Even though the US cannabis industry continues to make strides
toward legal acceptance, 2022 wasn’t a good year for most marijuana
stocks, primarily because cannabis companies have failed to turn
growth into profits. E-commerce solutions could dramatically impact
margins and lower customer acquisition costs.
With the increased adoption of e-commerce by dispensaries and
cannabis retailers, the legal marijuana market was valued at $17.50
billion in 2021 and is estimated to reach $80.1 billion by 2031,
growing at a CAGR of 16.9% from 2022 to 2031, according
to recent research. The main drivers for this expected growth
are growing consumer demand, increasing legalizations in various
countries and regions, and changing perceptions of cannabis use for
medicinal and recreational purposes, with adult use (recreational)
comprising 54.6% of the cannabis market.
Multichannel and omnichannel support let cannabis e-commerce
websites maintain consistency no matter how a customer interacts
with the brand. Creating a unified customer experience is
especially important given the requirement for cannabis brands to
operate across multiple channels, such as physical stores,
different branded e-commerce websites, and government-regulated
marketplaces. Privately held Leaflink is one of the leaders in
cannabis e-commerce. Leaflink has raised $479 million in funding
over eight rounds, with the latest round of $100 million having
closed on February 1, 2023.
Cannabis companies that could benefit from the future growth of
the cannabis market and e-commerce solutions include:
Tilray Brands, Inc. (NASDAQ: TLRY),
CannaPharmaRx (OTC Pink: CPMD),
Aurora Cannabis, Inc. (NASDAQ: ACB) and Canopy Growth Corporation
(NASDAQ: CGC).
Tilray Brands, Inc. (NASDAQ: TLRY) is a global
leader in cannabis research, cultivation, processing and
distribution. According to its website, Tilray is the first
GMP-certified medical cannabis producer to supply cannabis flower
and extract products to tens of thousands of patients, physicians,
pharmacies, hospitals, governments and researchers on five
continents.
For the second fiscal quarter ending November 30, 2022, Tilray's
gross profit rose to $40.1 million, a 22% increase, year over year,
while adjusted gross margin held at 29% compared to the year-ago
quarter. Tilray's gross profit on cannabis increased 37% to $18.6
million from $13.5 million in the prior year quarter, while the
gross margin percentage increased to 37% from 23%. Tilray had
adjusted EBITDA of $11.7 million, marking the 15th consecutive
quarter of positive adjusted EBITDA.
CannaPharmaRx (OTC Pink: CPMD) is focused on
acquiring and developing state-of-the-art cannabis grow facilities
in Canada. CannaPharmaRx recently announced it added to its revenue
stream by purchasing the e-commerce and financial platform LTB
Management. LTB has direct experience developing online website
applications for various customers, including medical cannabis
deliveries for pharmacies, distributors, and producers on an
international scale. According to a recent press release, this
acquisition will augment CannaPharmaRx's anticipated cannabis
sales, which the company expects to produce and deliver at an
annual run rate of nearly $30 million.
During 2023 CannaPharmaRx plans to further accelerate its
E-commerce applications. The company plans to complete its first
harvest during Q1 2023 and additional offtake agreements in
multiple countries.
Aurora Cannabis (NASDAQ: ACB) is an Edmonton,
Alberta-based cannabis company serving the medical and consumer
markets. Aurora's adult-use brand portfolio includes Aurora
Drift, San Rafael '71, Daily
Special, Whistler, Being, Greybeard, and CBD
brands, Reliva and KG7. Medical
cannabis brands include MedReleaf, CanniMed, Aurora, and
Whistler Medical Marijuana Co. Aurora also has a controlling
interest in Bevo Farms Ltd., North America's leading
supplier of propagated agricultural plants.
Aurora recently posted revenues of $50.95 million for its second
quarter that ended December 31, 2022, versus revenues of $48.07
million. The company had a quarterly loss of $0.14 per share versus
a loss of $0.42 per share a year ago. These figures are adjusted
for non-recurring items. The current consensus EPS estimate is
-$0.06 on $48.38 million in revenues for the coming quarter and
-$0.34 on $176.58 million in revenues for the current fiscal
year.
Canopy Growth Corporation (NASDAQ: CGC) is a
North American cannabis and consumer packaged goods company
focusing on premium and mainstream cannabis brands including Doja,
7ACRES, Tweed, and Deep Space. Its CPG portfolio features
sugar-free sports hydration brand BioSteel, targeted 24-hour
skincare and wellness solutions from This Works, gourmet wellness
products by Martha Stewart CBD, and category defining vaporizer
technology made in Germany by Storz & Bickel. Canopy Growth has
also established a comprehensive ecosystem to realize the
opportunities presented by the U.S. THC market through its rights
to Acreage Holdings, Wana Brands, and Jetty Extracts.
Canopy Growth recently announced net revenue of $101 million for
the third quarter of its 2023 fiscal year, a 28% decline from the
same quarter in fiscal 2022. The company posted a net loss in Q3
FY2023 of $267 million, which was a $151 million increase from Q3
FY2022. Company Growth announced a cost reduction program of
$140-$160 million over the next 12 months.
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