Canada: Small cannabis companies may be forced out of business

There’s bad news for investors in the Canadian cannabis industry, a publication known as The Motley Fool is saying.

It is looking like there will be a huge shakeout in the fledgling industry before pot is even legalized next July 1, and a lot of smaller current medical marijuana sellers will be out of business. And investors in those companies will be racking up losses.

Why?

Because if other provincial governments follow Ontario’s lead and monopolize the sale of pot, it will lead to a much reduced competitive landscape — to the point that only a few big marijuana companies will survive. (Along with the illegal market, of course.)

Of course, that is assuming that provincial governments buy their pot for resale from only a few companies. But I’m not totally convinced that will be the case, as The Motley Fool article suggests: government-run liquor boards buy alcohol from all over the world. Their shelves are stocked with wines and spirits from myriad producers, and I am not sure why government-run marijuana outlets couldn’t do the same.

Still, investors need to weigh all of this, and perhaps narrow their portfolios down to the biggest producers.

And, yes, there is the possibility that recreational marijuana won’t be legalized by July 1, 2018, which would bring all of the stock prices crashing down.

— Jillian

Photo: Field of dreams for marijuana investors. (Photo: Wikimedia Commons)

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