Marijuana News Today: Marijuana Investors Need to Be Wary of a Pot Stock Stumbling BlockPosted by On


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Marijuana News Today

In the marijuana news today, another legal pot company was found to be in non-compliance with Canadian regulators. This shines light on an issue that could become more prevalent as time goes on.

While the company in question, British Columbia-based Evergreen Medicinal Supply Inc., is not publicly traded, that doesn’t mean investors ought to ignore the federal regulator’s move to crack down on non-complying cannabis producers. (Source: “Health Canada suspends British Columbia cannabis producer Evergreen’s licenses,” Marijuana Business Daily, September 16, 2019.)

You may remember that, earlier in the year, CannTrust Holdings Inc (NYSE:CTST) was the target of a Health Canada audit that found the company to be in non-compliance of regulations. The result was disastrous for CTST stock, with the company having much of its inventory seized and the potential for its marijuana license to be suspended.

This event naturally had investors worried, so they rapidly fled CannTrust stock. The stock collapsed from about $5.00 a share in July, when this occurred, to its current price of about $1.45 a share.

With that in mind, it’s clear that there are a number of concerns that investors should have regarding the future of pot investments.

Health Canada has the power to completely demolish a company’s future with a single pen stroke. Having said that, it’s not arbitrary. The regulator’s guidelines are fairly clear and, whether one agrees with their stringency, they have been followed by virtually every other company operating in the market.

The key takeaway for investors is to follow a company closely and examine its management before getting too involved with that particular pot stock. If a company has a lot of turmoil or flux at its top leadership, then perhaps it’s worth reconsidering how much you want to invest in said company.

While that’s a good rule of thumb no matter what industry you’re investing in, with marijuana stocks, this can be particularly important as the government plays such an important role.

Another important consideration is to disregard rumors (or at least investigate them instead of taking them at face value).

Many rumors will be sure to emerge, claiming that this company or that company is next on the Health Canada chopping block. In fact, that has already taken place, with several murmurs being heard about top pot stocks and possible licensing suspensions.

But…

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