Yikes! Will Canadian pot stocks be forced to idle their grow farms?
Roughly one year ago, the Canadian pot industry could do no wrong. Marijuana stocks in our neighbor to the north were near their all-time highs, and investors were content in the fact that Canada had just become the first industrialized country in the world to legalize recreational cannabis. Sales officially began on Oct. 17, 2018. However, one year following this launch, Wall Street, investors, and even Canadian cannabis businesses are no longer feeling as confident. Regulatory issues stymie the rollout of recreational marijuana in Canada According to Cannabis Benchmarks, a financial data provider to the marijuana industry, “only” an estimated 1.1 billion Canadian dollars (about $850 million) of legal marijuana was purchased over the trailing year (Oct. 17, 2018 – Oct. 17, 2019). That might sound like plenty, but it’s well off the pace projected by Wall Street and independent analysts. Cannabis Benchmarks also surmises that, based on an average selling price of CA$10.23/gram for legal Canadian weed during the third quarter, 105,000 kilos is all that was purchased since the green flag waved last year. This number is particularly disturbing given that the peak production potential of Canada’s top-15 growers is liable to exceed 3 million kilos per year, on a combined basis, when fully operational. There’s no question that these growers are looking to export their product to overseas markets, but anywhere from 800,000 to 1 million kilos per year were fully expected to be consumed within Canada. As of now, domestic consumption is nowhere near this amount. What’s to blame? Although growers have been slow to expand their own cultivation capacity, most of the fault lies with federal and provincial regulators. For example, Health Canada entered the year with more than 800 cultivation, processing, and sales license applications on its desk awaiting review. Even with aggressive changes being made by the regulatory…
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