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Cannabis Investing 101
Stage 3: Focus
Companies focus on their core strengths and business and the blockbuster merger deals that make headlines occur in this stage. The top three companies can control as much as 70% of the market share. Aggressive expansion and profitability are often keys facets of this stage.
Stage 4: Balance & Alliance
The final stage. Companies often become complacent as the top three companies control as much as 90% of the market share. M&A activity and Joint Venture and alliances still occur. Danger of regulation and government monitoring is very real. Companies cannot progress beyond this stage. Ironically, often industries in this stage open the door to a new industry (think Uber, Air B&B, etc).
A key conclusion of their work was that a key driver to a company’s success depends on just how quickly and successfully they navigate through these stages. Those that fail to or are slow will drop out (ie: fail) or be acquired. These stages are unavoidable in most industries just as you need to go through puberty before becoming an adult – it cannot be avoided! These four stages of the Consolidation Curve may explain why so many companies in this industry are not profitable and even struggling to survive despite often
having first-market advantage. These four stages are a simple truth and are ideal for the astute Retail Investor. For example, Retail Investors in Bedrocan, Tweed, and Mettrum did well when these three companies became a part of the Canopy Growth Corporation (a holding company).