Hot Picks: Cannabis consolidation and global demand fuel sector outlook
Published: , 2026
Cannabis markets in Canada and the U.S. are showing uneven growth as the industry matures, with consolidation and international demand emerging as key themes shaping the sector.
BNN Bloomberg spoke with Frederico Gomes, director of institutional research and life sciences at ATB Cormark Capital Markets, about opportunities driven by strong balance sheets, retail consolidation and expanding global demand, particularly in Europe.
Key Takeaways
- Cannabis market growth remains uneven across regions, reflecting a maturing and increasingly competitive industry.
- Consolidation is accelerating as stronger operators acquire assets and capture share from smaller players.
- Balance sheet strength is critical, providing flexibility for expansion, acquisitions and downside protection.
- International markets, especially Germany and Europe, are key drivers of future cannabis demand growth.
- Competitive pressures persist from illicit markets, though legal operators are improving pricing and market share.
Read the full transcript below:
ANDREW: It’s time for Hot Picks. We’ve got three cannabis names that our guest believes have room to grow. We’re joined by Frederico Gomes, director of institutional research and life sciences at ATB Cormark Capital Markets. Frederico, great to talk to you again, and thanks very much indeed. Could we jump into your first idea here? SNDL — just remind us what they do, and why do you think the stock has promise?
FREDERICO: So SNDL — this is an attractive pitch for value investors, because approximately 50 per cent of their market cap is net cash at this point, so very strong downside protection from current levels. In terms of what exactly they do, in terms of their core operations, they are a diversified platform in cannabis. So they operate a cannabis retail segment, a cannabis operations segment, which includes cultivation and manufacturing, as well as a liquor retail segment in Western Alberta, with several liquor stores.
When you look at the valuation again, 50 per cent is net cash of their market cap, and then their core operations are being valued at only about four times EBITDA. So I think it’s a very attractive valuation, good downside protection. And on top of that, SNDL also has some investments in the U.S. cannabis market, which we believe, if we get regulatory reform in the U.S. — namely, if cannabis is rescheduled to Schedule III, which we think could happen this year, given President Trump’s executive order last year — we think that the value of those investments that SNDL has could be worth more than the entire market valuation of the company today. So attractive upside and good downside protection. A good pitch for value investors here.
ANDREW: Right. They used to be Sundial Growers, I believe, years ago.
FREDERICO: Exactly.
ANDREW: High Tide, okay, HITI — major retail presence in Canada.
FREDERICO: Yeah, High Tide is the largest cannabis retailer in Canada. They operate about 220 stores, really a leader in that space. It is a consolidating industry, so High Tide has been growing double digits over the past few years. They have a discount club model, which is working very well for them. They’re seeing strong same-store sales growth, sales per store that are two to three times higher than the average of the industry. They’re also seeing margin expansion.
Now, what’s interesting about High Tide is that not only do they have a long runway for growth — like I said, they operate 220 stores today, they’re aiming for 350 in Canada, opening about 20 to 30 new stores every year — so that gives them four to five years of growth. But not only that, they also have growth outside of Canada. Last year, High Tide acquired a company called Remexian, which is a medical cannabis distributor in Germany. And Germany is a market that is seeing exponential growth in demand, with patients growing and a lot of demand in that market.
And so High Tide is poised to benefit from that growth through that acquisition that they made last year. And on top of that, they’re also looking at acquisitions in the U.K. medical cannabis market. So you get the leader in cannabis retail in Canada, as well as exposure to international markets, for a very reasonable valuation. The stock trades at about five times EBITDA, growing double digits, like I said. So I think it’s a growth-at-a-reasonable-price story and very attractive growth here.
ANDREW: And retail — has it stabilized in Canada? At one time, it looked like we had far too many stores in Toronto. We had a whole bunch close.
FREDERICO: Yes, many stores have closed. The market has rationalized, and High Tide has taken advantage of that. So they have been acquiring stores here and there, as well as opening stores organically and really stealing share from smaller operators. And so it is a consolidating market. That process is still ongoing, but High Tide benefits from that.
ANDREW: One thing around Toronto — you do see, apparently, illegal stores, stores that are open 24 hours, etc. Is that a threat to the industry?
FREDERICO: That’s still a competitor. I wouldn’t say it’s a threat. The legal market has been declining in Canada — I think it’s about 20 to 25 per cent of the market today. Before legalization, obviously, it was most of the market, and so it’s been declining. It is a competitor, but given the prices that legal operators are able to offer today, they’re able to compete with that illicit market. So it’s a competitor, but I wouldn’t say it’s a major threat.
ANDREW: Right. And then your final idea, Village Farms International. Again, they offer international prospects for investors.
FREDERICO: Yeah. So Village Farms is a cultivator — right, so it’s a licensed producer. We call them LPs. They are a low-cost, large-scale, high-quality cultivator, and those low-cost capabilities are very important in the cannabis market. One of the top five LPs in Canada.
But I think what’s most exciting about this story is the growth that we’re seeing in international markets — namely Germany, the U.K., the Netherlands. And so Village Farms is seeing more demand than they can supply right now because of that growth internationally. And so they’re expanding their capacity by about a third — 40 metric tonnes — in Canada. That capacity is coming online this year.
They’re also expanding their capacity in the Netherlands. They have a presence there. They are five times that capacity this year again, and so they’re seeing a lot of demand, and that new capacity is coming online this year. So they have huge growth ahead with that international demand.
Valuation is very reasonable — trading at six times EBITDA for a company that is generating free cash flow, that has a strong path ahead with a net cash position. So very attractive here.
ANDREW: It’s interesting, Frederico — we’re tight for time, but we keep hearing about declining alcohol consumption. And I wonder, has the advent of decriminalized and legalized cannabis played a role in that?
FREDERICO: Well, I think it has. The cannabis market keeps growing, volumes are increasing, and so you see a little bit of that cannibalization, with consumers preferring cannabis as maybe a healthier option than alcohol. So that’s for sure a factor.
ANDREW: Frederico, thanks very much. Frederico Gomes, director of institutional research and life sciences at ATB Cormark Capital Markets.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| SNDL NASDAQ | N | N | Y |
| HITI CVE | N | N | Y |
| VFF NASDAQ | N | N | Y |
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This BNN Bloomberg summary and transcript of the April 15, 2026 interview with Frederico Gomes are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
