Consumers stocked up at end of March, but the surge likely didn’t continue
Large cannabis companies Aurora Cannabis Inc. and Tilray Inc. are set to report earnings this week, providing more detail on how the COVID-19 pandemic is affecting pot sales and the companies making the product.
So far data suggests that as the shelter-in-place orders took hold in mid- to late-March consumers bought lots of weed to ride out the lockdown. That may be visible in cannabis companies with exposure to retail sales, but for the larger producers which don’t operate stores directly, that will show up another way. Since most companies sell to provincial government distributors, investors should watch for executive commentary around the bulk buying behavior when Tilray reports Monday afternoon and Aurora reports Thursday afternoon.
Neither company directly operate bricks-and-mortar stores, though Aurora has made an investment in one. The March surge benefitted retailers in the short run, but it may not have lasted into April and investors should parse executive’s statements closely about what has happened since the quarter closed.
Overall, the data coming out of Canada reflected what occurred in the U.S. as both countries ordered their populations to shelter-in-place. People stocked up on weed the last couple of weeks in March and many increased their cannabis consumption as they were stuck at home. According to Cowen estimates, first-quarter Canada sales are expected at C$479 million ($343.8 million), a 16% increase over a year ago. Several analysts wrote they expected medical sales to be relatively flat. The March-quarter is also the first full three months where second-generation products such as vapes, edibles, and drinks are for sale across the country.
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