It’s truly incredible what a difference a year has made in the North American cannabis industry. Throughout most of 2018 and the first quarter of 2019, pot stocks were pretty much unstoppable. Sales growth expectations were through the roof, and Canada had recently become the first industrialized country in the modern era to OK the sale of adult-use weed. It looked as if nothing could go wrong — and then everything did.
In Canada, regulators struggled to approve cultivation and sales licenses, delayed the launch of high-margin derivatives (e.g., edibles, infused beverages, and vapes), and, at the provincial level, badly botched the retail licensing process in Ontario (the most-populous province). Meanwhile, in the U.S., high tax rates in key states like California made it virtually impossible for licensed producers to compete with the black market on price. And as the cherry on top, North American cannabis stocks have struggled with access to traditional forms of financing.