The public cannabis market is down by more than 40 percent, despite the industry’s dazzling forecast and enthusiastic quarterly reports, The Wall Street Journal (WSJ) reported on Saturday (Oct 12).
The WSJ pointed to a merger of two US companies for almost $ 700 million that was ruled out. Any predictions about what will happen next year have been removed, a Canadian producer told the newspaper.
“Capital markets have dried up,” said Brian Athaide, executive director of Toronto marijuana grower. Green Organic Dutchman farmshe told the WSJ. He said the firm is putting off seeking financing for two facilities, one planned at 1.3 million square feet.
Based in Los Angeles MedMen companies – a publicly traded cannabis company with operations in Arizona, Illinois, California, Nevada, New York and Florida – said it was scrapping a proposed full acquisition of Chicago shares PharmaCann. Both companies operate dispensaries in various US states.
MedMen said that “difficult market conditions” were among the many reasons it chose not to participate.
“Underperformance has made it increasingly critical to allocate capital efficiently, given the current industry headwinds,” MedMen said in a press release, according to the WSJ.
America’s First Bank cannabis equity offering – CannTrust Holdings – fell as much as 14 percent in New York in May, marking the sixth day of declines at the time and the lowest level since January. The decline came after the Ontario-based company announced that it would price its stock offering at $ 5.50 per share, 23 percent below its closing price before the offering was announced and a 54 percent below its October 16 high. As a result, CannTrust’s market value fell below $ 600 million.
As many states move toward the legal use of marijuana (whether for medicinal or other purposes), the US government seeks to clarify issues related to payment. Despite 47 states having some form of legalized marijuana for sale, the legal cannabis industry is in a potentially dangerous state of uncertainty when it comes to financial services.
The United States is not the only place where legal cannabis faces the problem of moving away from cash and entering the full world of digital payments. A similar situation exists in Canada, where the market could reach up to $ 5.1 billion in annual sales by 2020.