U.S. firms outshine Canadian rivals

The top U.S. cannabis companies are notably outperforming their struggling Canadian counterparts, yet valuations are still held back by their inability to list on the big American exchanges.

The divergence was well illustrated by two large companies that reported earnings Thursday night.

Green Thumb Industries Inc. became the first U.S. pot company to generate revenue above US$100 million and beat EBITDA expectations for the fifth consecutive quarter. Shares climbed 17 per cent Friday. Meanwhile, Canada’s Aurora Cannabis Inc., which is struggling to turn a profit before it runs out of cash, said it is on track to meet previously disclosed cost-cutting targets. Shares skyrocketed 54 per cent.

“I think this is an inflection point where the U.S. market is becoming the dominant market in the global marijuana space,” said Mark Noble, executive vice-president of strategy at Horizons ETFS Management Inc., which offers exchange-traded funds that track both the Canadian and U.S. pot sectors.

“I think the only thing that’s really keeping these stocks from overtaking the Canadian LPS is the fact that they’re not listed on the U.S. stock market.”

To be sure, the U.S. sector has actually outperformed the Canadian sector since the market’s pandemic-related low on March 18. Since then, the Horizons US Marijuana Index ETF has gained 94 per cent while the Horizons Marijuana Life Sciences Index ETF, which tracks mainly Canadian companies, has added 38 per cent.

“It’s a startling divergence, in my opinion,” Noble said.