It was one of the worst weeks for the legal cannabis sector since pot became legal in Canada.
After more than a dozen Canadian-based pot companies reported quarterly results over the past five days, it became increasingly clear the risks that had faced the industry have manifested themselves, resulting in what one analyst described as a “bloodletting.” A lack of legal retail stores, notably in Ontario, combined with a glut of cannabis held by provincial wholesalers and a decline in prices, led to a series of disappointments for investors.
The results were staggering: Half of those companies - including leading producers Canopy Growth Corp. and Aurora Cannabis Inc. - reported sequential revenue declines, and no publicly-traded company was immune from a broad investor selloff in the space. The top five cannabis companies on the market – Canopy, Aurora, Aphria Inc., Tilray Inc., and Cronos Group Inc. – saw a total of $5 billion in market capitalization disappear, according to Bloomberg data.
“What you’ve seen is a market that is uncertain on where to go from here,” said Michael Singer, executive chairman of Aurora Cannabis, in an interview with BNN Bloomberg.
Analysts widely believe that the worst isn’t over, despite the upcoming launch of next-generation cannabis products in December. Pot companies are betting ‘cannabis 2.0’ will bring greater revenues than what the gains they have seen in the first year of legalization.
