Green Rushed: Why The Tortoise Will Win The Cannabis Race

July 1, 2020 Benzinga Cannabis Contributors , Benzinga Staff Writer

The green rush. The irony in the name lends itself well to the current rush of companies looking to become the biggest names in cannabis. While companies scramble in a “race to the top,” many of them are not only falling behind but falling out of businesses altogether.

The Excitement

It isn’t often that a completely new business category opens up. But, when it does, it almost always begins and ends in the same way. Take the dotcom bubble as an example. In the late 1990s, U.S. technology stocks soared as investors drove up stock equity valuations of internet-based companies. By 2000, however, the bubble began to burst, leaving investors’ pockets empty from investing in “can’t fail” new technologies.

In this market, there's never been a better time to profit with options. Get Benzinga Options: Starter Edition to follow Nic Chahine's high-conviction options trades. The green rush gained popularity around 2012 when cannabis became recreationally legal in several U.S. states. Since 2016, some of the largest and most popular marijuana stocks have delivered gains upwards of 2,000%, 3,000%, and even north of 7,000%. And while it’s true that many of these numbers are continuing to rise, the overall allure of investing in cannabis has begun to take a sharp, downward turn. And for good reason.

As cannabis’ legality has grown across the U.S., cannabis businesses have fought to be the first into new markets, often opening multiple retail stores in a previously untested market. As sales and company culture often fail to translate into new geographies, cannabis companies are finding themselves upside down on valuations and sliding down a slippery slope of survival.