In business, a year can make a huge difference. At this time last year, pot stocks were untouchable as they were flying high, and most of the brand-name companies were expecting recurring profitability by the time 2019 comes to an end, but the reality of the situation was the opposite of their expectations. Some of the states in the U.S. have imposed high tax rates on marijuana sales, persistent supply challenges in Canada and the ever-growing marijuana illicit market posed a significant challenge to the legal marijuana industry in 2019 and these challenges eventually managed to push a several of the popular marijuana stocks to two-year lows.
However, hope that pot stocks will bounce back is not lost because last week, Statistics Canada issued its monthly retail trade sales report for the month of November which showed that marijuana sales hit a new all-time high, something which was unexpected since the pot industry in Canada is still facing supply and illicit market challenges. In the month of November 2019, marijuana sales jumped to $100 million. Below is a snapshot of the store sales progress since recreational cannabis sales started on Oct 17, 2018:
- October (2018): C$53.68 million ($40.6m)
- November (2018): C$53.73 million ($40.7m)
- December (2018): C$57.34 million ($43.4m)
- January: C$54.88 million ($41.6m)
- February: C$51.66 million ($39.1m)
- March: C$60.94 million ($46.2m)
- April: C$74.58 million ($56.5m)
- May: C$85.81 million ($65m)
- June: C$91.46 million ($69.3m)
- July: C$107.36 million ($81.3m)
- August: C$125.95 million ($95.3m)
- September: C$122.93 million ($93.1m)
- October: C$128.98 million ($97.7m)
- November: C$135.75 million ($102.8m)
Wall Street forecasts that in 2024, the marijuana industry will generate $5 billion in annual sales. Since recreational marijuana sales were launched in Canada on Oct. 17, 2018, the marijuana market in the country has generated a total of $916.6 million in revenues.
Marijuana sales in Canada could make a significant leap in 2020 because Wall Street and investors are hoping that the increase in marijuana sales is just the tip of the iceberg. Two significant changes are expected to increase cannabis demand by customers and minimize the supply challenges hindering weed sales. These changes include the launch of high-margin derivative products, which started last year, mid-December. The products are appealing to the younger generation of users who have shown a willingness to purchase these products, which include vapes, edibles, topicals, concentrates, and infused beverages.
The second change is the long-awaited dispensary permit reform in Ontario, which has the largest population of Americans in Canada. Thirty-eight percent of Ontario residents are Canadians, and the state has only 24 operational marijuana retail outlets, which are not enough to serve the large population, forcing most to turn to the black market. Ontario hopes to have around 250 dispensaries by the end of 2020.
Experts believe everything is looking up for the industry, and pot companies like SinglePoint Inc. (OTCQB: SING) could be looking forward to getting their fair share of that pie this year.
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