Cowen's recently concluded Cannabis Summit covered a myriad of topics ranging from clean cultivation; domestic and international growing; and the convergence of cannabis and culture.
In a new report, analyst Vivien Azer highlighted some key takeaways from the Toronto event.
What Happened
"Premiumization" was a recurring topic, Azer said in a Tuesday note.
The issue comes up frequently, in part due to the upcoming October rollout of more novel cannabis form factors in Canada. It's believed the deployment should result in higher average selling prices, which would be mix/margin accretive, she said.
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Women are playing a part in the premiumization of cannabis, Azer said.
“With women more likely to view cannabis as a health & wellness tool, female-focused companies such as 48North and Eve & Co will look to capitalize on expected share shifts away from flower by focusing on products such as edibles, beverages, topicals and beauty/skincare," Azer wrote in the note.
The bifurcation of premium and commodity products was another hot topic at the conference. The dynamic was credited for helping smaller LPs achieve a singular focus on quality.
Azer said the demand for such products could drive the premium dry flower market to reach 15-20 percent of the sector's sales, according to one panel.
What’s Next
Canadian cultivation should ramp in the second half of 2019, Azer said.
LPs are in a position to increase capacity soon, in Cowen's view, and the firm sees this expansion as resulting in increased retail sales, noting a 17-percent rise in month-over-month sales for March: "That said, we recognize that the onboarding of novel form factors creates other layers of complexity that can disrupt the industry, similar to last year."
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European demand is considered underserved, the analyst said.
Companies are now expanding cultivation efforts across Europe and Israel to service the European Union, she said.
"As these facilities come online, we continue to believe that allocation decisions and challenges will ease, allowing incremental supply to remain in the domestic market."
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