Putting together a marijuana stock investment strategy became decidedly more difficult following the legalization of cannabis in Canada earlier this year. With expectations running high, and volatility continuing to plague the market, investors to focus on finding one or two pot stocks for the long-term.
Meanwhile, Canadians continue to prepare for legal cannabis sales to begin in October. Over in British Columbia, the Liquor Distribution Branch (LDB) entered into agreements last week with over thirty different Licensed Producers to supply the province once recreational cannabis sales officially kick off. The agreement guarantees an initial 150 strains of marijuana for sale on the LDB’s online sales portal.
As the only legal wholesaler of medical marijuana, the LDB hopes to create a more varied and competitive recreational cannabis market with these distribution agreements. The “green boom”is coming, and they are already looking at opening BC Cannabis Stores across the province. The 31 Licensed Producers working with the LDB will have exclusive access to this market.
Take a look at the LDB’s list intriguing, though it does open up a lot of questions. Still, the list also includes some of the better marijuana stocks worth investing in today. These are the top four marijuana stocks to score cannabis distribution deals in Canada.
CannTrust Holdings Inc.
A distribution deal with the LDB is just one of three supply agreements CannTrust Holdings Inc.(TSX:TRST) entered into this month. The company’s pharmaceutically standardized cannabis will now be sold in British Columbia, Alberta, and Manitoba under three new recreational marijuana brands. CannTrust is on track to produce over 17,000 kilograms a year for the three provinces.
Even CannTrust is a little surprised at their success. According to a statement, these agreements “far surpass” their original sales projections. This kind of optimism is starting to reflect in the company’s performance, and they are positioning themselves to be a real success story. Their portfolio is expanding to include cannabis for pets and a 450,000 square foot perpetual harvesting facility in Ontario. As the cannabis market continues to evolve, CannTrust’s “what’s next?” kind of attitude makes them a marijuana stock on which to keep an eye.
With over half a million square feet of production capacity to their name, it should come as no surprise that Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) would be a top pick. Per their distribution agreement with the LDB, Canopy exclusively designated over 5000 kilograms of cannabis from their local Delta and Aldergrove facilities. The company wants to see the same marijuana grown in British Columbia sold in British Columbia.
“We’ve established a strong presence in B.C. with state-of-the-art greenhouse facilities in Delta and Aldergrove,” Canopy President and co-CEO Mark Zekulin clarified last week. “We can’t wait to see the B.C. bud we’re currently growing and harvesting at both sites readily available on store shelves.”
Canopy is already committed to supply agreements with seven other provinces that total over 67,000 kilograms a year across Canada. Adding an exclusive agreement with British Columbia will extend Canopy’s reach. It also gives them more room to build a branding presence in the recreational marijuana market. Recent moves with Hiku Brands emphasize this gallant approach to cannabis. And while Canopy paid an astonishing $33 million per store for seven cannabis shops, the investment could —and quite possibly will —pay off after October.
Glowing from suspected reports of a recent courtship with alcohol giant Molson-Coors, Aphria Inc. (TSX:APH) (OTC:APHQF) will only garner more success from their distribution agreements across Canada. Last week, Aphria promised the LDB 5000 kilograms of cannabis, while earlier this month, the AGLC ordered a little over 800 kilograms. Agreements with both provinces include flower, pre-rolls, and cannabis oils from Aphria’s portfolio of recreational brands.
While these numbers might look small right now, Aphria is paving the way for bigger things. The recent announcement of their Extraction Centre of Excellence will put the company at production levels over 250,000 kilograms a year. Recently listed as a top CBD oil stock pick, this state-of-the-art facility is part of the reason why. CEO Vic Neufeld believes that the company’s new Extraction Centre of Excellence will give them a competitive edge in the recreational market.
Pay close attention to this pot stock. Aphria’s particular focus on cannabis oil could make them a standout in Canada this fall.
Aurora Cannabis Inc.
Aurora Cannabis Inc. (TSX:ACB) (OTC:ACBFF) is scheduled to complete their groundbreaking, though controversial merger with MedReleaf (TSX:LEAF) later this month. The merger will put Aurora well over 500,000 kilograms in annual production, which will set them up well with the distribution agreements that are already underway with the LDB and the Alberta Gaming, Liquor, and Cannabis Commission (AGLC).
Size alone gives this marijuana stock a lot of sway in the Canadian market right now. Aurora partnered with high-tech greenhouse designer Larssen Ltd. and had four production facilities in development as of July 2018.
What is most notable, though, is Aurora’s $150 million loan from the Bank of Montreal. The loan secures the four facilities, and it comes with a revolving credit of $50 million. It is the largest loan in cannabis history, signaling a renewed trust in a market that is volatile, to say the least. It is a good sign for investors who are still trying to decide in which pot stock to invest. Aurora could turn out to be a smart play.
Honorable Mention: Eve & Co Incorporated
Last but not least, Eve & Co Incorporated (TSX-V:EVE) is a cannabis stock worthy of a spot on this list. The LDB chose Natural Med Company, their wholly-owned subsidiary and first ever female-founded cannabis producer, to supply the province with recreational cannabis.
This leading-edge pot stock is working on 220,000 square feet of greenhouse space, with another 780,000 on the way in Ontario. The anticipated production capacity alone is enough to consider adding this small-cap to any portfolio.