The investment year in cannabis: green shoots

The majority of the publicly traded cannabis companies still look massively overvalued. Not a month goes by without an embarrassment or two, but we are starting to see green shoots. Not just on the regulatory, but also on the investment side. Some operators have finally turned a profit and could be the winners of tomorrow. 

If you are an investor in publicly traded cannabis companies, 2019 was another miserable year, on average. Even after declining 55% in 2018 the Global Cannabis Index¹ dropped another 34% in 2019, to finish the year at a two year low (down 77% since the high early 2018).

The share price declines were not confined to the Canadian licensed producers (“LP’s”). The American Cannabis Operators Index dropped 44% in 2019, even worse than the Global Index. 

If one reviews the company headlines from last year, it is safe to say that these declines were more than justified. From illegally growing cannabis (e.g. Canntrust) to (temporarily) halting construction of facilities (e.g. Aurora, The Green Organic Dutchman), the scary stories far outweigh the successes. Coupled with the fact that (especially) the Canadian LP’s were priced to perfection, and the retraction of available capital, sentiment worsened and the downward spiral that started in 2018 continued in 2019. 

But the macro backdrop was actually very positive. As an example, Forbes, a magazine, recently listed 2019s ten biggest victories of cannabis in the United States, ranging from a first-ever congressional vote on federally legalizing cannabis in the US to a record high of Americans backing full legalization in the polls. 

The majority of listed cannabis companies still look overvalued to us. As can be seen on Canopy Growth, even after dropping 63% since it’s all time high in April of last year, is still trading at a market capitalization of C$ 9 billion, while the company is still expected to generate an operating loss in 2020 (just as peers Aurora, Cronos & Tilray).

This does not come as a surprise. According to the Financial Post, a Canadian newspaper, in Canada there are more than 200 companies chasing a market that has yet to cross the C$ 1 billion in sales mark². There is a lot of skepticism that infused beverages will be the turning point for the Canadian LP’s, as evidence from established US markets is that these beverages never took off.

In the same article in the Post the CEO of Canopy Rivers, the venture capital arm of Canopy Growth, mentioned that there is a lack of institutional investor interest going into 2020: “There’s just no money coming in, so if you have a low cash balance, you might be in trouble, but we haven’t seen the blood on the streets yet.” So it is dark, but not darkest before dawn.

Ranjeev Dhillon, a partner at McCarthy Tetrault, a law firm, stated that companies that cannot distinguish their brands and do not have the money to keep up operations on existing facilities will not be able to carry forward. “The only kind of money you can raise right now, if at all, is debt”. 

So where are the green shoots? At the Cannabis Capital Convention we learned from Nic Easley, founder of Multiverse Capital & 3C Consulting, that a lot of money is being made in private companies. These are Cannabis behemoths that nobody has heard of (so far). 

During the convention we featured two private companies that are aspiring to be in this category, namely Cannaverde Pharma and Cannafornia.

But there are also some publicly traded companies that are (finally) turning the corner.
At CCC we interviewed Sky Pinnick, director of C21 Investments, and he highlighted a new playbook for cannabis operators dubbed Cannabis 2.0: focus on operations versus on the latest press release. C21 is now one of the few American operators that has profitable operations. The stock price of C21 rose over 40% since the interview at CCC, but it is still trading 70% below the all time high.

Join us at the first First Wednesdays of 2020, this Wednesday, to discuss, in a bar in Amsterdam. Please register at: to receive the invitation with the location. 


Here’s to a prosperous and green 2020,


Team CCC


¹ New Cannabis Ventures

² Post says Canopy Rivers CEO warns of “blood on streets”