Starting to think Mj is becoming a big nothing | Marijuana Investing Message Board Posts
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Msg  437 of 447  at  7/24/2019 10:53:52 AM  by

agrossfarm


 In response to msg 436 by  checkmate77
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Re: Starting to think Mj is becoming a big nothing

The sector is overhyped and over-regulated in Canada.
You expect the companies to promote themselves. You may expect analysts to be realistic, but they don't make their reputation with realism.
 
The Govt. has strict rules and loads of red tape, ignoring the fact that the more they deter legal sales, there more there are totally unregulated ILLEGAL sales.
 
And observers seem too foolish to realize that a commodity-product eventually declines in price to cost plus a small profit... so all the Cultivators bragging that they can produce 10,000 or 100,000 kilos at more than $1/gram are wasting their money by expanding production.
 
Aurora, for example, just sold to Italy at what was considered BREAKEVEN. That was $2.50/gram. If that is cost, and they sell to a retailer at $4, the retailer will charge at least $8 in Canada plus $1 excise tax plus Sales taxes for a total of over $10, when Black Market price is under $7. 
 
Sell at $4 with $2.50 cost, the gross margin is 60%, so that is OK, if you could actually capture a good part of the $6 Billion market, instead of just a part of the $1 Billion legal market.
 
The key will be non-smokables.
And the Govt. has already postponed that once or twice.
And they will deter marketing of the edibles and drinkables, making it more difficult for Canadian companies to develop a large international business. Those with a large US sponsor will eventually do well if/when the US enters the modern era.


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