Just thought i would shrare this.Waiting patiently! It’s a little bit like counting chickens before they’ve hatched (perhaps literally). For mature agricultural industries, that can make sense. The market for tomatoes is well-established, prices are not in dispute, and a producer can enter into future sales contracts. That’s not the case with recreational marijuana sales, an industry that doesn’t even exist yet. Prices, costs, sales volumes and the quality of inventory are still very much up in the air.
Gross margins in the sector are distorted as a result, making firms look more profitable than they really are. Companies are boosting marijuana inventory in anticipation of legal recreational sales in July, and have much more weed than can possibly be sold at this point. That’s led to cases where some firms, such as Canopy Growth Corp., have reported gross margins in excess of 100 per cent. The situation makes it difficult for investors to truly gauge profitability—and it’s made worse by the fact that companies use different estimates to calculate the value of their plants, and they’re not always transparent about how they arrived at those values. “Even when you ask what number they’re using, they’ll give you a roundabout answer. It has been like pulling teeth sometimes,” says Jason Zandberg, an equity analyst who covers the sector at PI Financial in Vancouver. “They say, ‘Well, it changes every quarter.’ That’s just a bizarre way to carry out business.”