel’s press release announcing record first quarter results:

  • In April, Decibel continued to innovate in the vape category with the launch of its first 100% Live Resin Vape with its General Admission Kootenay Fruit live resin vape and a new flavour of distillate vape with its General Admission Rainbow Sherb distillate vape cartridge
  • In April, Decibel launched into the premium concentrate category with its first live, loose concentrate with its Apricot Kush live sugar, available in BC, Alberta and Saskatchewan now and in Ontario in July
  • Additional upcoming Q2 2021 launches including additional live resin vapes and live sugar along with gems & juice (diamonds & sauce)

Decibel launched its initial vape and concentrate SKUs in late 2020, with about 30 currently in the market and another 20 or so scheduled to launch yet this year. They have been received well by consumers. As of the end of March 2021 and across the company’s four main provinces of distribution (BC, AB, SK, ON), Decibel ranks as the #1 brand in concentrate sales with a 21.9% market share and the #3 brand in vape sales with a 10% market share.

Market Cap Comparisons

The other aspect of the chart in the section above is the market cap figures, as of June 11, 2021, listed below each company’s ticker. There are a lot of factors that go into any market cap comparison, and value is dependent on many variables. In the simple comparison of market cap vs. sales figures, Decibel looks like a low-cap outlier.

For now, suffice to say that Decibel is rising in the industry with more premium craft flower cultivation and Cannabis 2.0 products on the way over the coming quarters. It will be interesting to see if the company can continue its impressive growth, and if the public markets will adjust accordingly.

Disclaimer

The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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