After the comedown from 3-4 years of pure speculation and numbers picked from the air with a chef’s kiss attached, in 2020 we see a smorgasbord of depressing, angry, and pathetic stats coming from the real world of legal cannabis.
One of the remaining, consistent good data points I observed this last year was a steady growth in sales / revenue, especially comparing the nascent 2018/9 figures. Almost every LP was able to throw up a press release with some kind of “ONE MILLION PERCENT INCREASE” headline.
Even here, however, the latest quarterly figures had eye watering drops in volume / revenue, as well as the expected, continued write down of assets and goodwill and inventory.
- Medipharm casually revealed a 49% dip in sales. Cowabunga.
- Aurora acknowledged a $140m impairment, 40% of which related to a realignment of inventory value as the market continues to price cannabis differently, and lower, than the accountants. [They also shuttered a further FIVE facilities, which beggars belief that they thought they needed them in the first place.]
- Meanwhile, industry analysts determined the market share of behemoth Canopy had slipped from 20% to 15%, since the beginning of the year. These are horrifically bad numbers.
But, worry not! For there is a solution at hand – beverages.
It feels like there is a huge amount hanging on the drinks division of LPs. Why? My layman’s guess is the ready comparison with the alco-beverage market and its bazillion dollar valuation.
Cannabis only needs 5% of that in Canada to be a $1.3B business and save the day for the next 2-3 years. This is Canopy’s hope.
Because in the dried flower market, price degradation continues unabated. For Canopy, cheaper dried flower products will win back their market share, they believe. Good luck with that, like no-one else will pile in with all their ageing inventory, as MJBiz Daily shared last week. Value brand growth might be good for the consumer, but it is proving rough for the bottom line.
This week’s cannabis noise: GACK!
This Much We Know.