Smoke yet to clear for Canadian, U.S. weed firms going into 2023 -BofA

Cronos

16/12/2022 14:02

** BofA Global Research sees multiple headwinds for Canadian
and U.S. cannabis producers in 2023 and retains "underperform"
view on Canopy  WEED.TO  and Cronos  CRON.TO 
    ** "2022 was another tough year for cannabis ... 2023
outlook looks like more of the same," the brokerage says, given
pricing pressures and a lack of progress on the federal level
    ** BofA says the market "appears to have a lot of marijuana
product on hand", which makes finding the right balance of
supply and demand of the right mix of products a key challenge
    ** It also highlights the heavy taxation on legal cannabis
in Canada and the U.S. that has kept the illicit market "alive
and thriving"
    ** "Economies of scale is not there yet," BofA says, noting
Canadian firms need to moderate the size of their operations as
they prepare for the eventual U.S. federal legalisation
    ** Capital challenges due to higher rates and limitations on
banks willing take the risk to lend to cannabis players could
lead to acceleration in market exits, BofA says
    ** BofA notes the slow progress of Canada's Cannabis Act,
and says progress in the U.S. will also become difficult when
Republicans take control of the House
    ** "We think that inflation weary cannabis consumers will
force manufacturers to keep prices competitive," it adds
 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))