What are the highest-grossing cannabis stocks? Better yet, why is that important? Here is a listing of about 125 different pure-play cannabis companies and their respective gross margins from total revenues versus cost-of-goods. There are always some surprises in these listings, a listing that is actually very popular. Using this list you can start sorting out which cannabis companies are outperforming others.
What are gross margins?
Gross margins are broken down showing how much revenue was generated by the company during a period of time and how much it cost to produce the products sold. It is simple mathematics that gives us a percentage. The higher the percentage, the better performing a company is.
Basically, if you have a company that produced a pre-roll and they sold it for $10.00, what did it cost to grow the product, roll it, and package it? This is what gross margins show us. At the same time, there is another cost, that being total operating costs, the costs for running the business outside of producing the product. You would find Sales, General, and Administrative (SG&A) in this metric. How much is the rent? How much is the advertising costs? That shows up below the first portion of the financial statements.
This listing deals only with the cost of goods versus revenues.
If you think this through, it starts to make sense as to why this metric is so important. For instance, let’s say the consumer market feels that a $10.00 pre-roll is about right. If three separate companies each make a pre-roll and these can sell for $10.00, but the gross margins are significantly different, this may allow for more profits going to one company versus another. If three different companies, Company A, Company B, and Company C, each had 50%, 60%, and 70% gross margins respectively, then this means Company A keeps $5.00 of the sale, Company B keeps $6.00, and Company C keeps $7.00. The rest of the revenue went to the costs of making these pre-rolls. In general, Company C would be far more preferred. However, there are other things that factor into whether or not the top company on this list of top cannabis companies is a buy. This is just one metric for consideration.
I have about 350 cannabis companies on my radar in one form or another. I have listed about 100 of these below. These companies are consistent in reporting their financial statements are mostly pure-play cannabis stocks; with some minor exceptions. However, what we find is a lack of consistency with reporting in cannabis companies. For instance, you may get some companies that had to write down inventory due to not being able to sell some products. This is a problem with cannabis stocks. After the flower is harvested it is dried all the way down to 15% hydration level. If a cannabis flower sits around too long, it starts to lose that 15% level. Once that happens, it needs to be destroyed. This will affect margins because it goes against cost-of-goods.
Because of that, some companies may have reported solid revenues for the quarter but had to write down product losses. That goes against them, and it shows up here in this listing. But, it works both ways. There are times when an event will occur and a company will have a negative cost of goods for the quarter. If that did happen, it is difficult to put that company at the top of the list simply because they topped the 100% level. Although you can report negative cost of goods, you simply cannot have negative cost of goods if you are producing some kind of product. I have sanitized the companies that had one-offs that pushed their respective cost of goods out of normal bounds and above 100%.
Given that, there were some standouts with some consistency.
- MPX International $MPXOF: 93.3%
- GAIA $GAIA: 87.1%
- 4Front Vetnures $FFNTF: 85.9%
- TerrAscend $TRSSF: 84.5%
- Cresco Labs $CRLBF: 67.7%
- Orchid Wellness: $ORVRF: 66.7%
- Empower Clinics $EPWCF: 66.7%
- KAYA Holdings $KAYS: 66.7%
- C2 Investments $CXXIF: 62.1%
- MariMed $MRMD: 57%
TOP 10 Highest Gross Cannabis Companies
|Symbol||Name||Revenue||Cost of Goods||Gross Margins|
|11||GTBIF||Green Thumb Industries||$177.2||$76.7||56.7%|
|16||HRVOF||Harvest One Cannabis||$1.5||$0.7||53.3%|
|21||KGKG||Kona Gold Solutions||$0.2||$0.1||50.0%|
|23||INSHF||Inner Spirit Holdings||$7.2||$3.7||48.6%|
|24||NXGWF||Next Green Wave||$3.6||$1.9||47.2%|
|28||PLNHF||Planet 13 Holdings||$20.1||$11.3||43.8%|
|29||KHRNF||Chiron Life Sciences||$1.4||$0.8||42.9%|
|34||FFLWF||Fire & Flower Corp||$24.9||$16.2||34.9%|
|35||GLDFF||Golden Leaf Holdings||$6.2||$4.1||33.9%|
|42||WCEXF||World Class Extractions||$2.1||$1.5||28.6%|
|44||SARSF||Canada House Wellness||$2.2||$1.6||27.3%|
|46||CGC||Canopy Growth Corporation||$119.9||$88.3||26.4%|
|49||ACB||Aurora Cannabis Inc.||$53.2||$39.5||25.8%|
|50||VLNCF||The Valens Company||$15.7||$12.1||22.9%|
|57||HRVSF||Harvest Health & Recreation||$69.9||$58.9||15.7%|
|58||TGODF||The Green Organic Dutchman||$7.3||$6.2||15.1%|
|62||IGC||India Globalization Capital Inc||$0.8||$0.7||12.5%|
|63||DLTNF||Delta 9 Cannabis||$11.1||$9.8||11.7%|
|64||OILFF||Next Leaf Solutions||$1.0||$0.9||10.0%|
|66||SHWZ||Medicine Man Technologies||$7.9||$7.3||7.6%|
|67||VFF||Village Farms International, In||$47.4||$46.3||2.3%|
|79||TRTC||Terra Tech Corp||$4.5||$5.9||-31.1%|
|80||SNDL||Sundial Growers Inc.||$10.9||$14.6||-33.9%|
|85||FLOOF||Flower One Holdings||$11.9||$22.3||-87.4%|
|86||CRON||Cronos Group Inc. Common Share||$17.0||$31.9||-87.6%|
|88||OGI||Organigram Holdings Inc.||$11.5||$25.0||-117.4%|
|91||EMHTF||Emerald Health Sciences||$2.5||$6.6||-164.0%|
|92||FLWPF||The Flower Corp||$2.1||$6.0||-185.7%|
|94||NEPT||Neptune Wellness Solutions Inc.||$2.6||$10.3||-296.2%|
|96||EEVVF||Eve & Co||$0.5||$2.6||-420.0%|
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This is a once-in-a-lifetime opportunity to capitalize on a new industry that is booming.
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