Some of the biggest cannabis companies in the U.S. and Canada could burn through their cash balances in a matter of months unless they’re able to raise funds or cut spending, according to research from the boutique investment banking firm Ello Capital.
As pot stocks plunged over the past year, big spenders like Canopy Growth(ticker: CGC), Aurora Cannabis (ACB) and Tilray (TLRY) have found that capital markets have yanked the welcome mat and forced the pot producers to cut costs. “The cannabis industry is currently entering a new period where companies are focusing on corporate governance and operational efficiency,” says Ello chief executive Hershel Gerson.
Burn Rate: How many months’ cash do pot companies have at their current cash burn rates?
Few analysts foresaw the industry’s cash crunch. Some thought that Aurora Cannabis was even on the road to positive cash flow in 2019. But Aurora stock has fallen nearly 80% from one year ago and last week it announced drastic economies. The ETFMG Alternative Harvest ETF (MJ), an exchange-traded fund with exposure to the pot business, has shed half its value in the past 52 weeks. In 2018 and 2019 cover stories, Barron’s wrote that Canadian and U.S. pot stocks looked overpriced. [Read More @ Barron’s]