Cannabis share bubble brewing in North America

By Felicity Duncan

Even as investors around the world are still picking up the pieces of the cryptocurrency bubble, some observers see a new bubble forming: cannabis stocks. Last week, Canadian medical-marijuana producer Tilray saw its share price hit $214, up from $52 at the end of August. Cannabis stocks – many of them based in Canada, which is soon to legalise commercial cannabis cultivation and sale – have been trading at price-to-sales ratios of over 180.

A growing number of Canadian cannabis companies have started to list on US exchanges and investors have been piling in, anticipating that these companies will benefit from Canada's legalisation and that cannabis will ultimately be legalised in the US. But that's a lot of ifs. While there is certainly enormous potential in a legal market for cannabis, forward multiples of 185 are a little (ahem) high for my taste.

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