Hi Mechanic, you correctly identify horticulture, distribution and government regulation as important factors which can adversely affect companies involved in the cultivation of cannabis and hemp, and in the production and marketing of medicinal cannabis products, but an important factor which I believe is even more critical is the very significant oversupply of raw cannabis and hemp which is likely to flood the market in 2020 on a worldwide basis. I believe that this will depress prices to the point where many companies which have already been unable to operate on a cash-flow-positive basis will struggle to survive.
It appears that there is also a serious over-supply developing with manufactured medicinal cannabis products, with government regulation exacerbating the already significant situation of too many manufacturers and products chasing too few end users.
Major Takeover & Merger activity will, I believe, be essential for the majority of companies involved in this field to even survive, let alone operate on a reasonably profitable basis, and I suspect that the less well-managed companies will fall by the wayside.
I have held off re-entering the MC and hemp markets for these reasons, and I have particularly avoided re-investing in CGB because I believe that they have spread their tentacles far too wide, rather than concentrating on engaging in less activities but doing those activities well.
CGB Price at posting:
1.7¢ Sentiment: None Disclosure: Not Held
