Both Green Growth Brands (CVE:GGB) and HEXO (TSX:HEXO) are set to report earnings this week, on Wednesday and Thursday respectively. HEXO has already popped their own balloon in terms of expectations, having reduced its forecast dramatically.
HEXO countered the negative fallout by launching its Original Stash brand, which is priced below black market supplies – a move that has officially launched the cannabis price war we have been warning of for years and one that we doubt LP’s are equipped to win.
A nicely written review of the product by Teddy Elliot at MTL Blog is worth the read. He clearly concludes that the product is as good as most of the normally priced premium dried flower, which means HEXO might find itself suddenly the top vendor of cannabis across Canada. Now can they make money?
It will be interesting to see the notes to HEXO’s upcoming financials for any hint of the assumptions that have management believing this is a sustainable strategy on their part.
Village Farms International, Inc. (TSX: VFF) (NASDAQ: VFF) managed to raise an impressive $28.75 million from GMP Securities in a bought deal, which is evidence of bifurcation in the sector. There is money for big companies with big operations and who are global scale contenders.
Bad Ideas Abound in Cannabis
One of the more pleasant side-effects of a major market revaluation to the downside in any sector is the inevitable crop of would-be ganjapreneurs who aren’t quite plugged into the industry enough to realize the time is not now, or they have an idea that is either a) identical to a long line of “idea-of-the-day” graduates, or b) just plain dumb.
I hesitate to suggest that anyone’s idea is dumb, because a) what do I know?; and b) see a.
That being said, you can certainly see when you’ve got an idea in front of you that doesn’t make a lot of sense. But just because it makes no sense to me doesn’t mean it will make no sense to anybody.
I’m especially cynical when it comes to edibles.
Having never been a fan of edibles throughout my peak recreational cannabis years, I’m skeptical that there will be any broad uptake, and that the segment will be a money pit for most companies who lack the bench strength to take a consumer packaged product like candies that get you high all the way down the regulatory and retail shelf space field to score a win.
Obviously, companies like Plus Products are going to prove me wrong, but I view them as the exception rather than the rule.
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