The Global Cannabis 50: Ranking the largest cannabis businesses
Global Cannabis Times Debuts ‘THE GLOBAL CANNABIS 50,’ First Analysis of the Value of the Legal Industry’s Biggest Companies
U.S. multi-state operators dominate with 25 of 50 slots in the inaugural ranking by Global Go Analytics.
Led by Curaleaf Holdings (OTC: CURLF), the world’s largest cannabis company, U.S. multi-state operators (MSOs) grabbed nine of the top 10 spots, and 25 slots overall in the first Global Cannabis 50 annual ranking of the largest public cannabis companies in the world.
The Global Cannabis 50 appears in the Winter 2022-23 issue of Global Cannabis Times and is also available online in GCT’s latest digital edition. The ranking was assembled by Global Go Analytics, a leading industry research and consulting firm.
The 50 companies listed in the ranking generated combined trailing 12-month (TTM) revenue of $11.5 billion through June 2022. The market capitalization of the 50 companies on Nov. 4, 2022 was $24.7 billion.
“The steady pace of U.S. states and countries around the world legalizing cannabis for medical and recreational use has created a unique growth opportunity for cannabis companies,” said Tom Adams, CEO and principal analyst of Global Go Analytics.
Top cannabis companies on accelerated path
“Take Curaleaf, the No. 1 company in the Global Cannabis 50. When it went public on the Canadian Securities Exchange in 2018, it had $57.5 million in revenue. Three years later in 2021, Curaleaf became the first cannabis company to break $1 billion in annual revenue,” Adams said.
“Curaleaf edged out Trulieve (OTC: TCNNF) for the top spot in the ranking by reporting $1.35 billion trailing 12-month (TTM) revenue through our cutoff date; Trulieve was second with $1.17 billion in TTM revenue.”
Many of the rest of the ranked companies have also seen robust revenue growth in recent years, all the way down to Canada’s Entourage Health Corp. (OTC: ETRGF), which grew from $8 million in 2018 to $42.6 million in TTM revenue to place 50th in the Global Cannabis 50.
While the legal cannabis market has seen tremendous growth in recent years, the industry is still a minnow in the big pond of consumer products and retail.
“The near $25 billion combined market cap of the Global Cannabis 50 is still only about what Reynolds American paid to acquire Lorillard in 2014, AB InBev (NYSE: BUD) paid for Grupo Modelo in 2012, or Mars for Wrigley in 2008. In other words, there are any number of consumer-product giants that could swallow the Global Cannabis 50 whole,” Adams said.
Cannabis industry still federally illegal but valuations have been in reverse
Currently, U.S.-based consumer packaged goods (CPG) giants are blocked or discouraged from buying any of the U.S. companies that dominate the Global Cannabis 50 by continuing federal prohibition of cannabis in the U.S. and similar regimes in most major world economies outside Canada.
“The long wait for U.S. federal law changes that would allow institutional investors and public CPG companies to invest in cannabis companies have put valuations in reverse,” Adams said.
That has been most evident with the stocks of the licensed producers (LPs) in Canada, which make up 10 of the Global Cannabis 50, led by Canopy Growth Corp. (NASDAQ: CGC), the 8th-largest cannabis company in the world.
“There has been a complete reversal in how investors look at the value of the MSOs and LPs in recent years,” Adams said. “The five largest LPs were valued at a combined $48 billion at their 2019 peak, the top five MSOs at $15.4 billion. Now the top five MSOs are valued at $12.3 billion, while the market cap of the top five LPs is just $4.4 billion.”
How we created the Global Cannabis 50
The Global Cannabis 50 are the largest cannabis companies in the world ranked by annual revenue. Companies around the world were eligible for this inaugural ranking if they generated at least 51 percent of their revenue either from the sale of cannabinoid-containing products to consumers or from providing business-to-business products and services to such consumer-facing cannabis companies. Hence, some large companies—Scotts Miracle-Gro (NYSE: SMG), Jazz Pharmaceuticals (NASDAQ: JAZZ) and InterCure (NASDAQ: INCR), for example—don’t appear in the ranking due to the diversity of their revenue sources.
