Cantor Fitzgerald Archives - Green Market Report

StaffAugust 2, 2022


The Daily Hit is a recap of cannabis business news for August 2, 2022.


Cantor UpGrades Clever Leaves Amid International Expansion

Clever Leaves (NASDAQ: CLVR) could become one of the world’s top five cannabinoid exporters by the end of this year, according to a new report by Cantor Fitzgerald analyst Pablo Zuanic. The findings come a week ahead of the company’s second-quarter earnings release and half a year since CEO Andres Fajardo was tapped to lead the company out of a desperate cash burn and into new, more profitable markets overseas. Read more here.

TransCanna Get $16 Million Loan With Pelorus Equity Group

Pelorus Equity Group closed on a $15.8 million debt financing agreement with TransCanna Holdings Inc. The company said in a statement that the proceeds would be used to refinance and develop TransCanna’s California facility, as well as for construction costs, and the payment of interest on existing debt. Read more here.

Psychedelic Drug Stigma Is Starting To Dissolve

As psychedelics make their way into mainstream medicine, step by careful step, there are still difficult questions people (and potential patients) want to have answered that amount to multiple elephants in the room. What exactly are they? Who is saying that they are “medicine”, and why? Aren’t they all still illegal drugs that can seriously hurt people? Isn’t this “medicine” thing just a ploy to legitimize a banned recreational drug, like ecstasy (which was granted breakthrough therapy designation by the FDA)? Read more here.

Germany Clears Cannabinoid Medication For Insomnia

Zelira Therapeutics Ltd (ASX: ZLD,OTC-QB: ZLDAF), received formal approval from German regulatory authority BfArM to launch in the German medical cannabis market for its new insomnia medication Zenivol. Zenivol is the first clinically validated, pharmaceutical-grade, cannabis-based sleep medication. Read more here.

Lollapalooza Gives Downtown Chicago Cannabis Stores A Contact High

Lollapalooza delivered another summer pick-me-up to marijuana shops downtown. PharmaCann and Cresco Labs (OTC: CURLF) report record sales at their River North stores during the four-day music festival that ended Sunday. David Chiovetti, chief commercial officer of PharmaCann, which operates a store near Clark and Superior streets, said sales were up “double digits over last year. More people came in, and people spent more.” Read more here.



Cookies Co-Founder and CEO Gilbert Anthony Milam Jr., also known as Berner, is featured on the August/September 2022 issue of Forbes. The editorial decision to spotlight the 38-year-old rapper and cannabis entrepreneur by one of the world’s most respected business publications represents yet another powerful milestone for the $72 billion cannabis industry. Read more here.

Flora Growth Corp., Pharma Indigena Misak Manasr Sas

Flora Growth Corp. (NASDAQ: FLGC), an all-outdoor cultivator, manufacturer and distributor of global cannabis products and brands, announced today a joint venture agreement with Pharma Indigena Misak Manasr Sas, the largest indigenous tribe in Colombia, on the development of cultivation best practices, manufacturing, export, and marketing of cannabis and cannabis containing products. Read more here.

Red White & Bloom Brands Inc.

Red White & Bloom Brands Inc. (CSE: RWB and OTC: RWBYF) reported it has filed its 2021 audited financial statements, its 2022 first quarter financial statements and related 2021 and 2022 first quarter Management’s Discussion and Analysis and is providing certain full year 2021 and Q1, 2022 financial results and select subsequent events. Read more here.

Captor Capital Corp.

Captor Capital Corp. (CSE: CPTR; FRANKFURT: NMVA; STUTTGART: NMVA), announced today the release of its Audited Annual Financial Statements and MD&A for the year ended March 31, 2022. For the twelve months from April 1, 2021 to March 31, 2022 revenues from the sale of cannabis at the Company’s California dispensary network were $32,737,461, with the Company recording a gross profit of $12,307,212. Revenues from cannabis sales were up $16,520,051 (102%) from the previous fiscal year, while gross profit was up $7,010,238 (132%), in the face of a competitive and challenging retail cannabis environment. Read more here.

