It’s been a banner year for the marijuana industry. Early in the year, Wall Street and investors marveled at the dealmaking, uplisting, and production capacity expansion that pot stocks put on the table. This includes all six of the largest deals we’ve witnessed in the history of the pot industry.
More recently, it’s been all about the legalization of recreational cannabis in Canada, which became official on October 17. When the industry is fully up to speed, there’s the expectation that it’ll add $5 billion or more in annual sales, as well as have cannabis growers seeing green. Although it’s really anyone’s guess what the demand outlook will be at this point, peak production estimates for Canadian growers look to be on track to easily surpass 3 million kilograms per year, collectively.
These pot growers aren’t worth the risk
However, investors have to understand that no two marijuana growers are alike. Even though we’ve seen a number of pie-in-the-sky peak production figures, some growers carry considerably more risk than others. Though clearly up for interpretation, the following pot growers look to have the greatest capacity expansion risk, in my opinion.
The Green Organic Dutchman
On the bright side, this is a company with a nearly 20% equity investment from top producer Aurora Cannabis. Further, it projects to be a top-five producer when fully up to speed, assuming it can meet its lofty targets. Management has suggested that The Green Organic Dutchman could yield 195,000 kilograms at peak capacity.
Here’s the issue: It isn’t even expecting to complete its first harvest or sale until the first half of next year. It’s great that the company believes it’ll be a top-tier producer. It’s also nice that the company is planning to devote around 20% of its annual capacity to its high-margin edibles and beverage division. But those promises mean…
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