Playing the stock market means navigating a high-wire act between profound regret and untold reward, but in cannabis, it\u2019s mostly the former. Over the past decade, second only to cryptobro regret is the FOMO felt by investors in Canadian cannabis stocks, where a brief, meteoric rise gave way to an even more sudden and spectacular crash.<\/p>\n
If you cashed out at just the right time, you might have done great; if you put in $1,000 as early as you could and maintained\u00a0diamond hands<\/a>\u00a0throughout, you might have about $200 today, as\u00a0Franklin G. Snyder<\/a>, a law professor at Texas A&M University who studies cannabis legalization tells his students.\u00a0<\/p>\n And the bust is real. Last month, Aurora Cannabis\u2014a company with global ambitions and a key medical-marijuana license in Germany\u2014announced<\/a> it will close three facilities and lay off 12% of its global workforce, or about several hundred jobs. That\u00a0followed<\/a>\u00a0prior layoffs in September and another 1,200 layoffs in 2020.\u00a0<\/p>\n But with most American cannabis companies still reporting losses in the tens of millions, and with sales figures from early 2022 suggesting that sales have finally plateaued, does the tale of Canadian cannabis stocks<\/a> mean anything for the US-based multi-state operators (MSOs)? Yes, but also no, experts said.<\/p>\n During Q1 earnings calls in May, only one major US cannabis company\u2014Green Thumb Industries\u2014reported turning a profit.<\/a>\u00a0Everyone else lost money. Curaleaf reported losing $23.5 million in the first three months, compared to $14.8 million a year before. Cresco Labs reported a loss of $23.6 million. Columbia Care, with whom Cresco is merging, reported losses of $27.9 million. Trulieve, the biggest player in Florida, lost $32.4 million.\u00a0<\/p>\n In a sign of some turmoil, some companies, including Curaleaf, also shook up their C-suites, with executives who earn $475,000 or above leaving the company or switching posts, according to their quarterly reports filed at the Canadian Securities Exchange (where US companies must list given federal prohibition).<\/p>\n That\u2019s not rare for an early-stage company\u2014and earnest comparisons to Uber or Amazon or another revolutionary company that also gushed cash are what usually follows such an observation\u2014but some reported losing more than they did a year ago. (And, as defenders will point out, even if companies lost money, they did\u00a0report more revenue last year<\/a>.)\u00a0<\/p>\n And with the global economy apparently headed towards a post-COVID recession as the war in Ukraine stresses fuel prices, there\u2019s reason to worry if the Canadian cannabis stocks drama won\u2019t play out in the US. That would be the case anyway: As in Canada, US stock prices are still trading well above their weight based on metrics like the price-to-sales ratio.\u00a0<\/p>\n \u201cCurrent stock prices look to be inflated,\u201d Snyder said. \u201cNobody is making the kind of money to justify their current valuation.\u201d<\/p>\n Given the market overall seems to be cooling, \u201cas the stock market goes down, which it probably will,\u201d\u00a0\u00a0cannabis stocks will also lose some more value, he guessed. \u201cIn a real bear market, pretty much everything gets hit eventually.\u201d<\/p>\n But that\u2019s the operative word: guessed. \u201cNobody has a clue what will happen,\u201d Snyder said. In the meantime, there are probably more differences than similarities between US and Canadian cannabis companies.<\/p>\n For one, US companies still have immense upside, in the form of key policy changes that could transform the market overnight. Federal banking or tax reform would be instant game changers. So would interstate commerce. Adult-use cannabis is still illegal in Florida, a state with a strong MSO presence. And adult-use sales have yet to begin in New York, another heavily populated state where the big cannabis companies have all invested heavily.<\/p>\n Compare all this to Canada, a country with fewer people than the state of California, which legalized cannabis nationwide\u2014and didn\u2019t have a patchwork of states at odds with federal law, that hampered businesses\u2019 abilities to live. Remember, as well, that all the enthusiasm translated into an overheated market, which Canadian cannabis companies used to build massive facilities that grew acres of weed nobody wanted. That cycle hasn\u2019t quite played out in the US.<\/p>\n For these reasons, \u201cI do think the Canadian situation is quite different,\u201d said\u00a0Paul Seaborn<\/a>, a professor of commerce at the University of Virginia and renown cannabis industry expert, who taught the first \u201cBusiness of Marijuana\u201d class at an accredited business school.\u00a0<\/p>\n Though the US\u2014and investors\u2014still suffer from some of the same \u201cirrational enthusiasm\u201d that inflated the Canadian cannabis stock market before it popped. \u201cI don\u2019t think I see the US MSOs or the US market following the Canadian path,\u201d Seaborn added. \u201cThere\u2019s much less upside in Canada and much more in the US.\u201d<\/p>\n Still, things\u00a0are<\/em>\u00a0cooling off\u2026 but not where the big companies are.<\/p>\n As New Cannabis Ventures reported<\/a>, sales figures compiled by BDS Analytics reveal that in mature Western markets, sales are down\u2014down nearly 20% in Oregon, more than 25% in Nevada, 23.8% in Colorado and 7.6% in California. Don\u2019t forget: Most markets overall saw a \u201cCOVID bump,\u201d a phenomenon conventional wisdom says was triggered by a populace stuck indoors with stimulus checks and a cannabis industry declared essential still open for business.<\/p>\n In less mature markets such as Michigan, there\u2019s still an upward curve. This means the slowdown is OK news for MSOs that have smaller footprints in the western states where licensing requirements are less strict. They should expect an upward swing for at least the next few years as the cannabis market gets going. This moment in time could simply be a pause before the real swing happens.<\/p>\n \u201cWe\u2019re in this lull right now where new markets aren\u2019t coming online quite quickly enough,\u201d Seaborn said. \u201cThose mature markets make up a good total of US sales. That won\u2019t always be the case.\u201d<\/p>\n The post Canadian Cannabis Companies Collapsed; Are US MSOs Next?<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
Playing the stock market means navigating a high-wire act between profound regret and untold reward, but in cannabis, it\u2019s mostly the former. Over the past decade, second only to cryptobro regret is the FOMO felt by investors in Canadian cannabis stocks, where a brief, meteoric rise gave way to anContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[34,50,1228,170,16336,16337,13792,16338,16339],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55942"}],"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\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=55942"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55942\/revisions"}],"predecessor-version":[{"id":55943,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55942\/revisions\/55943"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=55942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=55942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=55942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Overweight, Underfed\u2026<\/strong><\/h4>\n
\u2026But Different<\/strong><\/h4>\n
Cooling or Chilling?<\/strong><\/h4>\n
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\nRead More: Canadian Cannabis Companies Collapsed; Are US MSOs Next?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"