ACRGF - Why Marijuana Legalization Won't Solve the Industry's Problems
Marijuana's illegal federally in the U.S., and that's a big problem. It makes it difficult for companies to gain access to the banking system, and pot can't travel across state lines, even if it's between two states that have legalized marijuana. There's no denying legalizing pot could lead to significant opportunities in the industry, but it won't be a band-aid solution for all of its problems, and here's why.
One of the biggest knocks on cannabis companies is that they're just not profitable. But that has much more to do with a company's management than with whether it can sell across the country. There are marijuana companies in both Canada and the U.S. that have posted profits in the past year.
The reason companies aren't posting profits is because they're simply being too aggressive. Much of the excitement in the industry has centered around growth, and companies have responded by expanding into many different markets. Acreage Holdings (OTC: ACRGF) is among the largest multistate operators in the country, with a presence in 20 states (which includes pending acquisitions). The company's been aggressive in its expansion, and in 2019 its revenue of $74 million was more than triple the $21 million that it generated in the previous year. And although its net loss for the year of $150 million was an improvement from $206 million the year before, the company is still nowhere near breaking even -- despite all that revenue growth.