Topline: The vaping crisis has helped cool once white-hot cannabis
companies—which may eventually offer legal vaping products—with a $10 billion
drop in market value.
·
Four of the biggest
cannabis companies, Tilray, Canopy Growth, Aurora Cannabis and Cronos
Group—have lost around $10 billion in market value since the CDC launched its
multi-state investigation into vaping illnesses on August 1st.
·
The ongoing health
scares in the U.S. have created more uncertainty for cannabis investors and
could negatively impact companies’ sales as Canada legalizes vaping products
later this year.
·
In states that have
legalized recreational use, vape demand makes up between 10% to 25% of
the market.
·
Also hurting cannabis
stocks: Profitability hasn’t materialized as quickly as expected, says Matt
Markiewicz, managing director of The Cannabis ETF, which tracks CBD and THC
companies.
·
While cannabis will
likely be a massive industry, these newly public companies are still learning
how to manage Wall Street expectations—and that has been a “painful learning
process,” Markiewicz says.
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“In the long run, [the
vaping crisis] is just a bump in the road,” says Morningstar analyst Kristoffer
Inton, who predicts that the real growth opportunity for cannabis companies is
in the underdeveloped derivatives market, such as edibles and beverages.
Pot stocks have seen
large declines in recent months.
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Crucial quote: “As an investor you have to think about
how these companies are all essentially playing with one hand behind their
back—when that hand is untied, what will their true business potential be?”
says Markiewicz.
Tangent: Aurora Cannabis is by far the most widely held stock on
Robinhood—and three other pot companies are among the top 20.
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