NewLake Capital Partners, Inc.

NewLake Capital Partners, Inc. (OTCQX: NLCP), a provider of real estate capital to state-licensed cannabis operators, today announced that it has added two lenders to its existing five-year revolving credit facility and upsized the aggregate commitment under the facility from $30 million to $90 million. The credit facility matures in May 2027, and has a fixed interest rate of 5.65% for the first three years and a floating rate thereafter. The Credit Facility allows for further expansion as additional lenders are added, or the commitments of existing lenders are increased. Read more here.

Incannex Healthcare Limited, Curia Global, Inc.

Incannex Healthcare Limited (Nasdaq: IXHL) (ASX: IHL), a clinical-stage pharmaceutical company developing unique medicinal cannabinoid pharmaceutical products and psychedelic medicine therapies for unmet medical needs, announced that it has engaged Curia Global, Inc. to further develop and manufacture GMP-grade IHL-216A, Incannex’s proprietary inhaled drug product for the treatment of concussion and traumatic brain injury. Read more here.

Hydrofarm Holdings Group, Inc.

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM), a manufacturer and distributor of hydroponics equipment and supplies for controlled environment agriculture, announced preliminary unaudited financial results for its second quarter ended June 30, 2022. Read more here.

Debra BorchardtJuly 25, 2022


Cantor Fitzgerald analyst Pablo Zuanic downgraded Fire & Flower (OTC: FFLWF) and Auxly Cannabis Group to Neutral from Overweight and cut his price targets for both. Challenges within the Canadian cannabis market were cited as the overarching reason.

Canadian Problems

Zuanic noted that the market seems to have hit a saturation point. He wrote in his report, “There are now over 3,300 stores in Canada (~1,600 in ON; 765 in AB, 435 in BC, 89 in QB). Store density in Canada (85 stores per 1mn people, with ON at 108) is above that in most states in the US, ex CO (129), OR (171), and OK (590).”  He went on to write, “Price deflation in Canada (flower prices down 36% in the last two years), has not all been caused by competition among licensed producers (LPs), but also by some retailers cutting prices and pursuing a discount strategy. Thus, overall, we think this is a tough market climate for retailing.” At this point, Cantor only gives three cannabis companies an Overweight rating and those are Aurora (ACB), Organigram (OGI), and Village Farms (VFF).

Fire & Flower

Zuanic dropped his rating on Fire & Flower to Neutral from Overweight and lowered his 12-month price target to C$2.60 from C$9.50 (last published 4/26/22) on reduced estimates and increased operational risks. It was last trading at $1.65 or C$2.11. He wrote, “Our recent surveys show that Fire & Flower stores (factoring-in its Spark membership offers) are now pricing in line with High Tide’s stores (NASDAQ: HITI), below Nova Cannabis, and well-below the OCS online store. While we believe this makes sense, we think competitive dynamics have forced Fire & Flower to take more draconian measures on the pricing front than management may have initially envisaged. The transition (likely increased sales but lower margins) generates uncertainty and makes us wonder about the company’s ability to make meaningful improvements to cash burn; we think this is also reflected by the company’s decision to delay its NASDAQ listing.”

Following the April quarter, the cantor analyst noted that sales fell 4% seq to $41 million, with retail store revenues dropping 7% sequentially and that same-store sales fell 26% year-over-year to $30 million. In addition to that, the store count fell to 101 stores at the end of April from 105 at the end of January. He also pointed out that tech revenues were down 28% to $3 million, and wholesale and delivery was up (but on lower margins).

That said, we appreciate Fire & Flower’s asset-light strategy, prudent brick & mortar growth plans, its inroads in tech services and delivery, and the strategic benefits of the partnership with Circle-K (ATD.TO/NC). However, given heightened competitive challenges and further potential shareholder dilution down the road, we now prefer to rate the stock Neutral.

