Canadians have lost $131 billion investing in cannabis

[Azure]

This is honestly a crazy amount, and can't be overly helpful with inflation, financial struggles, etc.

Canadian investors have lost $131 billion as a result of losses sustained by 183 publicly traded cannabis companies, according to a new report from a Toronto-based law firm.

While cannabis sales have steadily increased since legalization was enacted — weed now contributes almost as much to Canada’s GDP as the dairy industry — the country’s largest profile companies have lost billions. Despite their poor performance, those losses haven’t stopped those same companies from awarding millions of dollars of bonuses to their executives.

Though it won’t help Canadians who have already lost their initial investments, the federal government is currently undergoing a legislative review of the Cannabis Act, which industry advocates hope will breathe new life into the sector.

https://financialpost.com/cannabis-n...2-46b16799f2c1

[Sliver]

I've done my best to help the profitability of the industry, but I'm just one guy.

[SutterBrother]

It just went up in smoke?

[Muta]

I guess for some, money didn't grow like weeds.

[PsYcNeT]

Turns out guys who knew how to set up a hydroponic loop in their basement were pretty terrible at running multi-million dollar companies.

[Cowboy89]

The asset bubble that was just as predictable as crypto.

[opendoor]

How much of that is just paper losses? Someone who buys $10K worth of stock, sees it go up to $100K, and then eventually sells it for $10K hasn't lost $90K.

[Cowboy89]

Originally Posted by opendoor

How much of that is just paper losses? Someone who buys $10K worth of stock, sees it go up to $100K, and then eventually sells it for $10K hasn't lost $90K.

Would be interesting to see the basis for that calculation. That said it's not like the industry is back to square 1, it's been an awful allocator of capital. Aurora for example IPO'd at $9.70, so everyone who participated in that shelled out that amount in cash per share. Now it's worth $1.74 per share. Sure it once hit close to $160/share at its peak but still down over 80% from IPO value representing large real losses.

[blankall]

Originally Posted by Cowboy89

The asset bubble that was just as predictable as crypto.

There are still some marijuana producers doing pretty well in Canada. I'd say it's different than Crypto, in that it involves an actual industry producing actual products.

But yes, all the random companies popping up and primed to be the next big thing were clearly bad investments.

The one I never got was NFTs. Especially things like random cartoon pictures, that people can both look at and draw more of for free. That was clearly just a speculation based product, with absolutely nothing to back it.

[opendoor]

Originally Posted by Cowboy89

Would be interesting to see the basis for that calculation. That said it's not like the industry is back to square 1, it's been an awful allocator of capital. Aurora for example IPO'd at $9.70, so everyone who participated in that shelled out that amount in cash per share. Now it's worth $1.74 per share. Sure it once hit close to $160/share at its peak but still down over 80% from IPO value representing large real losses.

I mean just looking at the drops from the peak for Canadian cannabis companies should give a pretty good idea that the $131B number is totally suspect. Among the 10 larger cap (over $100M) Canadian cannabis companies, the combined market cap loss from each of their peaks has been about $140B.

So Canadians (who wouldn't be the only investors) losing $131B in actual money from that is basically impossible.

[you&me]

Originally Posted by opendoor

I mean just looking at the drops from the peak for Canadian cannabis companies should give a pretty good idea that the $131B number is totally suspect. Among the 10 larger cap (over $100M) Canadian cannabis companies, the combined market cap loss from each of their peaks has been about $140B.

So Canadians (who wouldn't be the only investors) losing $131B in actual money from that is basically impossible.

Well, that's just the top 10, no? Am I wrong to think there were potentially 100s of small(er) cap companies that have either lost a ton of value or gone bust altogether?

In any case, it would be hard to argue the cannabis industry has met early expectations.

[cam_wmh]

I still get mine, the nefarious black market ways.... Farmer direct if you will. Better, & cheaper.

[topfiverecords]

It was all spent on Cheetos.

[Northendzone]

So is the industry still looking for seed money?

As an aside, I have done alright with my stocks in old Dutch, lays and pizza companies. But it could just be a co-incidence

[OldDutch]

Originally Posted by Cowboy89

The asset bubble that was just as predictable as crypto.

