Cannabis 2.0 Lands in Canada
The high is over for cannabis investors, forced to accept a reality check as weed stocks graze new lows. As expected, regulation crashed the party. However, people do smoke weed, and people will buy pot, so does the industry deserve a pull-back?
Oh, Cannabis! Yesterday, Canada welcomed its second wave of legalization of recreational marijuana, dubbed ‘Cannabis 2.0.’ It includes the legitimation of high-margin pot-infused drinks, edibles, and even vape pens, but the market isn’t nearly as giddy as many expected. Canopy Growth and Cronos have lost 60% off their peaks, and as for Tilray, the 84% rot started almost a year today. The declines all coincided with a heavy regulatory fist being brought down.
The problem is that while cannabis producers continue to grow jungles of the stuff, it has nowhere to go. Red tape in some states is holding back retail stores from opening and true demand being supplied. It’s becoming a massive cost center for these producers, which are judged on the stock market by how much money they’re making. Also, smokers are going underground again due to taxes, and a different limit on THC in different products is complicating life even more.
Of course, the cannabis industry should be one of the most heavily regulated industries in the world. However, regulation isn’t supposed to kill all the fun! It’s in most people’s interest for this industry to breathe, and the CEO of Canopy Growth recently said that “at the end of the day, the cannabis opportunity that existed yesterday still exists today.” Speculators who’ve had their fingers burnt might not want to believe that, but that clears the way for any number-crunching analysts in the space who want to buy that “opportunity” at a discount.