It has been a terrible start to the week for the Cann Group Ltd (ASX: CAN) share price. The cannabis company’s shares are currently the worst performers on the All Ordinaries on Monday afternoon.
At one stage they were down by 33% to 49 cents. They have since narrowed this decline slightly, but are still down 27% to 53.5 cents at the time of writing.
Why is the Cann Group share price crashing lower?
Investors appear to be selling Cann Group’s shares today after looking over the production plans it announced last week.
Previously, the company was planning to complete the Mildura facility in a single stage development. This would give it a total capacity of 70,000 kgs of cannabis flower at an estimated project cost of $184 million.
This was expected to generate annual revenues of approximately $220 million to $280 million
However, in response to weaker than expected demand and an oversupply of cannabis, management intends to split its construction into three stages. It estimates that first stage production will be around 25,000 kgs.
And while management hasn’t updated its revenue forecast yet, I suspect the market is anticipating a sharp downgrade. Especially given the abundance of cannabis flower and the limited use that its offtake partner, Aurora Cannabis, has for it at present.
Other cannabis news.
The AusCann share price is up after appointing TGA-licensed Aspen Pharmacare Australia to provide packaging for its medicinal cannabis pharmaceutical products.
Whereas the Botanix share price is up after following a US DEA announcement. It advised Botanix’s partner Purisys, that its synthetic cannabidiol product is no longer scheduled as a controlled substance.
Botanix Executive Chairman, Vince Ippolito, believes this change will make a major difference to the speed of developing its products and greatly reduces the risks and costs of clinical development.
This Tiny ASX Stock Could Be the Next Afterpay
One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting...
Because 'Doc' Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget 'buy now pay later', this stock could be the next hot stock on the ASX.
Doc and his team have published a detailed report on this tiny ASX stock. Find out how you can access what could be the NEXT Afterpay today!
Returns as of 6th October 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.