Cannabis companies Affected by Inflation and Economic Slowdown
Recently, the shares of the cannabis companies have lost their value due to inflation, economic slowdown, among other factors. Analysts said that even though the cannabis sector reached historic highs last year, there is room for it to grow more in the future in the stock market.
Canadian and U.S. cannabis product makers are showing a sharp pullback in the stock market this year after posting double-digit gains in 2021.
Shares of Edmonton-based Canadian cannabis company Aurora Cannabis are down 71.68% on the Toronto Stock Exchange, trading at C$1.94. The company makes cannabis-based medicines.
Ottawa-based cannabis company Hexo, which manufactures products for recreational cannabis use, is the second biggest loser this year, with its shares down 70.45% at C$0.26.
Canopy Growth, also a manufacturer of medical and recreational cannabis products, fell 61.23% to 4.28 Canadian dollars a share.
You can find more information about the cannabis markets and other important news in the cannabis sector with the Hemp.im mobile app. This app collects the latest marijuana news among cannabis sectors that investors operate in.
Factors that affected the cannabis industry
Carlos Hermosillo, an independent stock market analyst, said that although the sector’s drop in the stock market can be explained by the general market falls due to investors’ pessimism about high inflation and the increase in rates, there are particular factors that have affected cannabis companies.
“The main thing is the general effect on the stock market due to the exchange rate and the prospect of recession, but on the other hand there are regulatory issues in general and also some companies in particular that have given bad news in their ‘real’ production capacity and/or product quality,” he explained.
Alain Jaimes, a stock market analyst at Signum Research, said that “the cannabis industry still presents regulatory risks, and although it seems to be an industry with favorable expectations, its nature and the environment in which it is traded, make it an asset with marked volatility.”
The U.S. manufacturer of medical and recreational marijuana-based products, Trulieve Cannabis, is down 58.44% in the U.S. over-the-counter market.
Other companies in the sector that also lost in the stock market during 2022 are the Canadian cannabis company Tilray (-52.47%), the U.S. companies Green Thumb (-50.87%) and Curaleaf (-35.55%), and the Canadian company Cronos (-19.08%).
There is the confidence that the cannabis sector will grow
Analysts said that even though the cannabis sector reached historic highs last year, there is room for it to grow more in the future in the stock market.
Carlos Hermosillo stated that the growth potential is “ample” because there are countries in which the medicinal and/or recreational use of marijuana has not been decriminalized or legalized.
In the world, about half of the little more than 200 countries have already legalized the use of cannabis for medicinal purposes (not all of them in the same way), 30 have decriminalized recreational use and only 12, including Mexico, have legalized the latter, according to data from the World Population Review.
(Featured image by TinaKru via Pixabay)
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in EL ECONOMISTA, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
The TopRanked.io Weekly Digest: What’s Hot in Affiliate Marketing [Week 22]
This week we're waking the dead as we go back to the metaverse baby. With Apple soon announcing its long-awaited...
Bullish on Bitcoin? – Blackrock CEO Warns of “Debt Ceiling Drama”
Many bitcoin and cryptocurrency investor advocates view BTC as a hedge against inflation and debt concerns, especially as central banks...
Docline Prepares a New Round of 6 Million for 2024
Docline maintains an agreement with Mapfre, with whom it offers digital health programs to the company's policyholders; with the Ballesol retirement...
Cedacri Prices New €275M Bond to Pay €50M Tax and €150M Extra Dividend
As stated in the Report to Cedacri's 2022 Annual Report, and as recalled in the release in which Moody's assigned...
Bierzo Aire Limpio Starts Crowdfunding to Support the Legal Defense of the Environment
The NGO holds an assembly that includes a state-wide meeting against waste incineration, debates on wind and solar macro-projects, and...
Featured2 weeks ago
Ripple Launches Institutional CBDC Platform for Millions of Users
Featured3 days ago
How the Fintech Sector Helps with Financial Inclusion
Featured1 week ago
Two Spanish Startups Selected by the Amazon Sustainability Accelerator
Crypto1 day ago
Ethereum: Will the Shanghai Upgrade Make it Easier to Detect Criminals?