For those that met the criteria, each company’s most recent four quarters of revenue (through their respective quarters ending closest to June 30, 2022) were summed to find their TTM revenue. They were then ranked by that annual revenue figure to determine the 50 largest companies.
Among Global Go Analytics’ other key findings, found in the Winter 2022-23 issue of Global Cannabis Times:
· The race to the top of the Global Cannabis 50 could be even tighter in 2023. No. 2 Trulieve will have fully consolidated its Oct. 1, 2021 acquisition of Harvest Health & Recreation, and Nos. 3 and 4 Green Thumb Industries (OTC: GTBIF) and Verano Holdings (OTC: VRNOF), each approached $1 billion in TTM for the time period considered.
· Assuming No. 5 Cresco Labs (OTC: CRLBF) closes its acquisition of No. 6 Columbia Care (OTC: CCHWF), it is likely to leapfrog into at least the No. 3 spot in next year’s ranking—the two companies had combined TTM revenue of $1.2 billion through June 2022.
· Vertical integration is a key factor explaining why the U.S. MSOs dominate the Canadian LPs in this ranking by revenue. The MSOs’ topline revenue comes at the retail counter in the much-larger U.S. market; LPs largely sell at wholesale to government-owned distributors in Canada.
· In fact, were it a publicly traded company, the government-operated Ontario Cannabis Store’s (OCS) $900 million in revenue in its fiscal 2021 would make it No. 4 on the Global Cannabis 50.
· Pure-play Canadian retailers have a solid chance to move up the rankings as they consolidate the Canadian retail space. Combined, No. 15 High Tide (NASDAQ: HITI), No. 23 Nova Cannabis (TSX: NOVC) and No. 27 Fire & Flower (OTC: FFLWF) posted a 14 percent compound quarterly growth rate from 3Q ’21 to 2Q ’22.
· The Global Cannabis 50 includes many U.S.-based non-plant touching entities (NPTEs) that are able to participate in the growth of the cannabis space while not violating any U.S. federal laws. Among the largest are No. 11 Innovative Industrial Properties (NYSE: IIPR), the first publicly traded cannabis real estate investment trust (REIT), and No. 14 WM Technology (NASDAQ: MAPS), which owns online service Weedmaps, one of the most recognized names in cannabis.
The future of the Global Cannabis 50 companies
What does the future hold for the Global Cannabis 50?
“Revenue growth is nearly a certainty for this group of companies as legalization continues market-by-market. But valuations are somewhat at the mercy of the U.S. government,” Adams said.
“Right now, the slow pace of liberalization of U.S. cannabis laws has the companies in the Global Cannabis 50 trading at just 2.1x TTM, while companies in much slower-growth but more established sectors like alcohol, pharmaceuticals and even tobacco trade at 4x-plus.
“Cannabis companies may not see the frothy valuations of 2019 again any time soon, but if revenue growth continues, better days are ahead for the stocks of the Global Cannabis 50.”
Global Cannabis Times is circulated for free to verified members of the legal cannabis industry in the United States. A yearly subscription costs $95 for non-qualified individuals in the U.S.; all others please contact [email protected] for information about subscribing.
THE LIST: The Global Cannabis 50
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ABOUT GLOBAL GO ANALYTICS Global Go Analytics was launched in April 2021 to put the power of data to work for established cannabis companies, investors and new entrants to the fastest growing consumer product category of all time. CEO and principal analyst Tom Adams is the cannabis industry’s most experienced analyst and strategic consultant. In 2016, he founded the Industry Intelligence group at BDSA, after more than two decades of business research innovation as the head of Adams Media Research, which The New York Times called “a leading monitor of the entertainment business.”
ABOUT GLOBAL CANNABIS TIMES Launched in March 2022, Global Cannabis Times is the worldwide cannabis industry’s favorite new business publication, offering a potent mix of interviews, market analysis, investing insight and in-the-trenches advice for licensed, legal cannabis operators and professionals. Published six times a year by SmartWork Media in collaboration with Zuber Lawler and Global Go, Global Cannabis Times won first place for “Best B2B Magazine Launch” at the 2022 FOLIO Eddie and Ozzie Awards, one of the most prestigious award programs in B2B media.