Global dagga express runs out of steam – The Wall Street Journal

Share prices of marijuana producers tumbled last week, some by nearly 40%, after a string of disappointing quarterly reports and mounting skepticism about the industry’s rosy growth forecasts.

Published on:

14 Oct 2019, 2:38 pm

I scoured this story, which outlines the downturn in the global marijuana market, for clues as to why this is happening, and there, in the last line, was the biggest one. Canada took the first toke in the relatively sudden global dagga-rush, legalising and commercialising the plant – but the slow growth of its retail network made nonsense of the explosive cannabis production. My theory is that the R41bn global market in marijuana products suffered the same fate, the bubble not so much bursting as deflating. Share prices on some listed companies tumbled by up to 40%, mergers were cancelled and capital market began drying up. Companies that invested millions drew back, some influenced by conservative governments, but most by pure logistics. In Africa, Lesotho led the way, granting a subsidiary of a South African company a licence to make, supply, export and transport cannabis and related products. In South Africa, the JSE-listed company, Labat Africa, acquired several pharmaceutical businesses in order to begin playing in the cannabis space, securing a majority shareholding in a seeds and genetics business that now also works out of Lesotho, producing concentrates with a high tetrahydrocannabinol (THC) content for the export market. – Chris Bateman