Recent reports show that major marijuana companies are running out of money, and businesses in Canada are especially in danger of becoming illiquid. Major producers in the weed-friendly nation have just over 6 months of cash on hand, according to the information, and comparable companies in the U.S. just over one year of liquidity. In the U.S. the falling cannabis stocks and sluggish market present an even greater threat, since companies cannot file bankruptcy as the plant is still illegal under federal law. All this seems to beg the question: where is crypto in these trying times?
Businesses Running Out of Weed Money, Black Market Still Thriving
The recent wave of cannabis legalization across the United States and Canada brought with it a surge in cannabis company stock prices and high hopes of big money and a thriving industry. Some also speculated legalization would curtail black market spending. The outcome however, has been a hard comedown for many in the sector, where only the biggest players able to pay for necessary compliance measures, overhead and other fees can compete and secure funding.
Many companies have not been able to keep up with demand or establish locations convenient to their customers due to laws and regulations. As BBC News Toronto’s Robin Levinson-King reported in December:
Red tape and a cap on the number of cannabis retail outlets have made rollout slow. Retail licenses were awarded by lottery, and the province held the number of licenses at 24, to serve a population of 14.5m.
A recent article from Bloomberg, citing a report on liquidity in the industry,