Here's Why 2020 Is the Big Test for Canadian Cannabis Companies

Canadian cannabis companies are still in the honeymoon phase of what's been rapid early growth for the new recreational marijuana market in Canada. However, in 2020 that's going to change in a hurry, and it could be a whole lot more difficult for cannabis companies to impress investors with their growth numbers. That could be bad news after what's already been a tough 2019 for the industry. Here's why things could get worse next year.

One of the problems that Canopy Growth (NYSE: CGC) has been hit with this year has been a lack of profitability. It's been a sore spot for the company, and it's also dragged down the results of its key investor, Constellation Brands. The mounting losses have been a contributing reason, if not the main one, for the dismissal of Bruce Linton, who had long been the leader for Canopy Growth and a respected figure in the industry.

But many investors have ignored the lack of profitability in the industry because companies are still experiencing tremendous growth. For instance, in its Q2 results for fiscal 2020, released back in November, Canopy Growth's sales of 76.6 million Canadian dollars were up a whopping 229% from the CA$23.3 million it had generated in the prior-year quarter.

Source Fool.com