Marijuana stocks have been struggling for some time now. Analysts have been predicting a touch time for the stocks, and that’s before the recent crash and pandemic slow down investments and consumer spending. Add lots of layoffs and departures to the mix and suddenly it doesn’t paint a pretty picture. That’s left producers like Canopy Growth and Aurora Cannabis in a position where they have to cut back and scale down their operations.
Aurora dropped 30% after the company forecast a drop in sales, and analysts have been saying “Please stop growing so much weed”. As the company tries to find a middle ground between supply and demand, there’s really no need for the excessive 35,000 kg of weed that the company expects to grow per quarter.
So how are these companies changing? New execs are focusing more on business than brand than superfluous swagger and as a result are cutting costs. Aurora for example has said they would cut staff positions down in Europe. Canopy and Cronos on the other hand have recently taken big investments from companies such as Constellation Brands, giving them healthy cash positions.
The weed industry is definitely a long term and riskier play, with many stocks having been beaten down quite substantially. As for push backs, legalisation still faces challenges from governments, as well as the continued illegal sale of cannabis around the world. What is promising however is the UN removing cannabis from the list of the world’s most dangerous drugs.