PotStocker wrote: punjabi416 wrote: I believe that inventory should not be as much of a concern as others are letting up. The company has recently been allowed to produce edibles. As you may or may not know, edibles require a considerable amount more marijuana to produce a high v smoking it the conventional way.
Also, consider if CGC is granted the ability to produce extracts. To put things in perspective use hashish as an example. It takes about 10 grams of marijuana to produce 1 gram of hashish (research using the internet). The ratio to produce newer "in market" concentrates is much higher, which would bring down the physical inventory once sales of these items are complete.
So my point is: this would not simply mean shifting one inventory to another, but rather the sales potential increases as edibles and concentrates appear to be in very high demand and very high growth segments. This would theoretically increase inventory turnover.
Good point. And I know even the degraded marijuana can be converted into hashish.
However, this is not my concern. My concern is
1, First, this huge inventory is now 1/4 of the cgc assets. And it is not audited by any third party. It is sitting on the book as ASSETS. This is the risk one
2, Right now, cgc is running on its 1/10 capacity. But it produces huge amount of product it could not sell. This means very poor production planning. So, this gives me reason to doubt the capability of the management team.
I would like to hear from CEO
1, How he is going to reduce the inventory if marijuana is not going to be legalized anytime soon, let us say 18 months?
2, How to cut the cost and make sure there will be no dilution going forward.
By end of Nov, cgc will be near running out of cash. And I think the new 12.5M$ is barely enough to last for half year given the size of current company. So I think cgc will need to raise more money.
If the company keeps on diluting its existing shares, it will be difficult for share price to go up.
Of course, if Trudeau said the pot will be legalized in the first half of 2016, no doubt, this will be the best time to get in. But, Trudeau also said the right way may be a few months or years.
Who knows?