Marijuana Business Magazine | February 2020 24 U.S. vertically integrated cannabis companies offer a better investment opportunity compared to their Canadian counterparts A Good Bet Investor Intelligence Snapshot | U.S.-Canadian Investments U.S. CANADA Market Capitalization ($ mil) 7,528 15,783 2019 Sales Est. ($ mil) 1,199 1,461 EBITDA Est. ($ mil) 64 -510 EBITDA Margin Est. ($ mil) 5.4% -34.9% 2021 Sales Est. ($ mil) 5,878 3,679 EBITDA Est. ($ mil) 1,787 351 EBITDA Margin Est. ($ mil) 30.4% 9.5% Sales Growth 2019-2021 390% 152% Valuation Price to Sales: 2019 6.3X 10.8X Price to Sales: 2021 1.3X 4.3X Market Size 2019 Est. ($ mil) 11,750 2,080 2021 Est. ($ mil) 20,600 3,390 Allfinancialdatahasbeenconverted toU.S.dollars for thisanalysis. The Canadian companies have a total market capitalization of $15.8 billion versus the U.S. companies at $7.5 billion, and the Canadians trade at a much higher price-to-sales multiple of 10.8-to-1 versus their U.S. counterparts at 6.3-to-1. What exactly are investors getting for the higher valuation on Canadian companies? Sales Based on sell-side analyst estimates from FactSet finan- cial data and analytics, Canadian companies were on track to produce more 2019 revenue ($1.5 billion versus $1.2 billion) while U.S. companies were projected to grow much faster (390% versus 152%) and have far greater sales in 2021 ($5.9 billion versus $3.7 billion). By Craig Behnke and Mike Regan COMPANIES INCLUDED FOR ANALYSIS United States: Acreage Holdings, Columbia Care, Cresco Labs, Curaleaf, Green Thumb Industries, Harvest Health and Trulieve. Canada: Aphria, Aurora Cannabis, Canopy Growth, Cronos Group, Hexo, Organigram and Tilray. T here is a huge difference in the risk/reward profile of the largest publicly traded, vertically integrated cannabis operators in North America. Knowing those differences could help anyone building a cannabis investment portfolio. Based on a host of factors, including estimated sales, EBITDA margin, price-to-sales valuation and total addressable market size, U.S. integrated operators offer a superior investment opportunity compared to their Canadian counterparts. For our analysis, we looked at the top integrated operators based on market capitalization as of Jan. 1 in both the United States and Canada. We chose to include seven companies per country based on the availability of historical financial data and sell-side analyst estimates for 2019 through 2021. The companies represent 84% (United States) and 92% (Canada) of the total market capitalization of publicly traded companies that we track.