Auxly Cannabis

The analyst lowered his 12-month price target on Auxly to C$0.08 from C$0.20 on reduced estimates and a lower multiple used. The stock was last trading at $0.06 or C$0.075. Zuanic wrote, “The heavy debt load and likely equity-holder further dilution, combined with worsening scanner trends prompt us to downgrade our rating to Neutral. We do see much improvement on cash burn. Based on our math, Auxly has the highest debt-to-sales ratio among LPs. This includes convertible debt held by Imperial Brands (IMB.LN/NC) due Sep 2024; but with a conversion price of $0.81, we think terms will be renegotiated.”

The analyst also lowered his sales estimates based on the latest Hifyre data, which showed Auxly losing further market share in the vape and flower segments (vape is >40% of sales, and the company’s vape share is now 16% vs. 24% a year ago), and sales dropping at a faster pace at retail. He also pointed out that Auxly has been lowering prices, which is not a good sign for profitability. Having said that he believes Auxly could still be an attractive target (given 2.0 share, pre-rolls gains, and supposedly more-efficient flower cultivation), but the convertible debt held by Imperial Brands may deter interested parties.

Debra BorchardtJuly 11, 2022


It seems Canadian cannabis consumers prefer to pay higher prices for flower. A new report from Cantor Fitzgerald’s analyst Pablo Zuanic found that most of the Canadian Licensed Producers (LP’s) increased market share with higher flower prices. The only exception to the rule was Organigram (NASDAQ: OGI), which saw its market jump dramatically after dropping prices almost by half.

Flower Power

Zuanic said he analyzed the 35 companies that accounted for 90% of Canadian flower sales in 2Q22 and looked at how those companies’ market share has changed over the last two years. Due to market competition, there are now 126 companies competing in the flower space versus just 53 two years ago.  Consumers are spreading their money around and the once-dominant flower sellers are now seeing lots of competition. For example, in 2Q20 just 10 LPs accounted for 90% of flower sales. Fast forward one year to 2021 and there were 19 LPs and in the most recent second quarter, 35 LPs.

He found that the bulk of the companies gaining market share in Canadian flower actually have prices above the market average, while those losing market share have prices below the market average and in most cases have also cut prices the most. He wrote, “We think the larger players for the most part may continue to lose market share, as price cuts are not enough. Sure, it is not just about better quality, but interesting that the ones gaining share are not price discounters (ankle biters, as called by some) but those with more premium offerings.”

Significant Growth

6 LPs grew their share of flower sales by more than 3pt.  The 6 LPs which grew their flower share by more than 3pt from 2Q20 to 2Q22 had an average price per gram of $5.13, 4% below the average price of $5.36. Zuanic’s hypothesis is that market share was gained with higher prices and this doesn’t seem to track, however, the price is only 4% below average. The losers had much bigger price drops.

Minor Growth

18 LPs grew their share of flower sales by between 1-2pt. The 18 LPs which grew their flower share between 1-2pt from 2Q20 to 2Q22 had an average price per gram of $7.78, 45% above the average price of $5.36.

Market Losses

The LP’s with market share losses ranging from 3pts. to 1 pt all had prices that were anywhere from 14% below the average flower price to 41% below average prices.

Organigram Bucks Trend

The big outlier was Organigram (NASDAQ: OGI) which saw its market share for flower, increasing share from 5% in 2Q20 to 12% in 2Q22. Zuanic wrote, “Organigram gained share by reducing their flower price per gram by 48% over the two-year period from $8.82 (5% premium to 2Q20 average price per gram of $8.37) to $4.56 (15% discount to 2Q22 average price per gram of $5.36).”

Other big losers included Aurora (NASDAQ: ACB) whose flower market share plunged from 21% in 2Q20 to 2% in 2Q22. Also losing share was Tilray (NASDAQ: TLRY) whose share decreased from 19% in 2Q20 to 8% in 2Q22.

