The vaping crisis has helped cool once white-hot cannabis companies—which may eventually offer legal vaping products—with a $10 billion drop in market value.
Four of the biggest cannabis companies, Tilray, Canopy Growth, Aurora Cannabis and Cronos Group—have lost around $10 billion in market value since the CDCThe ongoing health scares in the U.S. have created more uncertainty for cannabis investors and could negatively impact companies’ sales as Canada legalizes vaping products later this year. of the market.
Also hurting cannabis stocks: Profitability hasn’t materialized as quickly as expected, says Matt Markiewicz, managing director of The Cannabis ETF, which tracks CBD and THC companies. While cannabis will likely be a massive industry, these newly public companies are still learning how to manage Wall Street expectations—and that has been a “painful learning process,” Markiewicz says.
“In the long run, [the vaping crisis] is just a bump in the road,” says Morningstar analyst Kristoffer Inton, who predicts that the real growth opportunity for cannabis companies is in the underdeveloped derivatives market, such as edibles and beverages.“As an investor you have to think about how these companies are all essentially playing with one hand behind their back—when that hand is untied, what will their true business potential be?” says Markiewicz.