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The Cannabis Industry in the Face of Inconsistent Regulation

Despite some people raising their eyebrows, the cannabis industry is among the most promising in 2019, as the legalization for recreational purposes or medical treatments continues both in the United States and Canada, as well as other European countries.

In terms of stock market trading, several companies from the industry had already gone public, but yet, the growth of the industry might become inconsistent, due to pending inconsistent regulations.

Industry Growth Potential

According to investors.com, only in the United States, nine states and Washington D.C. have legalized recreational marijuana, and 29 states have legalized medical weed. Although there are still many places where federal governments outlaw cannabis, several important companies from the industry had already conducted their IPOs.

Canopy Growth Corp. Began trading on the New York Stock Exchange (NYSE) back in May 2018, while Cronos Group started to trade on the Nasdaq this year in February. Although a US marijuana company valued at $1.65 billion, MedMen conducted its IPO in Canada also in May last year.

Potential 2019 IPOs

There are still a lot of companies from the industry which might take the path of going public in 2019. Pax Labs is a cannabis-focused vaporizer founded by James Monsees and Adam Bowen. At the present time, Pax is producing vaporizers designed to be used with cannabis flowers and a pen and pod system for use with cannabis oil.  

A second important company that might go public this year is KushCo Holdings Inc., based in the US, California, which produces packaging for various forms of marijuana products, and other business units not involving touching the plant. According to CEO Kovacevich, the company will try to get listed on the Nasdaq in the first half of 2019.

Negative drags to consider

Cannabis stocks had been taking a tumble this month after comments from Attorney General William Bar, who showed muted support for States Act. Although the desire to regulate cannabis is evident, regulatory procedures might become harder to implement than previously expected. The second important aspect has to do with the cannabis price. According to Statistics Canada, the legal price stands at $9.99 per gram, while on the black market it stands at $6.37.

A setback in the price per gram could have a negative influence on the profitability of the companies from the industry, which leads us to conclude that despite its huge potential, the cannabis industry might have a bumpy ride.

Oliver

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