From the \u201ctulip mania\u201d in 15th century Holland to the Bitcoin bubble of 2017, high hopes for a commodity\u2019s market performance can lead to unsustainable overvaluation inevitably followed by a painful correction. Many observers believe that cannabis fell prey to this phenomenon in 2018 \u2014 but are hoping for growth in a more rational and realistic market in the coming year.<\/p>\n
Back in March,\u00a0ArcView Group<\/a>, the Bay Area cannabis industry research firm,\u00a0released\u00a0a new study with the sanguine title of \u201cThe Road Map to a $57 Billion Worldwide Market<\/a>.\u201d Although it warned that continued legal and bureaucratic restrictions are bottlenecking the market, it assumed that these impediments constituted the only significant obstacle to growth.<\/p>\n Looking back on how cannabis stocks actually performed this year, some observers see other factors distorting the market. In the unsubtle language of\u00a0Motley Fool<\/a>\u00a0investment website, \u201cmarijuana stocks put up an absolute stink bomb in 2018.\u201d<\/p>\n By way of example, Motley Fool notes the recent performance of the\u00a0Horizons Marijuana Life Sciences ETF<\/a>, or\u00a0exchange-traded fund<\/a>. As of last weekend, it was down 45 percent year to date, and has lost more than three-quarters of its initially very impressive gains since being launched in the spring of 2017.<\/p>\n Many factors appear to have inhibited the growth of cannabis stocks in 2018. One of those factors includes the cannabis shortage in Canada. Canada\u2019s licensed producers have been\u00a0struggling to meet consumer demand<\/a>\u00a0since cannabis officially went legal in the Great White North in mid-October.<\/p>\n For example, Aurora Cannabis<\/a>, the Alberta-based licensed producer, has been raising up great expectations, especially after they acquired Uruguay\u2019s\u00a0ICC Labs<\/a>, which has\u00a0ambitions to export<\/a>\u00a0cannabis oil throughout Latin America and beyond. It is estimated that the combined capacity of the companies could hit 700,000 kilograms in peak annual output. However, Motley Fool says the company\u2019s latest quarterly filing showed it was only producing about 10 percent of this amount.<\/p>\n A second factor impacting cannabis stocks in 2018 is that the competition of the legal market has made it more challenging for companies to deliver earnings. Counterintuitively, seven of Canada\u2019s leading licensed producers \u2014 Aurora,\u00a0Canopy Growth<\/a>,\u00a0Aphria<\/a>,\u00a0Tilray<\/a>,\u00a0The Green Organic Dutchman<\/a>,\u00a0Auxly Cannabis<\/a>\u00a0and\u00a0Cronos Group<\/a> \u2014 together\u00a0actually lost<\/a>\u00a0nearly $300 million in their most recent quarter. The culprit seems to be unrealistic expectations that inflated the value of these companies before legalization actually took effect.<\/p>\n MarketWatch<\/a>\u00a0also notes that Canadian retail cannabis sales have been hampered by supply shortages \u2014 leading to some absurdities. For instance in Ontario, the only method of legal purchase was an online store that launched in the middle of a\u00a0postal strike<\/a>. Alberta has\u00a0suspended<\/a>\u00a0licensing of brick-and-mortar retail outlets because the province has only received 20 percent of the cannabis it had ordered since Oct. 17.<\/p>\n But there still are reasons for investors to be optimistic about cannabis stocks moving into 2019. For example, back in June, Tilray of British Columbia became the first Canadian-based cannabis stock to go the\u00a0initial public offering route<\/a>\u00a0on a major U.S. exchange, the\u00a0NASDAQ. Since Ontario\u2019s Cronos\u00a0broke the barrier<\/a>\u00a0by listing on the NASDAQ in February, nearly a half-dozen cannabis companies have uplisted from over-the-counter trading to the NASDAQ or New York Stock Exchange.<\/p>\n Investors Business Daily<\/a>\u00a0notes that when Ohio-based\u00a0Green Growth Brands<\/a>\u00a0this week announced its plan to launch a hostile takeover bid for Ontario\u2019s Aphria, shares jumped not only for Aphria but for most other cannabis stocks as well.<\/p>\n Investorplace<\/a>\u00a0recalls the similar\u00a0rally after the\u00a0infusion of a massive $4 billion investment<\/a>\u00a0into Ontario-based Canopy Growth from beer and beverage giant\u00a0Constellation Brands<\/a>\u00a0in August. \u201cThat was when marijuana stocks took off like a rocket ship.\u201d But the subsequent slump is also noted: \u201cjust as 2018 was the year of the cannabis craze, it was also the year of marijuana stock volatility.\u201d<\/p>\n However, Investorplace actually sees a reason for optimism in the slump itself, which was a needed adjustment: \u201cIt increasingly looks like the pot stock bubble has already popped, and we are now in the post-pop phase. This inherently implies more stability going forward.\u201d<\/p>\n TELL US,<\/strong> do you have any investments in cannabis stocks?<\/p>\n The post Cannabis Stocks Dropped in 2018, But Investors Hope for Rebound<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
From the \u201ctulip mania\u201d in 15th century Holland to the Bitcoin bubble of 2017, high hopes for a commodity\u2019s market performance can lead to unsustainable overvaluation inevitably followed by a painful correction. Many observers believe that cannabis fell prey to this phenomenon in 2018 \u2014 but are hoping for growthContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":190,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2463,630,34,50,505,1228,461,960,170,4833,879,1088],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/31764"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/190"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=31764"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/31764\/revisions"}],"predecessor-version":[{"id":31765,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/31764\/revisions\/31765"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=31764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=31764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=31764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Shortages Burst Cannabis Bubble<\/h4>\n
The Tentative Good News for Investors<\/h4>\n
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\nRead More: Cannabis Stocks Dropped in 2018, But Investors Hope for Rebound<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"