As COVID-19 safety measures begin to slowly lift and more people are getting vaccinated, many industries are beginning to blossom. Forthe cannabis industry, in particular, this could mean an improved third quarter (compared to the second quarter) as restrictions began to ease in June, according to Cantor Fitzgerald’s Pablo Zuanic.
The analyst focused on the second quarter in his latest industry report, relying on Hifyre scanner data, which showed solid calendar second-quarter trends for companies like Organigram Holdings(NASDAQ: OGI) and Auxly (OTCQX: CBWTF).
The report revealed 5% growth month over month in May and a 4% drop in June, which could indicate 12% quarter over quarter growth for the second quarter of 2021 or $945 million in retail sales. By comparison, StatCan data showed first-quarter sales being up only 2% quarter over quarter after seeing an 11% improvement in the fourth quarter of 2020.
“In terms of the 2Q reporting season, we believe the forward commentary will be positive, even though it is unclear how much improvement top down we will see in the 2Q numbers,” Zuanic explained.
In addition to expecting even better sales trends reported for the third quarter of the year, Zuanic projected more inventory reform.
“At some point, we assume the boards will need to start rebuilding inventories, even though in some cases the cuts may have been permanent (from, say, 8 weeks to 4-6 weeks),” the analyst wrote.
Break Down By Companies In Order Of Market Share
Zuanic made no changes on estimates or price targets in this report and confirmed the possibility of potential regulatory changes in the U.S. being the accelerator for companies’ shares.
- Tilray Inc.(NASDAQ: TLRY) held 16.4% of the recreational market share in the second quarter, with Aphriaaccounting for 12.4%, and Tilray for 4%. Aphria sales fell 5% sequentially, after dropping 6% in the first quarter. Tilray was up 16% in the quarter, after being flat in Q1.
- Hexo (NYSE: HEXO) held 13% of the market share with its sales going down 13% in Q2, compared to 20% growth in the previous quarter.
- Canopy Growth (NASDAQ: CGC) seized 12.9% of market share and its sales went down 2% in the second quarter after gaining 4% in Q1.
- Village Farms (NASDAQ: VFF) grasped 7.3% of the market share, with itsPure Sun Farmsreporting sequential sales growth of 49%, compared to a drop of 14% in the first quarter of the year.
- Organigram Holdings (NASDAQ: OGI) held 6.1% of the market share, experiencing sales growth of 61%, compared to a 4% growth in Q1.
- Aurora Cannabis (NASDAQ: ACB) seized 5.1% of market share, with recreational sales going down 17% sequentially, representing the company’s fourth consecutive quarter of quarter over quarter decline.
- Auxly (OTCQX: CBWTF) held 4.9% of the market share and its sales improved 53%, compared to losing 7% in Q1.
- Sundial(NASDAQ: SNDL) had a 2.1% of market share with its sales increasing 16% sequentially after a 6% drop in the previous quarter.
- Aleafia Health (OTCQX: ALEAF) held 0.6% of the market share; its sales had seen 76% growth compared to a 52% improvement in Q1.