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Canadian Cannabis Earnings Are A Bloodbath – HuffPost Canada

Canadian Cannabis Earnings Are A Bloodbath – HuffPost Canada

MONTREAL — Weed may not be the product that sells itself after all. It’s turning out to be a bit tricky to make a profit on the green stuff — legally — in Canada these days.Some of Canada’s largest cannabis manufacturers have reported dismal sales and weakening revenue this week, with Smiths Falls, Ont.-based Canopy Growth, the largest public cannabis company in the world, reporting a nearly $375-million loss for the second quarter of the fiscal year.Check out this cannabis bonsai tree. Story continues below.Revenue for the period was just under $77 million, well short of analysts’ expectations of $107 million, and the company is no longer offering projections on future revenue.Shares in the company fell 18 per cent after it released its earnings.Though the numbers were a surprise, the downward trend was not. Investors have been experiencing disillusionment with Canada’s cannabis industry for at least the past half year, as revenues and profits rolled in much more slowly than hoped.The North American Marijuana Index — a basket of cannabis stocks dominated by Canadian producers — has lost nearly two-thirds of its value since peaking this past spring.One part of the problem is declining retail prices. Legalization has been pushing down prices in the illicit market for at least the past year, forcing legal producers to follow suit, reducing their bottom lines.But industry insiders say the rollout of legal cannabis retail infrastructure has been too slow, especially in Ontario and Quebec.The country’s cannabis market “is simply not living up to expectations,” said Mark Zekulin, Canopy’s interim CEO, in a conference call with analysts this week.Zekulin took aim at Ontario’s slow rollout of privately-run cannabis stores, of which only 24 have been authorized to open. By comparison, there are roughly 300 stores open in Alberta, which has less than a third of Ontario’s population. “The inability of the Ontario government to license retail stores, right
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