@Vandelay
I haven't looked at Cronos specifically, but these are impressive looking charts (off a low base), however, I note the first 2 are highly flattering "cumulative" and not actual monthly/quarterly figures.
They certainly looked to have found the sweet spot in the value chain - connecting users and manufacturers.
There are two points I would make:
- My wife interviewed for a medical cannabis practice. The introduction was all very encouraging and sounded above board with appropriate practices of prescribing for approved conditions. However, she wisely decided to sit in on a few consultations with the practice owner before committing. It was a farce of bending the indications and criteria to anything that would get them over the line of appropriate prescribing "you have pain, yes? How would you rate it - about a nine or a ten? And you have tried other medicines and they didn't work for you did they? Great, just sign here and we should be able to get you some cannabis". I suspect such practices will be widespread in the industry and will eventually result in a crackdown as the negative effects of chronic cannabis consumption become more evident. For clarification; I have nothing against recreational cannabis use or medicinal use for the appropriate, scientifically proven indications. But this sounds very similar to the beginning of the US opioid crisis.
- Progressive medical usage is a backdoor way of decriminalisation and eventual legalisation. "If 5-10% of the population are using marijuana as a "medicine" then it cant be an illegal drug as well, can it?" - goes the reasoning. Joe Biden's recent pardoning of federal cases affects very few individuals but has interesting long term ramifications for the medical/legal cannabis industry. Australia is likely to be following in those footsteps, so what happens there may be highly instructive as to what might eventuate to our own cannabis/cannabinoid companies.
The first order conclusion is that Joe Biden's decision is a great thing for cannabis stocks, and indeed their share prices soared on the news. A bit of deeper thinking might not support this however. A regulated industry player will have to comply with significant policies, procedures, reporting, quality control et etc that the black market will not. Their unit costs are going to significantly higher than a black market source. If marijuana becomes progressively more de-criminalised, or indeed legalised, then the barrier to using a black market product is removed and it becomes a straightforward price comparison. Unlike other illicit recreational drugs, marijuana suffers from very little quality control advantages for regulated vs unregulated origins.
So, Cronos may well continue to grow revenues and margins at a fair clip for many quarters to come. But big picture, I would expect both regulatory and competitive headwinds to appear.
It's certainly and interesting area