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Aurora Cannabis, Cronos, Canopy Growth or Tilray? – The colorful fool



Canada's recreational marijuana market and the European medical cannabis market are usually the top topics for senior executives of the largest marijuana manufacturers. That makes sense, because almost all the revenue of the major marijuana companies in Canada and Europe are generated.

But what about the US, the largest cannabis market in the world? The largest of these major marijuana manufacturers in terms of market capitalization – Canopy Growth (NYSE: CGC) Aurora Cannabis (NYSE: ACB) Tilray (NASDAQ: TLRY ) and Cronos Group (NASDAQ: CRON) ̵

1; can not enter the US marijuana market and maintain its quotations on the major stock exchanges as long as marijuana remains federal at federal level in the United States ,

However, entry into the US hemp market is another story, thanks to the legalization of hemp in the US in December 2018. Which of the best Canadian marijuana breeders can best win in the US market? This is how the prospects for Canopy, Aurora, Tilray and Cronos look like.

  US. Flag framed by a pile of marijuana leaves

Source: Getty Images.

The Leaders

Two of the leading Canadian marijuana manufacturers are in the race to enter the US market. Canopy Growth and Tilray have already taken significant steps to enter the US.

Canopy Growth made its first major appearance in October 2018 with the acquisition of the hemp-based hemp research firm ebbu of Colorado. Canopy was able to comply with the listing requirements of the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX), although hemp was technically not legal in the US at the time. The company has been able to research and develop only with its ebbu activities and not to manufacture any products for sale.

Canopy Growth followed in January with an even bigger announcement. The company announced that it had obtained a license to produce and process hemp in the state of New York. Canopy is investing between $ 100 million and $ 150 million in the construction of a hemp industrial park in New York.

Bruce Linton, founder and co-CEO of Canopy Growth, said in his February Q3 conference call that he expects the company to launch hemp CBD products in the US by the end of this year , Linton also pointed out the possibility that Canopy could build hemp production facilities in other US states.

Tilray was not far behind. In February, the company announced that it would acquire Manitoba Harvest, the world's largest hemp food manufacturer, for approximately $ 318 million. Manitoba Harvest's hemp products are sold in over 16,000 stores in North America, of which approximately 13,000 are in the United States.

The acquisition of Manitoba Harvest plays another role Tilray has recently taken. The company announced in January that it had teamed with the US-based Authentic Brands Group (ABG) to develop and market cannabis products to consumers worldwide. Tilray CEO Brendan Kennedy confirmed in the company's quarterly update a few weeks ago that this partnership "will initially focus on CBD products in the US". The acquisition of Manitoba Harvest gives Tilray an integrated supply chain for the supply of ABG with CBD.

  Chemical structure of cannabis and CBD

Source: Getty Images.

The Latecomers

While Canopy Growth and Tilray Emerge Aurora Cannabis and the Cronos Group are the laggards to enter the US early. Neither company has yet announced firm plans for its expansion strategy in the US.

When the company's profit bid for the US hemp opportunity was asked in February, Terry Booth, CEO of Aurora Cannabis, said there was some confusion about the hemp-based CBD distribution in the United States. He added that Aurora "would come in, if it is right to enter and if it is legal to enter the US market."

To be fair, Aurora definitely has significant hemp skills. The company owns Agropro, the largest hemp producer in Europe. Aurora owns a controlling interest in the Canadian hemp producer Hempco Food and Fiber . And it acquired Uruguay-based hemp producer ICC Labs.

The Cronos Group was the first Canadian marijuana inventory to be listed in the Nasdaq . CEO Michael Gorenstein said last year that Cronos was planning to be "a big part of the US market." So far, however, the company has taken no visible steps to expand into the US. However, Gorenstein said in the Cronos Group's Q4 telephone conference that Cronos has "done an excellent job of building strong relationships with US cannabis industry stakeholders". and will "watch the US hemp opportunity" very closely.

Most likely to succeed

While there are now clear leaders and laggards among Canadian marijuana growers with respect to the US market, momentum could change rapidly. It is quite possible that both Aurora and the Cronos Group may announce their expansion into the US in the near future.

Cam Battley, chief corporate officer of Aurora, mentioned in the company's teleconference that "we do not want to divulge too much of us strategy just yet in the US" Similarly, the Gorenstein of the Cronos Group said that his company is ours Strategy for the US market "not wired", as some of his colleagues do.

  Finger on wooden block with star beside three other wooden blocks with stars

Source: Getty Images.

Which of the four companies seems to be the most successful in the US? I will give a differentiated answer.

In my opinion, Tilray will be very successful on the US hemp CBD market very early. The company will be in the bag with Manitoba Harvest. Canopy Growth will take months to bring its first hemp CBD products to market. Tilray will now have solid relationships with retailers and customers through its acquisition in Manitoba Harvest and its ABG business. The company also has a large partner with a successful track record in the US, Constellation Brands (NYSE: STZ) . Canopy also has a large cash reserve to fund its efforts, thanks to Constellation's $ 4 billion investment. When the US Food and Drug Administration passes the regulations on CBD-soaked drinks, Canopy's relationship with Constellation should give the competition an edge.

I also think that hemp will only be a start. The chances of the United States allowing states to enforce their own marijuana laws are increasing. Sooner or later, the major Canadian marijuana producers are likely to be able to penetrate the US marijuana market.

If so, I think that Canopy's partnership and Constellation's money will be a key factor. In my opinion, Canopy Growth is most likely in the long run in the entire US cannabis market.


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