RECAP: Rivemont MicroCap Cocktail - Canadian Cannabis Special
Two weeks ago, I hosted a networking cocktail in Montreal. The concept is simple. I aim to get about 50 investors, two microcap companies and a keynote speaker in the same room for a little over an hour of presentations with networking periods before and after.
I try to organize my events around specific themes. I pick a keynote speaker who’s an expert on the theme to provide attendees with actionable insights and two high-quality microcap opportunities to learn about.
Here are some pictures of our most recent event:
I was particularly excited about our May 28th event because Canadian cannabis has been a big theme in Rivemont MicroCap Fund’s portfolio this year.
Following a massive boom in 2017-2019 and a subsequent bust (2020 to today), the sector has been left for dead. However, there are now clear signs that the cycle is turning:
Wholesale cannabis prices have been increasing for the last 12-18 months following several years of price compression.
60+ licensed producers have gone bankrupt
Consolidation is underway, which will lead to a more rational competitive landscape
A handful of emerging LPs have shown strong revenue growth. Some even have a track record of generating positive cash flows (such as the two ideas below).
I view the cannabis industry as a mix of highly regulated CPG and agriculture (for those who are vertically integrated). The barriers to entry are very high for two primary reasons:
Compliance costs and the length of the regulatory approval process
The capital requirements to build a cultivation facility are high, and there’s currently very little capital available for potential new entrants.
Unlike the US, the regulatory framework for cannabis in Canada is clear. It’s a $5.5 billion annual market that is not going away and is still in structural growth mode. I believe the market will consolidate into an oligopoly over time, which will improve pricing, stickiness, and profitability for the remaining players.
As you will see in the videos below, it is becoming clearer by the day which LPs are likely to establish themselves as the winners in the sector.
With that preface in mind, please enjoy the video replays from the event!
I included an AI-generated summary below each video so you can quickly glance at the main topics covered in those presentations.
Keynote Speech: Andrew Semple, CFA - Equity Research Analyst at Ventum Financial
Summary:
Seasoned cannabis analyst’s track record: Andrew Semple has outperformed benchmarks in 18 of 20 quarters, delivering a 137% total gain on his top picks vs. -60% for passive cannabis ETFs.
Capital-cycle opportunity: After four years of capital drought, investors have largely exited the cannabis sector, cultivation capacity has gone offline, and consolidation is underway. These conditions set the stage for value investors to find the next winners in the industry.
Attractive valuations: Top Canadian LPs once traded at 30× sales / 209× EBITDA (January 2019); today they trade at just 0.6× sales / 7.8× EBITDA — reflecting realistic economics and creating selective bargains among high-quality operators.
Industry still growing structurally: Retail cannabis sales in Canada have climbed to CA$5.4 billion TTM — surpassing craft beer — and, despite recent headwinds (illicit resurgence, price compression), volume growth remains in the low double digits.
Big LPs lagging vs. nimble winners: Canopy Growth (TSX: WEED), Aurora Cannabis (TSX: ACB) & Tilray Brands (TSX: TLRY) have flat-lined revenues over six years, while Ventum’s recommended basket (e.g. Cannara Biotech, Rubicon Organics, MTL Cannabis, Decibel Cannabis, and Auxly Cannabis Group) has gone from near-zero to ~CA$100 million in quarterly sales and turned solidly EBITDA-positive.
Quebec catalyst underappreciated: With only 1 store per 88,000 residents (vs. ~1 per 7,000 in other provinces) and vape sales launching November 2025, Quebec has an estimated CA$550 million – $1.1 billion market growth potential. Vapes alone could add CA$200 million in annual revenue.
Regulatory and international upside: Potential excise-tax cuts (from ~34% back toward 10%) could lift legal-market sales; higher THC limits on edibles and streamlined compliance (e.g. national excise stamps) offer hundreds of millions more. International exports — mainly to Germany — absorb the excess supply and benefit domestic players.
