Last year was transformational for the marijuana industry, with Canada becoming the first industrialized country in the world to legalize recreational weed, a handful of U.S. states green-lighting cannabis in some capacity, and multiple pot stocks moving from the over-the-counter exchange to either the New York Stock Exchange or Nasdaq Stock Market.
This proliferation of pot has led to some very robust sales estimates for the industry. In the near term, global revenue could hit north of $31 billion by 2022, with an assortment of Wall Street investment banks calling for between $50 billion and $75 billion in annual sales by the end of the next decade. This suggests that marijuana stocks should see their sales soar over the next couple of years, with meaningful revenue figures being recognized in 2020.
Which marijuana stock will stand atop all others as the revenue kingpin by the turn of the decade? Let's take a closer look, according to Wall Street's most recent revenue consensus.
Say hello to the weed industry's top revenue producers in 2020
To be clear, we're looking only at pure-play pot stocks, which eliminates high-revenue players like Constellation Brands, Molson Coors Brewing, and Scotts Miracle-Gro, which derive most of their sales from traditional businesses. Also eliminated were pot stocks that don't currently have any analyst coverage. That being said, here are the projected 15 top revenue producers in fiscal 2020 (in U.S. dollars).
- Aurora Cannabis (ACB -5.50%): $642.8 million
- Aphria (APHA): $627.8 million
- Canopy Growth (CGC -5.09%): $594.5 million
- Acreage Holdings: $525.1 million
- MedMen Enterprises: $470.3 million
- GW Pharmaceuticals: $429.8 million
- Tilray: $373.1 million
- The Green Organic Dutchman: $327.6 million
- Charlotte's Web Holdings: $313.3 million
- HEXO: $239.7 million
- KushCo Holdings: $204.8 million
- Auxly Cannabis Group: $203 million
- OrganiGram Holdings: $175.9 million
- CannTrust Holdings (CNTTQ 0.00%): $142.9 million
- Cronos Group (CRON -6.21%): $142.7 million
Is this what you expected at the top?
There are a number of surprises with Wall Street's data, but perhaps the one thing that isn't a surprise is seeing Aurora Cannabis atop the pack in the revenue column. Aurora is outpacing the field right now in terms of annual run-rate production (north of 150,000 kilos a year), and it recently announced an additional expansion of its largest facility, Aurora Sun. While management has been conservative with its peak production forecast, I believe the company to be on track for more than 780,000 kilos a year by 2022. Based on sheer volume alone, Aurora will remain at or near the top of the list in terms of annual sales.
In terms of surprises, the first that might stand out is Aphria surpassing Canopy Growth in 2020 sales, per Wall Street. Aphria's two key facilities, Aphria One and Aphria Diamond, were slated for completion earlier this year, putting it on track to achieve 250,000 kilos annually from these two core grow sites. Meanwhile, Canopy Growth has been slowed by Canada's early-stage supply chain issues. Of course, with Canopy's peak annual output of around 525,000 kilos being more than double Aphria's, and Canopy pushing into the U.S. hemp industry, the top of the sales pecking order is likely to change in the years to come.
Take note of the companies at the bottom
You might also be surprised to see the two companies occupying the 14th and 15th spots on this list: CannTrust and Cronos Group.
CannTrust might push its way to the No. 3 spot in terms of peak annual production, yet it finds itself barely clinging to the list of top revenue producers for 2020. The reason? Most of its cannabis production is back-end loaded. Having already completed 450,000 square feet of the Niagara facility, and the 60,000-square-foot Vaughan facility, the company has about 50,000 kilos of run-rate capacity right now. A 390,000-square-foot expansion at Niagara, approved in January, will bring CannTrust to about 100,000 kilos. But the acquisition of 200 acres of land for outdoor growing will double or triple its capacity. Unfortunately, such an aggressive move is going to take a few years to pay dividends for CannTrust.
Meanwhile, Cronos Group, the third-largest marijuana stock by market cap, trails a slew of much smaller peers in terms of revenue potential in fiscal 2020. Arguably, the only thing bolstering Cronos Group's stock has been the closing of Altria's $1.8 billion equity investment. Altria's investment gave it a prediluted 45% stake in Cronos, and this, in turn, has given investors the impression that Altria will simply acquire Cronos Group in the not-too-distant future. But in the early going, Cronos' sales, production, capacity, and overseas expansion have been subpar. The company's 2020 sales estimates are a testament to this.
There's little doubt that we're going to see sales estimates change considerably as deals are made, new products are introduced, and the North American cannabis industry matures. But for the time being, there are some very clear standouts and disappointments.