The marijuana industry is being reshaped before our eyes. In only 12 days, Canada will make history by becoming the first developed country in the world to legalize recreational marijuana. When that happens, consumer euphoria, along with domestic and foreign demand, should allow the legalized Canadian industry to bring in around $5 billion in added annual revenue.
Based on the performance of marijuana stocks since the beginning of 2016 — many of the biggest publicly traded names out there are up more than 1,000% in less than three years — it’s pretty evident that investors expect the industry to be the greatest thing since sliced bread. But there are factors at work that could prevent marijuana stocks from living up to investors’ lofty expectations. Here are four ways pot stock investors will probably be disappointed…
1. Production ramp-up is still ongoing
The first thing marijuana stock investors need to realize is that while pot stocks have thrown around lofty peak production figures, none of them are producing at anywhere near that rate at the moment.
For instance, Aurora Cannabis (NASDAQOTH:ACBFF) expects to be at the top of the pack in terms of peak production. The company has previously guided to 570,000 kilograms at full production capacity, and this doesn’t include its ongoing acquisition of ICC Labs, which has more than 1.1 million square feet of greenhouses being developed, along with 92,000 square feet of existing facilities. Yet, in Aurora Cannabis’ latest earnings report, it notes a current annual run rate of just 45,000 kilograms, with an end-of-fiscal-2019 goal (June 30, 2019) of 150,000 kilograms. That’s not even close to what Wall Street or investors are expecting, and it could be…
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