Oversupply, declining prices, and a slow rollout of stores in Ontario has led to consecutive quarters of weak revenue for many licensed producers
Cannabis industry insiders are bracing for a slew of bankruptcies in the coming year as small and medium-sized companies low on cash struggle to raise funds in the downtrodden sector.
That dynamic, coupled with a slow rollout in the number of cannabis stores in Ontario — which, to a large extent, choked the supply chain — has led to consecutive quarters of weak revenue for many licensed producers. It’s not about growing cannabis anymore, it’s about how efficient you are as a consumer packaged goods producer
The company had previously raised $70 million through a convertible debt deal, and introduced a new discounted dried flower product called Original Stash , in an effort to boost its cash position.“Given the company had raised $70 million in convertible debentures after the October quarter, and had entered into an after-market facility to raise equity, we wonder about the need for these extra $32 million proceeds,” he wrote in a note to clients.
The rollout of major new product lines as part of the legalization of edibles presents a significant risk to producers.
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