It May Look Pricey, But This Profitable Cannabis Stock Can Still Make You Rich

1 min read

The cannabis industry is booming, but that doesn’t mean every player in the space is destined for success. As global legalization progresses and consolidation — such as the upcoming AphriaTilray merger — continues, we will see a group of deep-pocketed players coming to compete for a finite number of dollars. Currently, many of the biggest companies, Tilray among them, are experiencing ballooning losses because of lower gross margins, unfavorable inventory valuation adjustments (presumably due to ] cost-cutting spurred by competition), and high sales, marketing, and research costs.

Such losses are not uncommon in commodities or industries that mimic commodities, because traditionally, there are no moats protecting a commodity producer. In the case of a marijuana distributor or grower, what is to prevent any other player — legal or otherwise — from slashing prices to the bone to starve its rivals of profit?

Image source: Getty Images.

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