In Closing

Zuanic believes that Canadian cannabis consumers are maturing and focusing more on quality than they had in the past. Cutting prices doesn’t seem to bring in more sales. It could also be that with more competition, consumers may have a harder time choosing which flower to buy. They could be opting for the higher-priced product in order to assure their money is well-spent.

Debra BorchardtJuly 5, 2022


Cantor Fitzgerald analyst Pablo Zuanic issued a report this morning in which he sees some value in the beaten-up cannabis group, although he also cautioned that numerous roadblocks remain. He was clear that the group may not have even found a bottom yet as prices continue to slide along with the broader market. Zuanic also noted that even the second quarter might not bring relief on valuations, but he is a selective buyer at these levels. Having said that he said investors may not see any meaningful upside for another two to three years and that it would probably only occur when some sort of federal reform occurs.

Current Valuation

Zuanic wrote, “The MSOS ETF fell 25% in the last month vs. a 7% drop for the S&P500, and over the last three months it is down 49% vs. -15% for the SPX Index (yoy -75% vs. -12%). Even on risk-on days, when the larger Canadian LPs move up, MSOs either drop or stay flat. The MSO stock performance masks encouraging medium and long-term sales trends, with more states legalizing since 4/1 (NM, NJ), or soon to start rec sales (RI, CT/NY), or soon to vote to legalize (MD, MO); also, states like IL could see growth accelerate as more stores open, as we have recently seen in MI (+22% seq sales trends based on Apri/May data).”

If investors were hoping for some relief in the second quarter, then Zuanic dashed those hopes. He said that the second quarter boost will most likely only apply to those companies in New Jersey. Adult-use sales begin in the state on April 21 and sales have reportedly been very good. Plus, investors have been increasingly focused on profit margins and cash flows, which dampens buying. The companies with good cash flow are also beset with high taxes and debt levels are high.

“In this context, where it is difficult to call the bottom (as technicals and poor liquidity exacerbate stock swings and concerns about the lack of reform at the federal level and about state level fundamentals), we would tread carefully and are buyers only selectively of a few MSOs. We think the current state of affairs will lead to further consolidation (Columbia Care was at 0.9x debt to sales as 3/31/22, and we think that contributed to the decision to sell at the bottom) and benefit those in a stronger position,” wrote Zuanic.  He says he is focused on quality and his top picks (in alphabetical order) remain: Cresco (CRLBF. OW) proforma (1.7x C23 EV/Sales), Curaleaf (CURLF, OW) (2.7x), Green Thumb (GTBIF, OW) (1.6x), and Trulieve (TCNNF, OW) (1.9x).

Sales Trends

The analyst took a temperature read on sales in the second quarter based on data from Headset. He cautioned that it wasn’t official hard data, but did gather that second-quarter sales overall had improved from the first quarter. Most companies had reported that first-quarter sales dropped from the fourth quarter, so this improvement is welcome. However, early indications seem to say that sales dropped versus 2021 for the same time period. He believes these sales figures are competing with last year’s stimulus checks that consumers got during the pandemic.

Cannabis prices seem to be falling as much as the stock prices. The analyst cited Cannabis Benchmarks and pointed out that wholesale prices nationwide (in the 18 states it tracks) averaged $1,057/lb for the week ending 7/1, down 16% from 4/1/22 and down 20% YTD (-35% you). “Regarding key MSO states that we track: AZ -9% seq and -45% YTD; CA -4% and -20%; CO -9% and -17%; CT -10% and -9%; IL +1% and -12%; MA -7% and -37%; MI +4% and -43%; NV -5% and -14%. We realize lower wholesale prices sometimes may be neutral for companies just focused on retail, but most of the MSOs that we track have cultivation and tend to be vertically integrated,” he wrote.



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