Research Update: Our Favorite Canadian Cannabis Holding Is Finally Getting Some Love!
If you’ve followed our work, you know we’re bullish on one particular Canadian cannabis company, and it’s still trading at a very cheap valuation.
The equity remains significantly undervalued. The primary driver for this discount is the broader cannabis sector where market sentiment has not yet fully shifted in the positive direction we expect sooner rather than later.
Today however the TD Cowen initiation of coverage on four Canadian cannabis operators is a massive development that should provide a significant catalyst for the sector. The specific company we are providing a research update on today is one where we have met management multiple times and visited the production facility and attended investor presentations.
We have a very high level of conviction in this name.
So which one is it? It would be too easy to just name it right away.
Instead, let’s start with TD Insights on the cannabis industry.
We see it as highly relevant for anyone interested in the space and a strong starting point to understand the broader opportunity.
Industry Insights
A substantial disconnect currently exists between equity prices and fundamental performance within the Canadian cannabis landscape.
While the sector remains dominated by retail investors and trades at a significant discount to historical multiples the operational reality has improved significantly. All companies under current coverage are EBITDA positive with strengthened financial positions and leverage levels maintained below the institutional 3.0x hurdle rate. We expect continued execution strength and financial discipline as market growth and share gains accelerate.
A first mover advantage in key categories is driving repeat sales and margin expansion through sticky consumer behavior. This institutional validation highlights specific competitive advantages across industry leaders including retail expertise and scale along with a focus on proprietary genetics and medical cannabis dominance. Furthermore, we believe the sector’s large cash positions and strategic backing from major tobacco players provide meaningful stability, while established leaders maintain strong market share in high-growth categories such as vape and infused pre-rolls.
Market dynamics are further supported by a visible shift away from alcohol consumption as awareness of health risks increases. A 2026 study by the Centre for Addiction and Mental Health identified alcohol as the most harmful psychoactive substance in Canada while cannabis ranked five times less harmful. The sector is now comprised of world class consumer packaged goods companies characterized by high purchase frequency and low costs.
These industry leaders are well positioned for an eventual sector revival as the domestic opportunity becomes better understood. Furthermore the cannabis sector is a massive contributor to national growth contributing over $16B to Canadian GDP and supporting over 227,000 jobs.