Someone posted a quote on Reddit from Carltaken from the Cannalyst AMA a few months ago. It deserves reading....
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From the AMA with Carl Merton, APHA's CFO: I don’t share the same beliefs of severe oversupply as some of the doomsayers in the analyst community. While I agree that the currently announced capacity, if all built and operated, will result in a large oversupply, BUT I don’t believe we ever get there. I believe that there are a number of LPs that sitting very close to bankruptcy, even today. It is clear that you cannot raise money in the space today, except at an extreme discount. A number of LPs simply do not have enough money (and likely don’t have access to enough money) to survive long enough to get to profitability. Those are the primary targets for bankruptcy. Further, a significant amount of the projected capacity is tied to projects that are not currently funded. How will those projects get built without funds? Finally, I think there will be further consolidation in the industry. In the next phase of consolidation, premiums on current share price will be non-existent and be done on the assumption that the weaker of the two’s production capacity will be closed. I want to be clear; I do not think this means that there will not be oversupply, I just think the doomsday scenario of severe overcapacity is overstated. Economics will prevail. If you can’t turn a profit, no one will support you. The days of glossy press releases and wishful stories of future glory raising share prices are gone."