Back in July, it was discovered by Health Canada that the company was using five unlicensed rooms to produce cannabis. These rooms have since been approved by Health Canada; however, it has put a lot of product on hold, and the company may receive a fine up to $1,000,000 or even lose its licence.
The scandal has been all over the news, which is why many are saying you should avoid it like the plague. But in this uncertain time in the marijuana industry, I would also consider avoiding these two other companies for the time being.
Hexo
Hexo believes it can do this after it launches its 600,000-square-feet facility space specifically meant for derivatives production, and through its five-year deal to supply cannabis to Quebec. However, if I were an investor I would wait to see how successful the derivatives market actually looks before investing in Hexo. There could be a lot of hype (see last year) for a whole lot of nothing. If that’s the case, Hexo could be sunk.
Cronos
Cronos announced back in July it would be entering the United States CBD market, and it does look to be fairly lucrative according to Wall Street with value estimates of US$16 billion by 2025. This was followed by intentions to acquire Redwood Holding Group, an owner of popular CBD brand Lord Jones for US$300 million, giving it a place in the U.S.
So, while many investors are getting excited about Cronos’s future potential, it’s just that: potential. There really isn’t that much proof yet that CBD will be a huge move in the U.S. Meanwhile, Cronos is still trading fairly high, making now not a great time to invest in this company that is, frankly, still in set-up mode, with no plans for all of its cash on hand.
Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing.” data-reactid=”41″>Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing.
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