MSOs vs LPs Pre-Election Volume Analysis

With the U.S. presidential election around the corner, I was curious to see what kind of demand the LPs have experienced in comparison to the MSOs.

Time and time again, CNBC reports on the Canadian Licensed Producers when speaking to U.S. cannabis legalization/decriminalization, instead of the U.S. Multi-State Operators.

As a quick example, Todd Harrison from CB1 Capital highlighted this discrepancy following the Vice Presidential debate earlier this month.

CNBC has interviewed a number of MSO CEOs, so it is not clear to me why they are resistant to report the appropriate cannabis operators when speaking to U.S. regulations.

In any case, the MSOs have seen a pick up in average daily volume so far in October, most likely by way of investors try to front run the results of the presidential election. On average, trading volume in the “Big 5” MSOs, which I define as CURA, GTII, CL, TRUL, and TER, have increased by an average of 25.3% on the OTC market, while the CSE/Canadian volumes have increased by an average of 50.1%. On an aggregate basis , MSO trading volumes are higher by 37.5% for October.

However, the Canadian LPs, which have very limited (if any) exposure to the U.S. market are experiencing even higher trading volumes, thanks to being listed on the major U.S. exchanges (NYSE & Nasdaq), and confusion from the retail investors regarding who will be a beneficiary of cannabis descheduling.

That said, average trading volumes in the Canadian LPs have essentially doubled on the U.S. and Canadian exchanges in October, increasing by 94.5%. To be fair, much of the elevated volume has been driven by Aphria and its quarterly earnings results. Excluding Aphria, average trading volumes for the LPs are higher by 56.0% on a month-over-month basis.

On an unrelated note, I look forward to comparing the market capitalizations for the “Big 5” MSOs and LPs a year from now. As a reference for myself to look back on: