Things continue to get worse for cannabis companies in the U.S. and Canada. With the coronavirus pandemic expected to continue to grow and many economists warning that there could be a significant recession in 2020 if drastic measures aren’t done by the government to combat the virus.
This is perhaps the worst possible situation for cannabis stocks, which have suffered significantly in 2019, with many hopeful investors expecting that things could be different in 2020. The biggest cannabis company in the world, Canopy Growth (NYSE:CGC), announced that it would be shutting down all of its stores due to the coronavirus.
Non-essential physical locations, such as gyms and libraries, are being shut down to prevent the possible spread of the coronavirus. While some retail stores, such as groceries and pharmacies, need to be kept open, cannabis dispensaries aren’t really that crucial, especially since many companies offer online deliveries depending on which U.S. state a customer is in.
As such, Canopy Growth has decided to shut down all of its retail locations precisely for this reason, although only its Canadian locations. Other cannabis companies are expected to follow suit in the coming weeks.
“We have a responsibility to our employees, their families, and our communities to do our part to “flatten the curve” by limiting social interactions. For us, that means shifting our focus from retail to e-commerce,” said Canopy Growth’s CEO David Klein. “This is a big decision but it was also an easy one to make – our retail teams are public-facing and have been serving an above-average volume of transactions in recent days. Given the current situation, it is in the best interest of our teams and our communities to close these busy hubs until we are confident we can operate our stores in the best interest of public health.”
Canopy Growth also made news earlier when it announced it would be shutting down two of its greenhouses in an effort to cut down cannabis output. Like many other pot stocks, Canopy has been steadily accumulating a lot of inventory that’s having trouble being sold. Previously optimistic forecasts about the demand for marijuana in Canada seem to have been incorrect, although that’s likely also due to the continued presence of the black market or a slow provincial rollout.
Shares of Canopy didn’t react much to the news, initially tumbling around 10% but quickly ending the day in the positive, up around 1%. Over the past month, shares of Canopy growth have fallen by around 50%, extending what’s already been a challenging 12-month period for the company. The future doesn’t look very good for Canopy Growth right now, and cannabis investors need to be careful where they put their money.
Canopy Growth Company Profile
Canopy Growth, headquartered in Smiths Falls, Canada, cultivates and sells medicinal and recreational cannabis, and hemp, through a portfolio of brands that include Tweed, Spectrum Therapeutics, and CraftGrow. Although it primarily operates in Canada, Canopy has distribution and production licenses in more than a dozen countries to drive expansion in global medical cannabis and also holds an option to acquire Acreage Holdings upon U.S. federal cannabis legalization. – Warrior Trading News