Beyond just regulatory concerns, it's going to take quite some time before marijuana stocks are producing at a rate that'll be sufficient to satisfy the domestic market. Below are the rough estimates -- some company estimates, others author-estimated -- for peak production from Canada's largest projected growers.
Aurora Cannabis (NYSE: ACB): 600,000-plus kilograms Canopy Growth Corp.: 500,000 kilograms Aphria (NYSE: APHA): 255,000 kilograms Tilray (NASDAQ: TLRY): Around 200,000 kilograms The Green Organic Dutchman (NASDAQOTH: TGODF): 195,000 kilograms
Clearly, there's some interpretation in these figures. Whereas Aphria and The Green Organic Dutchman have specifically stated their belief that they'll produce 255,000 and 195,000 kilograms, respectively, Canopy Growth and Tilray haven't offered any production guidance. With Tilray's prospectus calling for a little over 850,000 square feet of capacity to be completed by the end of this calendar year, perhaps generating 75,000 kilograms in annual run-rate production, I'm making an educated guess that it'll use its nearly 3 million square feet of available land to expand capacity.
Assuming these production figures are accurate, the top-five producers could yield around 1.75 million kilograms per year in aggregate. When the entire industry is running on all cylinders, these five marijuana growers could be generating more than half of all production.
But here's a rough look at where these top-five pot stocks are producing right now, either based on their own run-rate figures or an extrapolation of their most recent production results.
Aurora Cannabis: 45,000 kilograms, as of September 2018 Canopy Growth: 40,0000 kilograms on an extrapolated quarterly basis Aphria: 35,000 kilograms, according to the company Tilray: 6,000 kilograms on an extrapolated quarterly basis The Green Organic Dutchman: zilch! Currently, the top-five growers are only yielding 126,000 kilograms at an annual run rate. They aren't even a tenth of the way to their collective peak production capacity. And, as you'll note, The Green Organic Dutchman isn't even expecting its first sale until the first half of 2019, and the leading producer, Aurora Cannabis, hasn't even hit six digits yet.
We're likely looking at many years before these growers are anywhere near their pie-in-the-sky production figures, and that's going to mean a downward adjustment in the sale and profit potential for all five of these marijuana stocks. As much as we'd like to believe these stocks will go from zero to 60 mph overnight, that's very unlikely, and it's something that marijuana stock investors should keep in mind.
