Edmonton-based Aurora Cannabis is the latest producer to report disappointing financial results. Its sales of recreational weed was down 33% comoares to last quarter.
So save $190million in planned expenses, tge company announced it was halting construction of one production facility in Medicine Hat, Alta and stopping work at another facility.
In Montreal, Aurora Cannabis chairman Michael stinger told CTV news “We are tightening the belt and being vwry cautious about spending.”
For the cannabis industry, its been a dramatic shift from the abundant investment hype seen during the last years up to the legalization.
Cutbacks are being felt in communities such as Ontario’s Niagara region, where layoffs by cannabis company HEXO have effected the town of Lincoln. The company cut 200 jobs last month, which is nearly a quarter of its entire workforce.
The selloff In Canada’s Five Biggest Pot Stocks has wiped out $33billion in market value since May. One of the largest driving factors is the government’s unsuccessful battle witg the black market. Companies burning through cash and the slow rollout of legal pot stores in markets such as Ontario.
‘Some Of These guys Are Going To Disappear’
Industry analysis Andrew Kesser at equity research firm William O’Neil told CTV news “We don’t think they’re going to be able to raise money easily going forward. And ultimately some of these guysare going to disappear.”
In Ontario, Mississauga-based producer Green Organic Dutchman fell sharply following a $20.1million third quarter loss.
There have been some self-inflicted, regulation issues facing some producers. Former high flyer CannTrust was targeted by Health Canada for growing cannabis before securing a license.
During a call with analysis, Mark Zekulin, the CEO of Canopy Growth Corp said its “increasingly unlikely” Canopy would achieve its target of $250million in revenue in its fiscal fourth quarter.
Zekulin also told BNN Bloomberg his company missed the market for new like cannabis oils an gel capsules.
“The reality is we expected this might be 20% of the recreational market. It ended up being somewhere along the lines of 5%,” he explained.
But the industry’s positive spin to this current slump is tge upcoming “Canmabis 2.0”, the moniker of dor the rollout of things like cannabis gummies, oils, and other edibles, which companies hope provides more growth.
New regulations for cannabis edibles and topicals come into effect last month, but because of the approval process products won’t hit tge legal market until mid-December, at the earliest