Cannabis cash flow problem

Published on March 18, 2020 by oz. staff

Cash isn’t something cannabis producers seem to have a lot of these days.

That could become a problem.

Analyst Graeme Kreindler from Eight Capital says cash on hand and firm footing to negotiate with suppliers will help cannabis companies get through the pandemic.

The escalation of coronavirus is already causing supply issues for cannabis companies that need to source protective gear, like masks.

Kreindler says Canopy Growth Corp., Cronos Group, and Aphria have some of the strongest cash positions in the industry. It will be easier for them to deal with the crisis.

“With a lot of these LPs a little bit strapped for cash, or getting a little bit tighter, we’re definitely seeing the demand growing and we’ll see some new contracts come forward in the foreseeable future,” said Tyler Robson, CEO of The Valens Company, a Kelowna-based extraction enterprise, during a conference call with investors late February.

Valens itself could potentially face problems. Kreindler also said companies that produce vaporizers could be hit with shortages.

Shipping delays or factory shutdowns in China, where much of the vape hardware is produced, could lead to shortages.

On the bright side, we are not likely to see any shortages of flower, as it’s Canadian grown.