Last month, Statistics Canada released the results from its National Cannabis Survey for the second quarter of 2019. Fortunately, the results offer oodles of information that watchers of pot stocks can use to their advantage.
For example, the results found that Canadian men are almost twice as likely to consume cannabis as females. Roughly 21 percent of men used cannabis in the first half of 2019, compared to 12 percent of women. Men are also twice as likely to consume cannabis on a daily basis (8 percent, compared to 4 percent for women) and are more than four times as likely to use cannabis solely for recreational purposes.
In all, almost 5 million Canadians—roughly 16 percent of the population aged 15 and older—reported using cannabis in the months of April, May, and June 2019. In June alone, retail sales hit $91.1 million, which represents $1.1 billion in annualized sales nationwide. What more can be gleaned from the Stats Canada results to divine which pot stocks will be soaring in the near and long term future? Find out below.
Alberta is the Most Profitable Sector for Pot Stocks
Month after month, Alberta remains the biggest retail venue for cannabis. Since legalization, Albertans have spent more money on cannabis than Canadians in any of the other provinces, dropping a total of $123.7 million on legal weed. Residents of Ontario, though, trail closely behind, having spent $121.6 million since legalization.
Alberta distinguishes itself in part for having a lower age for legal consumption than the other provinces (save Quebec). On top of that, it also has the most physical cannabis retail locations by a wide margin. The government of Alberta has already issued 277 retail licenses—or approximately one for every 15,000 residents—while Ontario has issued fewer than 50.
The province's big cannabis revenue numbers spell good news to pot stocks that have established themselves in the region. Calgary-based High Tide Inc. (CSE:HITI) (OTCQB:HITIF), for example, has already opened 19 retail locations in Alberta alone. Its flagship brand, Canna Cabana, is quickly becoming one of the most recognizable retail names in the Canadian cannabis market.
The boom in Albertan sales is also reflected in the company's significantly improved financial position. High Tide's second-quarter 2019 sales report reveals that revenue has grown a staggering 325 percent since last year. Compared to the previous quarter, the company grew revenue from $5 million to $6.6 million and reduced its losses from $3.8 million to $3.3 million.
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Investors should consider backing pot stocks like HITI that target Alberta, as Albertans have proven that they're willing to spend significant amounts of money on cannabis. As the oil-rich province is the only one in Canada without a provincial sales tax, it makes sense that its residents have more disposable cash.
Cannabis Oil is Simply Not Selling
While plenty of the National Cannabis Survey results will give investors reason to celebrate the pot stocks they chose, it's not all good news.
Companion data released by Health Canada shows that, while dried cannabis is selling at an impressive rate, cannabis oil is simply not moving off the shelves.
In June, cannabis retailers sold 10,000 liters of cannabis oil. That's just barely more than one-tenth of the total national supply. These frankly pitiful sales mean that Canada has an oversupply of cannabis oil, which is bad news for companies producing products like CBD oils.
What's worse, legalization 2.0 will soon flood the market with new methods of cannabis consumption. Drinks, edibles, topicals, and a host of exciting ways to ingest cannabis will have consumers across the country ready to experiment. This means that cannabis oil sales may dip even lower in the next year.
Rather than putting their money in cannabis oil companies, investors should look to pot stocks that are getting ready to ride the wave of new ingestible products. Valens GroWorks (TSXV:VGW) (OTCQX:VGWCF) is one such company, as it is already profiting off of the industry-wide pivot to ingestibles.
Valens supplies extracts to a veritable who's who of Canadian cannabis. The company is constantly signing new deals to provide customers with extract for edibles, beverages, and more, making it perfectly positioned for growth in the coming year.
Takeaway
There's a lot more data that investors can sift through, but there are two major points to take away. As Canada nears its one-year anniversary for legalization, the industry is starting to mature in an exciting way. Some pot stocks won't make it through year two, but others will be there to capture new aspects of the market. It's important that investors look at all the data suggesting which category a company will fall into.
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