These Pot Stocks May Need to Enact a Reverse Split

At this time last year, marijuana remained one of the hottest industries that investors could buy. Canada had recently legalized recreational pot, and the country was slated to introduce higher-margin derivatives later in the year. The U.S. was also expected to deliver substantive growth with lawmakers in numerous states actively engaged in legalization discussions.

Today, however, the cannabis industry is a veritable disaster. The launch of high-margin derivatives in Canada wound up being delayed, and important provinces like Ontario have struggled to create an adequate retail presence. Meanwhile, high tax rates have made it difficult for U.S. pot stocks to compete with the black market. Very little has gone right, and pot stocks have paid dearly for it, with across the board declines of 50% to 95%.

While these huge drops have some investors searching for bargains, the reality is that a handful of pot stocks listed on the New York Stock Exchange (NYSE) or Nasdaq have fallen so much that they may soon have no choice but to enact a reverse split in order to avoid being booted from these exchanges.

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Source Fool.com