The top five Canadian cannabis stocks have seen huge losses. The Canadian government fails to open up enough stores to meet the demand. A renowned portfolio manager weighs in on the state of the market.
The top Canadian cannabis stocks have seen massive declines over the last few months due to the slow start seen in Cannabis 2.0, a bill that allows cannabis derivatives like edibles, infused beverages and vapes to be legally bought and sold nationwide.
Despite the hype seen across the market after Canada’s historic legalization of recreational marijuana, now even the world’s largest cannabis company by market value, Canopy Growth, expects another three to five years to turn a profit.
Top Canadian cannabis stocks suffer massive losses. | Source: TradingView Scary Times in the Canadian Cannabis Market
Tim Seymour, portfolio manager at the Amplify Seymour Cannabis ETF, sat down with CNBC’s Fast Money to discuss what he described as a “scary time” in the Canadian cannabis market. According to Seymour, the Canadian province of Ontario is not “opening up enough stores” to let the cannabis industry flourish. Even though Cannabis 2.0 kicked off in mid-October, its adoption has been “slowed down dramatically,” added Seymour.
As the market plummets, Canopy Growth’s CEO Mark Zekulin called on the Ontario government to immediately commit to opening more retail stores across the province,
There simply aren’t enough stores. Provinces representing 60% of the Canadian population have only 10% of the stores. So, if there is nowhere to sell consumer products, it’s very difficult to have the type of revenues that everybody expected. But, the positive news, that’s an easy problem to fix. The governments have acknowledged they need more stores. We now have enough supply to allow them to do that and hopefully, we will see that fixed.
Aurora Cannabis Inc. is also being affected by the lack of stores across the country, according to Seymour. The firm recently reported a 24% sequential decline in revenues, resulting in a slowdown in expansion plans. Aurora Cannabis announced that it would be halting the construction of one of its weed-growing facilities in Denmark and delay the activation of its Aurora Sun facility in Canada.
[Aurora is] pushing out some projects which were at one point seen as exciting growth. They are talking about waiting for global demand to pick up and waiting for domestic demand to pull up.