The coronavirus has taken its toll on a number of marijuana stocks. In the past month or so, we have seen as much as 60-80% of value lost across the board. Of course, this is cause for concern, but we have to remember that this is simply a symptom of short term pandemic-related volatility. But, the result of this high level of volatility is that the cannabis market has not lived up to what investors had hoped for this year.
One of the major focal points of the high volatility has been Canada. Aside from the U.S.’s individual statewide cannabis markets, Canada has the largest cannabis industry in the world. Because of this, investors tend to focus on what type of price action is happening domestically. In the past few weeks, we have seen the Canadian marijuana market shift completely in several distinct ways.
What Exactly is Happening in the Canadian Cannabis Market?
After Canada legalized marijuana back in 2018, it saw quite an uptick in the number of cannabis stocks that were located within it. When this happened, investors soon believed that the market could see sales of somewhere from 800,000 to 1 million kilograms of cannabis per year. But, nobody truly knew what would happen since this was the first time a country broadly legalized marijuana. Since that time, however, the industry has been plagued by several distinct issues.
One of the main parts of this stems from regulatory measures that have yet to meet up with what the industry needs. The country only recently legalized derivative products as of the first of this year, which shows just how much lag we have seen with new laws being put in place. Additionally, it has been extremely difficult for cannabis companies to find proper financing to grow their businesses. This has resulted in slower cannabis stock growth than previously thought.
How the Coronavirus is Directly Affecting Canadian Pot Stocks
As we turned the corner on this year, everything seemed to be moving toward the right direction. But, after the pandemic took its toll, we soon saw values shoot down by extreme amounts. This has resulted in billions in market cap lost. If there is any positive from the coronavirus, it is that demand has shot up dramatically in the past few months. Cannabis companies are attempting to work around the massive stay at home orders by offering curbside pick up and delivery services. Because of this, it seems as though the industry is beginning to adapt to this terrible world event. But, it has not been all good for cannabis stocks.
Many are still attempting to make a rebound from the effects of the coronavirus. It is important to note that we are also still far away from seeing the end of this pandemic. This means that investors should continue to stay on their toes, watching price action constantly. As we continue to move toward the next few weeks, we may be able to get a better view of what will happen in the near future for pot stocks. For now however, it may be best to turn away from trading if you don’t have the proper amount of experience with cannabis stocks.
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