The big day is almost here. In 24 days, on Oct. 17, Canada will lift the curtain on recreational marijuana prohibition and allow adult-use cannabis to be purchased in licensed dispensaries. When the industry is fully up to scale, it should result in billions of dollars in added annual revenue. This is why investors have driven marijuana stock valuations into nosebleed territory in recent years.
However, the marijuana space remains very fluid, with acquisitions, partnerships, joint ventures, and organic grow projects constantly reshuffling production expectations. After all, when the year began, it looked as if it’d be a struggle to foresee 1 million kilograms of annual production by 2020. Now, 3 million kilograms looks to be the annual floor by the turn of the decade, in my best estimate.
What companies will be leading the charge in production? Again, while these are nothing more than educated guesses at this point — and a lot could change depending on dealmaking, mergers, and organic project announcements — here’s a prediction for the top 10 cannabis producers by 2020.
1. Aurora Cannabis: Up to 700,000 kilograms per year
Most likely, Aurora Cannabis(NASDAQOTH: ACBFF) will be the country’s largest producer by the turn of the decade. Aurora has been hell-bent on growing its capacity by any means necessary. It’s undertaken organic projects that include Aurora Sky and Aurora Sun; formed partnerships, as in Aurora Nordic with Alfred Pedersen & Son; and acquired CanniMed Therapeutics and MedReleaf. With these assets under its belt, Aurora Cannabis expects to yield 570,000 kilograms annually.
But its recently announced purchase of ICC Labs, with 92,000 square feet of existing production and just over 1.1 million square feet currently under development, should allow Aurora Cannabis to bolster its potential yield to around 700,000 kilograms by 2020, in my best guess.
2. Canopy Growth Corp.: Between 500,000 kilograms and 525,000 kilograms per year
Interestingly enough, Canopy Growth Corp. (NYSE: CGC) has been quite secretive regarding its peak production potential. What we know right now is that it has 2.4 million square feet of licensed capacity in British Columbia, and it’s on track to have 5.6 million square feet licensed when all is said and done. The wild card is we don’t know exactly what sort of yield Canopy Growth is getting on its square footage. My suspicion is that it’s close to 100,000 kilograms per 1 million square feet, which is why I’m estimating in the neighborhood of, or just above, 500,000 kilograms per year.