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If you do not like one side of the cannabis industry, there is always another one in which to invest. The following two companies represent alternatives in which shareholders can invest their money: Aurora Cannabis (WKN: A12GS7) and MedMen companies (INS: A2JM6N). Aurora is one of the largest marijuana growers in Canada. MedMen is the largest cannabis retailer in the United States.
If we look at the stock market performance of 2018, MedMen wins easily. But investors are more interested in the future than in the past. What is the best part of marijuana? Aurora or MedMen?
What is Aurora Cannabis?
Aurora Cannabis is crowned King of Capacity in the global cannabis market. The company claims to have a production capacity funded of 500,000 kilograms. However, this does not include the acquisition of ICC Labs. This agreement will further increase capacity.
One thing not to be confused: capacity and demand. Neither Aurora nor any other competitor can generate sales without selling its products. Therefore, it is essential to have sufficient demand to use the production capacity.
This is not a problem at the moment. Aurora can sell all of its production in its home country, Canada. However, the current production capacity is not as high as in the coming years.
Aurora is certainly a major competitor in the Canadian medical and recreational cannabis market. The company has supply agreements with the provinces covering 98% of the Canadian population. Although the country offers an important opportunity, Aurora knows that its long-term fortune lies in its international expansion.
That's why Aurora is positioned as an important partner of marijuana for medical purposes worldwide. The most important of these markets at the moment is Germany. The acquisition of Pedanios by Aurora in 2017 allowed him to access the German market. Through its partnerships, joint ventures and other acquisitions, the company is also present in other countries. These include South Africa, Australia, Brazil, Colombia, Denmark, Italy, Malta, Mexico and Uruguay.
Aurora's current market capitalization of approximately $ 7 billion seems quite high compared to past sales. But if the global market actually reaches more than $ 100 billion in volume, the Aurora stock price should still have enough room for growth.
What speaks for the medmen
The main argument for investing in MedMen Enterprises is quite simple: the United States is by far the largest marijuana market in the world. And MedMen is the leading retailer in the United States. MedMen does the same with the growth of the US market.
There is no question that the United States consumes the most marijuana. Legal marijuana sales are expected to exceed $ 22 billion by 2022. It is also clear that MedMen is the leading retailer in the US cannabis market. The company currently operates 14 cannabis stores in three states.
But the MedMen will probably be much bigger soon. The company recently announced plans to acquire PharmaCann for $ 682 million, the largest acquisition in the US cannabis industry. This agreement will make MedMen the largest cannabis company in the United States. It then maintains 66 retail outlets and 13 crop / production facilities.
Marijuana pharmacies and growing sites make MedMen particularly attractive. The company is already active in the major states of California, New York and Nevada. The acquisition of Tradewell Nursery by MedMen strengthens its presence around the state of Florida, which is expected to become the third largest marijuana market in the US by 2022.
The acquisition of PharmaCann ensures the presence of MedMen in other countries: Illinois, Maryland, Mbadachusetts, Michigan, Ohio, Pennsylvania and Virginia. Once the acquisition is completed, MedMen is represented in 12 states in total, which together account for more than half of the marijuana space in the United States.
In addition, MedMen is not limited to the United States. The company is in partnership with the Cronos Group concluded to open cannabis retail stores in Canada.
The best part of marijuana
The considerations for Aurora and MedMen are based on important badumptions. I think that the growth badumptions for MedMen are more realistic in the years to come. And this gives the MedMen an edge over Aurora.
Aurora can not, at least for the moment, establish its own presence in the United States. Thus, the growth potential of the company is strongly disadvantaged. Although the situation may change in the future, Aurora may enter the US market, but there is no guarantee that this will be the case.
The biggest hurdle to US growth prospects would likely be a federal law prohibiting the marketing of marijuana in states that have already licensed it. I think the danger that this scenario is happening is diminishing. This is good news for MedMen.
MedMen's share is always expensive. As a result, I would like the company to complete the agreement with PharmaCann and generate significant revenue and earnings before the stock is considered a safe investment. However, I think MedMen is still the best part of marijuana compared to Aurora. Investors should keep them on the radar.
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Keith Speights There is no position in the mentioned actions. Motley Fool does not own any of the shares mentioned.
This article was written by Keith Speights in English and published on 10.11.2018 on Fool.com. It has been translated so that our German readers can participate in the discussion.
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