3 New Cannabis Stock Risks Are Emerging -- As If There Aren't Enough Already
It has essentially become a fact that cannabis stocks are among the riskiest investments due to the illicit nature of the industry in many countries. Investors seemingly agreed, with the AdvisorShares Pure U.S. Cannabis ETF (NYSEMKT: MSOS) dropping by 58% in the last 12 months.
Headwinds like low selling prices, rising interest rates, and regulatory hang-ups have become stronger recently -- and there's a trio of new risks that investors should know about. Let's explore each of them so that you can appreciate what might weigh the marijuana industry down even further in the medium term.
After a two-week strike at Green Thumb Industries's (OTC: GTBIF) Chicago dispensaries in late April, it is undeniable that the cannabis industry is not immune from labor issues affecting the rest of the U.S. economy. Ultimately, Green Thumb agreed to pay wage increases in the ballpark of 50% to get the strike to end. If the workers' victory is any indication, the labor force in other companies could command similar changes to compensation, causing costs to rise. And in the context of an ongoing multi-year labor shortage in the cannabis industry, that's a big risk. Furthermore, some cannabis companies have laid off employees as a cost-cutting measure, which directly challenges striking as a labor tactic at the risk of lowering morale.
Source Fool.com
