At a price tag of around $1.5, this looks at first glance like more leftovers from the cannabis bubble - a cheap penny stock, a sector in disfavor, and deep historical losses. But beneath the surface, the picture is markedly different: sales are approaching CAD1 billion a year, the business is generating positive free cash flow for the first time, and hundreds of millions of CAD in cash lie on the balance sheet with only very modest debt.

The investment thesis is not based on another wave of hype, but on the mismatch between the size and quality of the business and how the market values it. The combination of near-billion-dollar sales, positive FCF and a stabilized retail model now trades well below book value and below one times sales, while consensus target prices are heading into the multiple-of-current-price range. This is countered by an extremely tough tax and regulatory environment, sector stigma, a history of large losses and the real risk of further dilution if conditions…