If it was predictable than I am guessing your messaging from your private island having sold prior to peek?

All seriousness, living through dot com bubble, online gambling bubble, and now crypto, knowing the technology and political fundamentals all of it was a totally waiting to collapse. Yet it could have succeeded. So I won’t dance on graves.

Full disclosure, I invested not a dime in any of the above. Yet if I could have timed it right I would be way ahead in life. Instead I have some plodding RRSP and a bunch of savings going no where.

I told my buddy who lost a fortune beers and an ear are on me anytime. I mean he would have me in his boat had it worked so fairs fair right?

[TheIronMaiden]

Originally Posted by cam_wmh

I still get mine, the nefarious black market ways.... Farmer direct if you will. Better, & cheaper.

For the black-market prices have never been cheaper, and service has never been better. It may be a bad time for investors, but it is a great time for consumers.

[The Cobra]

Originally Posted by opendoor

How much of that is just paper losses? Someone who buys $10K worth of stock, sees it go up to $100K, and then eventually sells it for $10K hasn't lost $90K.

You do understand that when a stock goes up to $100k it's based on someone actually paying that much for it?

So while individual investors may have a paper loss, the loss to the industry as a whole is very real.

Investing in weed stocks was never an investment, it was a gamble.

And like all gambles, you need to quit while you're ahead, as eventually the tables will turn.

[bizaro86]

Originally Posted by opendoor

I mean just looking at the drops from the peak for Canadian cannabis companies should give a pretty good idea that the $131B number is totally suspect. Among the 10 larger cap (over $100M) Canadian cannabis companies, the combined market cap loss from each of their peaks has been about $140B.

So Canadians (who wouldn't be the only investors) losing $131B in actual money from that is basically impossible.

That number probably isn't exactly, but I bet its not as far off as you think. The weed stocks have been very high volume - it's not like there are buy and hold pension funds holding 90% of the shares. The volume transacted at or near the highs (using real money) would be a material percentage of the sector market cap. And with weed being illegal Federally in the US many US investors are precluded from the space, while other foreigners would generally have difficult accessing Canadian markets, so a material % of the losses would be from Canadians.

[Leondros]

Originally Posted by bizaro86

That number probably isn't exactly, but I bet its not as far off as you think. The weed stocks have been very high volume - it's not like there are buy and hold pension funds holding 90% of the shares. The volume transacted at or near the highs (using real money) would be a material percentage of the sector market cap. And with weed being illegal Federally in the US many US investors are precluded from the space, while other foreigners would generally have difficult accessing Canadian markets, so a material % of the losses would be from Canadians.

Previously I would agree with you. But all the speculation in the stock market over the past 3 years has really made me question whether at time if the market is really efficient as we think it is and is a true predictor of value. Did we ever really think GameStop was worth $20B+... It had the daily volume and prices to suggest such, but would another company or institution really pay that much for GameStop or was it more a factor of market manipulation as a result of derivatives, short positions and options trading?

[opendoor]

Originally Posted by bizaro86

That number probably isn't exactly, but I bet its not as far off as you think. The weed stocks have been very high volume - it's not like there are buy and hold pension funds holding 90% of the shares. The volume transacted at or near the highs (using real money) would be a material percentage of the sector market cap. And with weed being illegal Federally in the US many US investors are precluded from the space, while other foreigners would generally have difficult accessing Canadian markets, so a material % of the losses would be from Canadians.

How much of that volume was algorithms trading back and forth with each other though? If computers trade the same shares 50 times in a day trying to benefit from the price moving by a few cents, that doesn't necessarily mean that retail investors are all buying and selling their shares as quickly.

And a lot of outstanding shares aren't necessarily easily tradable. For Canopy Growth for instance, over 50% of the shares are either held by insiders (36%) or institutions (18%). So most of the paper gains and losses were probably never realized on that stock.

Originally Posted by The Cobra

You do understand that when a stock goes up to $100k it's based on someone actually paying that much for it?

Only a small portion of outstanding shares get traded at peak prices, particularly with the very narrow peaks that a lot of weed stocks had.