Cautioning prudence to investors desperate to cash in on the next, big thing is not much different than spitting into the wind. For reasons that should seem obvious, you are bound to regret it.
As it happens, the Cassandras of the financial world are few and far between whenever the market smells red meat in the air. Are we now heading into this mortally treacherous territory thanks to the impending legalization of pot for recreational use in Canada?
Last week, Moncton’s OrganiGram, a medical marijuana producer, confirmed plans to build out its production capacity to 26,000 kilograms of the stuff (about 9,000 kg more than its current output) annually. Meanwhile, according to a report in this newspaper, the company has “made some new friends in high places. Trailer Park Boys, the hit Canadian comedy TV show, will be collaborating with the cannabis company on an exclusive strain of marijuana as soon as it becomes legalized.”
Said OrganiGram’s chief commercial officer, Ray Gracewood: “We need to be strategic about the opportunities that will be afforded to us with the advent of recreational use in Canada. Brands will play a key role within the cannabis market space, and we’re devoting the thought leadership and developing our strategy well in advance of these expected changes to ensure we’re prepared.”
Elsewhere, despite their mindful-sounding public statements, the industry’s “thought leaders” are licking their chops without actually knowing how the shape of their emerging business will solidify.
According to a piece in Cantech Letter, “Already setting new record highs for months, shares of Canadian marijuana stocks have reached lofty new territories after California voted to legalize marijuana. On Tuesday, (November 9) while many were mulling the shocking surge to the White House by Donald Trump, the state of California passed Proposition 64, which will allow residents 21 years and older to buy and possess up to one ounce of cannabis for recreational purposes and to grow up to six marijuana plants for personal use. The new measure will create an environment for state-licensed businesses to set up retail marijuana sales. With a proposed 15 per cent sales tax, the state is expected to take in an added $1 billion in tax revenue from legalization.”
Indeed, as the CTV reported last week, “Shares in Canopy Growth Corporation (based in Smith Falls, Ontario) saw its value hit $17.86, double its level from a week earlier, before falling again. The total value of the company’s stocks briefly hit $2 billion, twice what it was a few days before. Stock in Aurora Cannabis, based in Alberta, jumped to $3.95, up from around $2 a week earlier.
Mettrum Health Corp. also saw its trading stopped twice, while Supreme Pharmaceuticals Inc. and OrganiGram Holdings Inc. had their trading stopped once each.”
All of this feels vaguely familiar. Enthusiasm for the “new” and the “exciting” is a permanent feature of market capitalism. As with virtually everything within the realm of human volition, it produces both good and ill effects. On the one hand, ventures obtain access to badly needed capital for expansion and product innovation. On the other hand, too much hot blood can generate bubbles, which have a nasty habit of bursting when you least expect.
The age of legal “Mary-Jane” in New Brunswick is about to dawn. That’s great, as far as it goes. We could use the business boost in this province. But let’s not forget that all industries take time to mature. We want them to survive and thrive, despite the fickle headwinds that conspire to knock them down, cold and stoned.