Major Investment Firm Urges Cannabis Caution, Despite Legalization Enthusiasm

Investment agency Edward Jones launched a report on Dec. 20 that highlights their very conservative outlook for the Canadian marijuana sector, regardless of elevated enthusiasm because of pending legalization and massive positive factors for hashish shares in 2017.

canadian cannabis stocks rally

Courtesy of Bloomberg

The Edward Jones report states that though marijuana is at present all the fad, dangers exist for “any startup company in a new, growing market.” The evaluate added that due to an growing variety of rivals and altering laws, it’s difficult to find out the eventual dominant gamers within the burgeoning business.

While different funding companies together with Merrill Lynch have been all-in in terms of investing in pot, Edward Jones seemingly downplayed the business by claiming Canada’s medical marijuana market is “relatively small.” The Edward Jones report said that medical hashish gross sales in 2017 have been hovering over $300 million, whereas the whole prescription drug market reached $25 billion.

This comparability failed to spotlight the truth that entry to medical hashish continues to be comparatively troublesome, however will enhance as extra licensed producers enter the combination. Further, the report uncared for to say the inevitable progress in marijuana gross sales as previous stigmas towards the substance are erased and extra medical purposes are revealed.

As for the upcoming leisure market, Edward Jones noticed uncertainty, stating they consider the thrill over the marijuana business will ultimately fade. The agency expects competitors to extend alongside “rapidly changing market dynamics and regulatory scrutiny.” An extra portion of the doc cited issues in figuring out shopper conduct. “Beyond market dynamics, we do not know where and how buyers will choose to consume recreational marijuana,” the report stated.

This considerably conservative outlook on behalf of Edward Jones comes on the heels of an announcement made by Statistics Canada, which said that Canadians consumed as much as $6.2 billion value of hashish in 2015. That quantity is the equal of roughly 697.5 metric tons of pot.

The Statistics Canada numbers have been on par with an estimate made by Deloitte in 2016, predicting the Canadian hashish business is predicted to tally as much as $eight.7 billion in hashish gross sales yearly. The similar report added that if ancillary merchandise corresponding to lighting, safety techniques, and testing labs are included, that quantity might attain $22.6 billion yearly.

Photo courtesy of Allie Beckett


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