US cannabis stocks shine – Canada, not so much

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The US cannabis market is already outperforming the neighbor to the north

For the last year or so, the cannabis market for both US and Canada went through some difficult times that were loaded with high expectations and heavy regulations. This created havoc in the sector, but, now, US cannabis companies seem to be outperforming their Canadian counterparts, which are still struggling amid a restrictive market. For instance, Green Thumb Industries Inc. has made history for being the first US cannabis company to generate over $100 million in revenue, plus it also beat all expectations for its EBITDA numbers for the fifth quarter in a row – its shares rose 17% by last Friday.

The situation has been different for the Canadian market, where the Canadian venture Aurora Cannabis Inc. has been struggling to turn a profit; however, it has been on track to achieve its goals of cost reductions. These positive numbers had caused its share prices to skyrocket by 54%. “I think this is an inflection point where the U.S. market is becoming the dominant market in the global marijuana space,” said Mark Noble, executive vice president of strategy at Horizons ETFs Management Inc. This firm offers exchange-traded funds that track both the Canadian and U.S. pot sectors. “I think the only thing that’s really keeping these stocks from overtaking the Canadian LPs is the fact that they’re not listed on the U.S. stock market,” he added.

The US cannabis stock market seems to be becoming the dominant market leaving Canada behind, even despite the fact that the New York Stock Exchange and the Nasdaq prohibit listing any company with marijuana operations in the US due to its federally illegal status. The Toronto Stock Exchange is not listing those stocks either; therefore, these companies had had to seek smaller bourses such as the Canadian Securities Exchange.

To compare the numbers from both markets, the Horizons US Marijuana Index ETF has gained 94% since the lowest point during the coronavirus pandemic reported on March 18. The Horizons Marijuana Life Sciences Index ETF, which tracks Canadian companies, has increased only by 38%.