Well, it has been almost two years since I urged investors to take into account some statistical evidence before investing in marijuana stocks. While it has been a tough couple of years for most firms, there may be more trouble on the horizon according to The Walrus.
Marijuana
Investing in Canadian marijuana stocks?
Here are some interesting facts you should consider. This comes directly from Statistics Canada’s National Cannabis Survey 2nd quarter, 2019.
- About a quarter of those Canadians who consumed cannabis did not pay for it. How can licensed marijuana producers make money when a quarter of their potential market won’t pay?
- Less than half of all cannabis consumers bought some of their cannabis from a legal source. Only 29% of current consumers obtained their cannabis exclusively from a legal source. Assuming that the cost of buying from licensed producers is too high for consumers, what will declining prices do to producers’ profitability?
- Cannabis consumption has not increased since legalization! It was essentially the same in the second quarter of 2019 as it was in the second quarter in 2018. And 99% of Canadians who have never consumed cannabis apparently have no intention of using it any time soon. Where is that multi-billion dollar market that ‘experts’ predicted would develop?
14 Billion up in Smoke
In a period of 53 minutes, USD 13.877 Billion of Tilray, Inc. (TLRY) “value” was wiped out. Its share price plummeted 50% from USD 300 at 2:50 pm. to USD 151 at 3:43 pm. That’s a lot of marijuana stock “up in smoke”. After the wild ride, the share price later recovered to close out at USD 214 at the end of the trading day.