Wall Street’s exuberance over legal weed has quickly withered into sober reality.
In a matter of months, white-hot cannabis companies have flamed out in spectacular fashion. Many have lost two-thirds or more of their value.
Widespread legalization has been thwarted. Bank financing has dried up. Deep-pocketed institutional investors remain on the sidelines and old-fashioned black-market dealers still provide stiff competition.
The pain deepened on Thursday, when Ontario, Canada-based Canopy Growth Corp. announced revenue that fell short of the lowest Wall Street estimate and a loss that one analyst called “astounding.” That sent shares to their lowest price since December 2017. It’s still the largest pot company in the world, but at $7.1 billion Canadian, its market value is just a sliver of the $24 billion it reached in April.
One day later, MedMen Enterprises Inc. of Culver City, one of the first U.S. cannabis companies to sell shares to the public, said it would dismiss 190 employees, including about 20% of its corporate workforce, as it struggles to preserve a dwindling cash pile.
Published: November 16, 2019