For years, over-investment has created challenges for the cannabis sector. Whether malicious or misguided, some overextended cannabis companies are defrauding investors with absolutely insane artificial evaluations. Yes, cannabis is a “cool,” “sexy” investment, but a lot of promises go unfulfilled. Too few valuations meet the actuality of how operations and revenue are behaving.
In a 2018 bulletin, the Securities and Exchange Commission (SEC) highlighted these very dangers: “Scam artists often exploit ‘hot’ industries to trick investors, including by making false promises of high returns with low risks.” Beyond the memo, several cannabis and cannabis-adjacent companies have seen the SEC take action against them. Comparable to the extravagant speculation of the dot-com boom, far too many colossal cannabis companies now put investors in a tough spot. Without the right investment strategy, cash will quickly evaporate, and companies across the industry will continue seeing massive layoffs and the scaling back of operations.
Back in May, Acreage Holdings, a New York-based multistate operator, announced a myriad of operational updates aimed at returning to profitability, including the sale of additional non-core assets in North Dakota and Massachusetts. The announcement also detailed the resignation of its executive vice president,