The long-term prospects for industry growth remain compelling as more states legalize cannabis.
Near-term fundamentals are hampered by a thriving illicit market, lack of law enforcement, price compression and added costs associated with prohibition most notably, the punitive 280E tax.
In 2022 impairment charges totaled over $1.9B; In short order some firms have either abandoned or sold non-performing assets.
Prolonged federal illegality will make it increasingly more difficult for many firms to continue as a going concern while others will benefit from accretive acquisitions at distressed valuations.
The timeline for federal legalization, seems to remain hostage to a politically driven timetable. and changes to legislation may fall into play as the 2024 election cycle draws closer.
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