Potential Concerns In Pot Stocks

business

Investments in Canadian pot stocks are on the rise in North America. With the market set to boom this summer when adult-use is legalized, it’s no small wonder so many people are trying to get in on the ground floor. However, there are some risks to investing in the green rush.

Here are a few concerns that have the markets buzzing…

 

Too Much Pot

Though some have projected a shortage of weed in Canada, that outlook seems to be reversing as of late. Recent expansion plans from key players such as Canopy Growth, Aphria, MedReleaf, and Aurora the estimated yearly kilograms of production is skyrocketing and the increase in supply could put downward pressure on cannabis pricing which would affect the profit margins of the Licensed Producers.

 

Rise in Share Count

The bigger the companies grow, so does the outstanding share count. For example, Aurora has seen a 2,200% rise in outstanding shares since 2014. When new shares are issued it can cause intermediate-term dilution causing the existing shares value to drop.

 

Delay In Legalization

The optimistic deadline of July 2018 may not be enough time for individual provinces to establish policy. The main concern is enforcement of new laws which would require an increase in police force. Some provinces have expressed concern about meeting the July deadline. If there are delays in legalization, this should cause share values to deflate.

February 16, 2018

by Shasta Nelson

Profile photo of Shasta Nelson
Shasta Nelson is a California Native and a cannabis connoisseur. She's been involved in the industry at every level since she was a teenager. Currently she provides content for Roottie, DOPE Magazine, and Terpenes and Testing. She's also a creative writer, with a graphic novel underway.

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