Are There Too Many Hurdles In Marijuana To Make Cash In The US?

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Marijuana companies have many struggles for profitability, causing investors to get mad at cannabis stocks

Author of the article:

Brendan Bures • • The fresh toast

Release date:

February 18, 2020 • • March 6, 2020 • • Read for 2 minutes Legal marijuana retailers also have to deal with black market producers who can undercut prices and introduce stronger products that are not available under state law. Legal marijuana retailers also have to deal with black market producers who can undercut prices and introduce stronger products that are not available under state law. Photo by Darren Brown

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Don’t forget that new cannabis markets also struggle with legal restrictions. Florida lawmakers acted childishly after voters legalized medical marijuana in the state by banning smokable flowers. The problem dragged on for over a year, and lawmakers pulled their heels all the way in court until new Governor Ron DeSantis took office and called for the ban to be lifted. At the end of last year, when the law against smokable flowers was repealed, the operators tried to take advantage of the suddenly lucrative market.

In Canada, provincial regulations have prevented manufacturers from creating a significant retail footprint and from meeting past consumer demands. Add in overhyped reviews that haven’t delivered enough and you’ll begin to understand why investors pissed off marijuana stocks. Less than 10% of cannabis companies could be considered profitable.

As Barron noted, cannabis supplies keep falling. Canopy Growth, Aurora Cannabis, Tilray, Cronos, and more all slipped this week. Oppenheim-based analyst Rupesh Parikh believes these struggles will only go on. Stability is simply not there in the cannabis industry as CEOs fall at big players like flies and there is significant revenue at the C-suite executive level.

Over the next few months, it will be important for large companies to gain momentum and prepare for potential regulatory headwinds. Otherwise, cannabis stocks could fall further out of favor with investors.

TheFreshToast.com, a US lifestyle website that provides lifestyle content and medical marijuana information for The GrowthOp through its partnership with 600,000 doctors through Skipta.

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