{"id":1528,"date":"2023-02-09T12:06:34","date_gmt":"2023-02-09T12:06:34","guid":{"rendered":"https:\/\/tradersontrend.com\/?p=1528"},"modified":"2023-02-09T12:06:34","modified_gmt":"2023-02-09T12:06:34","slug":"why-investors-should-be-cautious-with-cannabis-stocks-the-case-of-curaleaf","status":"publish","type":"post","link":"https:\/\/tradersontrend.com\/h\/2023\/02\/09\/why-investors-should-be-cautious-with-cannabis-stocks-the-case-of-curaleaf\/","title":{"rendered":"Why Investors Should be Cautious with Cannabis Stocks: The Case of Curaleaf"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1528\" class=\"elementor elementor-1528\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3ebe5e58 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3ebe5e58\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-512e40b9\" data-id=\"512e40b9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-728d1c76 elementor-widget elementor-widget-text-editor\" data-id=\"728d1c76\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.21.0 - 26-05-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p><a href=\"https:\/\/www.jdsupra.com\/legalnews\/bankruptcy-doors-open-a-little-wider-to-6398587\/\">Cannabis companies<\/a> used to be primarily concerned with expansion at any cost but that is no longer the case. Investors are getting sick of companies that aren&#8217;t profitable, putting pressure on them to be more fiscally responsible.<br \/><br \/><span style=\"font-family: inherit;\">Marijuana entrepreneurs are typically eager to enter new markets that have recently legalized cannabis usage, but this tendency may be changing.<\/span><\/p><p>There have been recent occurrences with <a href=\"https:\/\/mjbizdaily.com\/marijuana-industry-layoffs-and-cost-cutting-likely-to-continue-in-2023\/\">marijuana businesses cutting costs and laying off employees<\/a>, but what truly piqued my interest was when a leading cannabis company revealed a bombshell: it would be leaving not one, but three states.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Curaleaf Plans to Close Most of its Businesses in California, Colorado, and Oregon.<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">Curaleaf Holdings (<\/span><a style=\"font-family: inherit;\" href=\"https:\/\/www.google.com\/finance\/quote\/CURLF:OTCMKTS\">CURLF<\/a><span style=\"font-family: inherit;\">) said on January 26 that it will be closing most of its activities (producing and cultivation) in three major markets: California, Colorado, and Oregon. According to the corporation, the decision is &#8220;<\/span><em style=\"font-family: inherit;\">part of its ongoing attempt to streamline its business.<\/em><span style=\"font-family: inherit;\">&#8221; It also stated that its activities in Massachusetts would be consolidated.<\/span><\/p><p>It&#8217;s easy to see why Curaleaf could be motivated to cut costs, given that the company hasn&#8217;t been growing much lately and its bottom line is still in the red.<\/p><p>The company cited &#8220;<em>price compression and a lack of policing of the illicit market<\/em>&#8221; as two of the primary reasons for its decision to close its manufacturing and cultivation plants in these states.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Why is This Significant?<br \/><br \/><\/span><\/strong><a style=\"font-family: inherit;\" href=\"https:\/\/www.fool.com\/investing\/2023\/01\/24\/is-curaleaf-a-buy\/\">Curaleaf has been a growth machine throughout the years, generating $1.3 billion in revenue in the previous 12 months.<\/a><span style=\"font-family: inherit;\"> It&#8217;s a market leader, so investors shouldn&#8217;t ignore the news if it&#8217;s pulling out of some of the most important markets. When it posted its third-quarter profits in November, the company said that it had 142 dispensaries across 22 states, making it one of the industry&#8217;s largest footprints.<\/span><\/p><p>The most shocking aspect of the news was Curaleaf&#8217;s claim that the markets it was exiting would generate less than $50 million in sales for the firm in 2022. Given that California and Colorado have the <a href=\"https:\/\/mjbizdaily.com\/us-cannabis-sales-by-state\/\">largest marijuana markets<\/a> in the country, that&#8217;s a very low amount. It emphasizes the rivalry and obstacles that companies confront in those areas, and it serves as a reminder that just because a marijuana specialist enters a new market, does not guarantee a good impact on both sales and earnings.<\/p><p>Curaleaf claims the changes will help it achieve at least $125 million in positive free cash flow this year. That&#8217;s a lofty aim given that the company rarely generates positive operating cash flow, let alone free cash flow, which includes operating cash and subtracts capital expenditures.<br \/><br \/><strong><span style=\"font-size: 24.5px; font-family: inherit;\">Should Investors Avoid Cannabis Stocks?<br \/><br \/><\/span><\/strong><span style=\"font-family: inherit;\">Although growth investors see substantial long-term potential in the cannabis market, many are betting on the probability of <\/span><a style=\"font-family: inherit;\" href=\"https:\/\/en.wikipedia.org\/wiki\/Legality_of_cannabis_by_U.S._jurisdiction\">federal marijuana legalization in the United States<\/a><span style=\"font-family: inherit;\"> occurring soon, which can be a risky assumption to make. And, given the industry&#8217;s continued uncertainty, many people may believe it is still too early to invest in cannabis.<\/span><\/p><p>Cannabis companies, like Curaleaf, are only now beginning to prioritize cash flow and long-term operations. That will make them more tenable investments and better bargains in the long run. But, for the time being, cannabis stocks are in for a rough ride. Unless you have a high-risk tolerance, you should avoid marijuana stocks because this is still a risky business to invest in.<\/p><p><em>For More Stocks And Investment Related News, Click\u00a0<a href=\"https:\/\/tradersontrend.com\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/tradersontrend.com\/&amp;source=gmail&amp;ust=1676022777099000&amp;usg=AOvVaw1mtu0fk_LJ3CYnE2VME70c\">Here<\/a>.<\/em><\/p><p>\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Cannabis companies used to be primarily concerned with expansion at any cost but that is no longer the case. Investors are getting sick of companies that aren&#8217;t profitable, putting pressure on them to be more fiscally responsible. Marijuana entrepreneurs are typically eager to enter new markets that have recently legalized cannabis usage, but this tendency&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1529,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[112,167,168,378],"class_list":["post-1528","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","tag-cannabis","tag-curaleaf","tag-curlf","tag-marijuana"],"_links":{"self":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/comments?post=1528"}],"version-history":[{"count":0,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1528\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media\/1529"}],"wp:attachment":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media?parent=1528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/categories?post=1528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/tags?post=1528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}