Pot stocks take a hit in Canada

Everyone knew that the valuations of companies in the cannabis sector were wildly inflated, but it’s not all doom and gloom

By Kieran Delamont

2019-10-10

The thing that many Canadian cannabis investors assumed would make them bajillionaires – pot stocks – have taken a hit.

One year of legal weed in Canada has wiped out more than $40 billion in market value. And that’s only counting the top half dozen companies. 

According to industry analysts quoted in the Financial Post, a “psychological shift” has occurred in the marijuana marketplace. To some extent, this day was bound to arrive. Everyone knew that the valuations of companies in the cannabis sector were wildly inflated.

The other harsh truth is that supply shortages in the first weeks of legalization – and the following rush to expand to meet the high demand – has hurt the bottom line of large Licensed Producers. None of them are known (yet) for growing top quality bud, and as the meteoric growth in pot stocks has slowed, so has investment in their companies.

But it’s not all doom and gloom. A handful of Canadian companies are turning a profit. Others have actually seen revenues increase, despite lagging stock prices – which are indicative of markets in general. The demand in the U.S. and Europe, particularly in CBD products, continues to look promising for Canadian cannabis producers who have a bonafide first-to-the-market advantage.

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