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If you want to be a discerning investor, you’ll need to know what benchmarks matter for the various kinds of stocks you might be interested in purchasing or selling.
Per-pound cultivation expenses aren’t as easy to analyze as they might seem, though.
The chart above shows how businesses spend more than twice the amount per pound when they have their growing operation in a warehouse setting than when they grow it in fields.
Thankfully, there’s another metric which is useful in understanding cultivation efficiency: The cost of goods sold .
By depicting the COGS as a percentage of quarterly revenue, it’s easy to see that Trulieve Cannabis and Cresco Labs probably have more favorable unit economics than Aurora Cannabis.
For example, when Trulieve recently announced its acquisition of 64,000 square feet of indoor cultivation space in Arizona, we should also be aware that the cannabis produced from there might be on the expensive side.
On the other hand, if a few quarters pass and its COGS as a percentage of revenue hasn’t budged, we can infer that the cost to produce the marijuana that Trulieve is growing at the new facility isn’t significantly different from its norm.
In closing, be sure to keep an eye on cultivation expenses in comparison to the industry’s median, and don’t forget to use wider benchmarks like COGS to evaluate cannabis stocks.