There's a Marijuana Frenzy That Could End Very Badly in Canada … – Bloomberg

There’s one bummer question haunting all the marijuana businesses popping up between British Columbia and Newfoundland.

How much do Canucks like weed, eh?

A year before recreational cannabis is expected to become legal in Canada, there’s an explosion in companies cultivating the stuff. At least 10 marijuana outfits have new listings this year on the TSX Venture Exchange and Canada Securities Exchange. Some 51 enterprises have gotten the green light to grow pot, and 815 applicants are in the queue. All told, it could be enough to raise the country’s raw-weed output more than tenfold.

This is where skeptics see froth. “If you ask people today why they don’t use, it’s a small percentage who say ‘because it’s illegal,”’ said Neil Boyd, a criminologist at Simon Fraser University in Vancouver. “In many respects there might be an overestimation of demand.”

Long-time users and growers insist he’s wrong, but investors aren’t so sure. Producer MedReleaf Corp. tumbled as much as 28 percent last month in the worst debut for a Canadian IPO in 16 years amid concern pot stocks are overvalued. Shares of Canopy Growth Corp., the country’s first billion dollar marijuana start-up, are down 21 percent in the past three months.

The North American Medical Marijuana Index, which tracks leading cannabis stocks in the U.S. and Canada, has plunged 21 percent since Prime Minister Justin Trudeau’s government in April unveiled its plan to legalize the drug by next July, 16 years after Canada permitted it for medical use.

Of course, some of the decline may be attributed to the situation in the U.S. Many in the Trump administration, Attorney General Jeff Sessions in particular, are no friends to the industry. For Canadian companies, the risk isn’t political.

“There seems to be a little bit of investor fatigue,” said PI Financial Corp. analyst Jason

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