The cannabis market has ballooned in terms of investments and capital flooding into the space, and these investments have been the primary reason responsible for growth throughout the sector. With new laws being put into place in the near future throughout areas like Canada, the market looks as though it will only continue to grow.
One of the most exciting prospects of the industry is continuing to be the upcoming possibility of recreational legalization throughout Canada. The bill known as the Cannabis Act would effectively make Canada the first developed country to fully legalize marijuana nationwide. This would not only be a large step for cannabis in the country, but it would likely see a shifting paradigm throughout the world of cannabis.
There are several companies in the industry that have more cash than most, and this is helping to grow the space even further. The combined cash on hand for the top four cannabis firms in the industry is over $1 billion, which means that other businesses should start taking cannabis more seriously than they have been.
One of the companies at the top of this lit has been Canopy Growth Corp. (NASDAQOTH:TWMJF). Canopy Growth has an estimated $311 million in cash. This means that they are poised to gain the most from this new Canadian legislation occurring in the coming months. As one of the few companies in the space that is legally allowed to grow cannabis, Canopy Growth is positioned to take advantage of all new regulation. Canopy also has plans to increase the amount they are able to grow to become one of the largest producers of cannabis in the world.
Other companies in the space such as Aurora Cannabis (NASDAQOTH:ACBFF) have as much as $332 million in cash. This all adds up to a little under $1 billion, which means that this industry is only going to continue grow. One would think that all of this cash might be an issue for growth but it is quite the opposite. The majority of the companies listed are working to reinvest this free cash to continue growing their operations throughout the domestic markets and abroad. One of the fastest growing abroad markets in the space has continued to be that of Germany. Germany has a large legal cannabis market that is only continuing to grow. The prospect of these companies being legally allowed to export their product is something that is exciting investors to keep putting money in. According to one study “Canopy Growth Corp. is expanding its industry presence by increasing its eventual licensed production capacity to 5.7 million square feet in British Columbia. At the moment, Canopy is currently approved to cultivate up to 2.4 million square feet. Its capital is primarily being used to complete greenhouse construction, though it has been known to liberally use its cash on hand to make acquisitions or expand its leading product line.”
The bottom line seems to be that the reinvestment of free cash in the market is the reason that it is continuing to grow. The cannabis market is still very much in its infant stages which means that the market is hopefully going to grow to larger amounts every year. With new legislation happening in Canada and abroad, marijuana is likely to become one of the larger and more promising markets as time goes on. Only time will tell how well these new investments will continue to fuel new ideas in the space, helping cannabis to grow to its full potential in the near future.
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