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NextGen Magazine

 
 

Analysts Say Average Canadian Cannabis Companies Have Six Months Before Running Out of Cash

By:
Chris Gaetano
Published Date:
Feb 11, 2020
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An analysis of the cannabis market reports that the entire sector is experiencing severe liquidity issues, with the situation in Canada being particularly dire, as firms there  have, on average, just six and a half months worth of cash, according to MarketWatch. Like all averages, the statistic contains wide variations among specific firms. For instance, according to the study, conducted by Ello Capital, one of the largest Canadian cannabis firms, Aurora Cannabis, has a little more than two months worth of cash remaining, while Canopy Growth Corp., another major Canadian firm, has a little less than eight. Meanwhile, while the average U.S firm has 14 months of liquidity on hand, some are set to run out of cash much sooner. One example is Green Growth Brands, which has about a month before the cash dries up completely. While cannabis companies had previously been able to easily raise enough capital to offset liquidity issues, the sector has been rapidly shedding market value as investors have started to realize that these firms are having a great deal of difficulty making consistent profits.