Recreational pot sales in Canada haven’t exactly been red hot since the country became the first wealthy nation to legalize marijuana nationwide in October. Government data indicate that Canada’s legal weed sales in the first two months of 2019 were flat compared with those in the first two months of 2018’s fourth quarter, analysts at BMO Capital Markets said in a new report.
“We remain cautious on most of the stocks in our coverage,” Tamy Chen and Peter Sklar wrote, “given the muted near-term sales outlook.” Profit margins will suffer, they said in their note Tuesday, as Canadian producers work on ramping up production and addressing bottlenecks like getting their products packaged.
The government’s StatsCan agency measures retail sales of marijuana. Industry sales in January and February of this year were 105 million Canadian dollars (US$79 million), which was disappointingly flat with the industry total for September and October of 2018.
Retail sales don’t directly track industry revenue. The revenues reported by Canada’s public pot companies—like Canopy Growth (ticker: CGC) or Aurora Cannabis (ACB)—derive from those companies’ shipments to the country’s provincial distributors.
So the BMO team also examined cannabis supply data from Health Canada. That agency’s data suggest that recreational volumes shipped by Canadian producers totaled about 15,000 kilograms in this year’s first two months. That estimate would represent a decline from the 22,000 kilos shipped in the like period o