Marijuana Market: Cannabis Stocks Fell 33%

It was a rough start to the week for the Cann Group stock price. The cannabis company's shares are currently the worst performers on the All Ordinaries on Monday afternoon.

At one stage, they fell 33%, to 49 cents. Since then, they have slightly reduced that decline, but still decreased by 27%, to 53.5 cents at the time of writing.

For comparison, the next worst performers are Nufarm Limited and Pacific Current Group. They fell 18% and 8%, respectively, this afternoon.

Why is the Cann Group stock price dropping further?

Investors seem to be selling Cann Group shares today, after analyzing the production plans announced last week.

Previously, the company planned to complete the Mildura facilities in a single development stage. This would provide a total capacity of 70,000 kg of marijuana flower at an estimated project cost of $184 million.

It was expected to generate annual revenues of approximately $220 million to $280 million. However, in response to weaker-than-expected demand and an oversupply of marijuana, management intends to split its construction into three stages. It estimates that production from the first stage will be about 25,000 kgs.

And although management has not yet updated its revenue forecast, I suspect the market is anticipating a sharp downgrade. Especially due to the abundance of cannabis flowers and the limited use that its sales partner, Aurora Cannabis, currently has.

Source: Yahoo