Cannara Biotech (TSX-V: LOVE)
Summary:
Large-scale organic growth: Since 2019, Cannara has built from a five-person “blank facility” into a 400-employee, 1.6 million ft² operation in Québec, all organically.
Top-ten Canadian LP with Québec leadership: Cannara is now the 7th-largest licensed producer nationally and 3rd in Québec (12.8% market share), targeting #1 Québec LP by year-end as the new vape category launches.
State-of-the-art cultivation capacity: Acquired a purpose-built, 1 million ft² hybrid greenhouse in Valleyfield, QC, for $27M in 2021. The facility had been built for $250M+ by another LP that got in financial trouble and had to liquidate the asset. The facility currently yields 40,000 kg of cannabis annually, with a goal to scale to 100,000 kg by 2029.
Robust Q2 FY2025 financials: For the six months ending Feb 2025, Cannara posted $72M in gross revenue (+40% YoY), $51.7M in net revenue, 40% gross margin, $13.1M in Adj. EBITDA, $5.6M in net income, and $3.3M in operating cash flows.
Full vertical integration & IP: Controls seed-to-sale, including hand trimming, in-house testing lab, tissue-culture genetics preservation, and a robust “pheno-hunting” program screening 1,000 genetics per year for new IP.
Québec-centric cost advantage: Leverages Québec’s low electricity (≈ 5–6 ¢/kWh) and labour costs (≈ 70% of COGS), plus high barriers to entry in the province (fewer brands and producers).
Strong balance sheet & shareholder alignment: 50%+ insider ownership (founder/CEO owns 25%) and backed by Tier 1 bank debt (~$45M). The company’s last financing was done at $1.80 per share in 2021 (vs. a current share price near $1.20). The company is profitable with growing cash balances and a tight float.
Rubicon Organics (TSX-V: ROMJ)
Summary:
Premium-focused, vertically integrated producer: Rubicon Organics positions itself as Canada’s leading premium organic cannabis LP, leveraging living-soil cultivation and an extensive genetics library to deliver consistent, high-quality products.
Award-winning brand portfolio: Over the past two years, Rubicon’s brands have swept major industry awards—flower, vape, topical, hash, and edible “of the year” — and consistently rank among the top budtender recommendations.
Sustained profitability and strong Q1 growth: Entering its fourth consecutive year of profitability, Rubicon reported a 39% YoY revenue increase in Q1 2025, driving material EBITDA growth.
Diverse consumer brands: Its flagship brands — Simply Bare Organic (super-premium, flavour-forward flower), 1964 (premium value), Wildflower (leading wellness/topical brand), and Homestead (tactical value outlet) — span all major market segments.
Aggressive capacity expansion: Rubicon recently closed the acquisition of its Hope facility (125,000 ft², 4,500 kg capacity) to bring total annual cultivation capacity to over 15,000 kg, alongside ongoing edibles, vape, and genetics launches.
Market outlook and strategy: Amid a global quality supply shortage and rising wholesale prices, Rubicon doubles down on brand trust, budtender advocacy, and targeting legacy market conversion, while selectively testing international export opportunities.
Disclaimer
This publication is for informational purposes only. Nothing produced under the Stocks & Stones brand should be construed as investment advice or recommendations. Mathieu Martin, the author, is employed as a Portfolio Manager with Rivemont Investments. This publication only represents Mathieu Martin’s own opinions and not those of Rivemont. Rivemont may own positions and transact on any securities mentioned in this publication at any time without prior notice. At the time of this writing, the Rivemont MicroCap Fund holds shares of Cannara Biotech (TSX-V: LOVE) and Rubicon Organics (TSX-V: ROMJ). Always do your own research and consult a professional before making investment decisions.
If you’d like to invest in small public companies, check out this post.
Thanks for sharing! Just curious, any thoughts on Rubicon's stock comp? Seems excessive based on their market cap or even versus Cannara.
Great summary. Thanks for sharing the vids.