{"id":41630,"date":"2020-03-20T12:54:58","date_gmt":"2020-03-20T16:54:58","guid":{"rendered":"https:\/\/eresearch.com\/?p=41630"},"modified":"2020-05-26T15:45:49","modified_gmt":"2020-05-26T19:45:49","slug":"cannabis-update-lay-offs-facility-closures-write-downs-u-s-exchange-delisting-and-retail-store-closures","status":"publish","type":"post","link":"https:\/\/eresearch.com\/2020\/03\/20\/eresearch-reports\/analyst-articles\/cannabis-update-lay-offs-facility-closures-write-downs-u-s-exchange-delisting-and-retail-store-closures\/","title":{"rendered":"Cannabis Update: Lay Offs, Facility Closures, Write-downs, U.S. Exchange Delisting, and Retail Store Closures"},"content":{"rendered":"

<\/p>e<\/em><\/strong>Research<\/strong> |<\/strong> The first established cannabis ETF, Horizons Marijuana Life Sciences ETF (TSX: HMMJ)<\/strong>, has fallen almost 80% in share price in the past year due to overinflated expectations for demand coupled with failed executions from both cannabis companies and regulating governments in providing transparency and prudence.\n

Chart 1: Horizons Marijuana Life Sciences ETF (TSX: HMMJ)<\/strong> vs. S&P 500<\/h4>\n
\"HMMJ
Source: TradingView.com<\/strong><\/em><\/figcaption><\/figure>\n

As the cannabis industry continues to fall short in meeting expectations, a multitude of negative material events have impacted businesses including: (1) layoffs and facility shut downs, (2) Goodwill write downs and impairments, (3) U.S. stock exchange de-listing, and (4) Cannabis retail store closures.<\/p>\n

Lay Offs and Facility Shut Downs <\/strong><\/h4>\n

The cannabis industry has been on one of its largest down trends in its history mainly due to a misalignment of supply and demand. The Canadian cannabis market forecasted anywhere from C$5 billion to C$10 billion in sales for last year but due to several factors including inefficient government implementation and overestimations, the industry only recorded C$1.2 billion in sales.<\/p>\n

Aggressive supply production for an overestimated market has made it difficult for companies to manage working capital and profitability. In addition, companies invested in developing high-cost indoor greenhouse facilities before federal regulations permitted low-cost outdoor cultivation. The combination of these factors has forced cannabis companies to cut employees, shut down facilities, and stop plans for future facilities.<\/p>\n

Below are recent related events:<\/em><\/p>\n