These 3 Pot Stocks Have Lost Nearly $500 Million, Combined, in Fiscal 2019

Ready or not, here comes the green rush! Following the end of nine decades of recreational marijuana prohibition in 2018, Canada became the first industrialized country in the world, and only the second overall, aside from Uruguay, to legalize adult-use weed this past October. When combined with two-thirds of all U.S. states having now legalized medical cannabis, the market for North American cannabis is budding.

After generating an estimated $12.2 billion in global sales in 2018, Arcview Market Research is calling for a surge in sales to $31.3 billion worldwide by 2022. Even more aggressive industry sales estimates come from Cowen Group and Jefferies, which foresee sales hitting $75 billion by 2030, and perhaps as high as $130 billion (although no timeline was given), respectively.

Investors flock to marijuana’s “Big Three”

It’s this rapid change in sentiment and underlying law, along with monstrous sales projections, that have investors piling into Canada’s “Big Three” pot stocks — Aurora Cannabis (NYSE:ACB)Canopy Growth (NYSE:CGC), and Aphria (NYSE:APHA). You’ll note that by “Big Three” I’m not referring to their market caps, although Canopy Growth and Aurora Cannabis just happen to be the respective Nos. 1 and 2 in size. Rather, I’m talking about Canada’s projected top marijuana producers.

Aurora Cannabis, which had been forecasting 570,000 kilograms of peak output prior to its ICC Labs acquisition in South America, should have a realistic shot at 700,000 kilos in peak annual output by 2021 or 2022.

Meanwhile, Canopy Growth has been far more tight-lipped about its potential production. What we know is that the company has more than 4.3 million square feet of licensed growing capacity spanning 10 sites, but that it’s aiming for 5.6 million square feet, in aggregate. Assuming an industry average yield of about 100 grams per square foot, Canopy Growth has a realistic shot at 500,000 kilos to 550,000 kilos in annual yield.

And then there’s Aphria, which, according to management, should hit 255,000 kilograms of peak production. Most of this will come from the company’s organic Aphria One buildout (100,000 kilos) and its joint venture project with Black Diamond Farms that’ll see vegetable-producing greenhouses retrofit for cannabis production (120,000 kilos).

Together, these major growers could account or between 1.4 million and 1.5 million kilos of peak production a year, which is more than the entire country of Canada will likely demand by 2021. Unfortunately, these companies together are also generating massive operating losses…

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