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article imageCanadian cannabis stocks continue to fall amid supply shortages

By Karen Graham     Oct 23, 2018 in Business
Alberta - Cannabis stocks continued a six-day rout on Tuesday as retailers in Canada faced shortages in the supply chain — with some licensed producers acknowledging they will not reach full capacity for months.
Exacerbating the supply problem - which was expected and which may continue for several months - at least 111 retail stores are set to open across Canada, with even more to come. In the past week, the Alberta Gaming, Liquor and Cannabis Commission (AGLC) granted 14 more retail cannabis store licenses, bringing the province's total to 31.
"It's a mess. The supply is just a mess," Patrick Wallace, owner of the Alberta shop Waldo's 420 Store, told CBC Canada. They should have worked on the supply before they legalized it. They needed a lot more supply," he said.
Retail stores can order more supplies from the AGLC, but store owners are saying there is nothing left to order. "We were on the website, but there is nothing on the website. There is no product," Karen Barry of Calgary's Beltline Cannabis told CBC.
"I'm sure the [AGLC] is working hard to remedy the problem. This is just a growing pain that we're experiencing in the whole industry."
File photo: A customer shows a marijuana product that he bought legally after entering a cannabis st...
File photo: A customer shows a marijuana product that he bought legally after entering a cannabis store in Montreal
MARTIN OUELLET-DIOTTE, AFP
Cannabis stocks taking a hit
It had been hoped that legalization of cannabis would bring some stability to share prices, but that has not been seen, according to the Financial Post. But on Day 1 of legalization, shares began their downward plunge, falling across the board, with the exception of Aphria.
On Monday, Aurora Cannabis fell as much as 15 percent on its first day of trading in the U.S. Canopy Growth Corp. dropped 12 percent and Tilray Inc. tumbled as much as 18 percent - but the market was shaky all around on Monday and today, Tuesday, it is not doing much better.
Bloomberg notes that many investors are disappointed in the lack of inventory coupled with a dearth of brand awareness. Cowen analyst Vivien Azer said retailers were sold out of 46 percent of pot products, based on her survey of online retailers in five provinces.
Charles Taerk, the chief executive officer of Toronto-based Faircourt Asset Management said, “We thought the sector was going to be weaker at the beginning of the month as we slid into Oct. 17 and we were kind of surprised that markets stayed pretty buoyant up until early last week."
But Tarek says investors shouldn't be rushing to sell their holdings. This temporary weakness in the sector will more than likely prompt the next big investment in the space. He cited Constellation Brands which bought into Canopy in August. He notes that when shares are down, this is the time to invest.
More about Marijuana, Stocks, supply shortages, Volatility, sellout rates