Legal Cannabis Retail Rides A Wave Of Revenue Growth

In a way, watching the emergence of legal retail marijuana in North America is like watching someone grow up. Not really a toddler or baby — even black-market sale of recreational and medicinal pot took on many traits of legitimate retail — but more like a once gawky teenager growing into a graceful, confident person.

That comparison may not be 100 percent on the mark, but the truth is this: Legal pot operations are joining the legitimate business world, and more evidence of that will come after the markets close on Thursday (June 20). That’s when Canada’s Canopy Growth — an up-and-coming player in the blooming pot industry, and an apparently darling of investors — is scheduled to report its fourth quarter and fiscal 2019 results.

Expectations on Thursday afternoon were pretty high for the company, at least going by a report from Barron’s. It said that Canopy Growth’s stock “has gained 57 percent so far this year,” outpacing the 16 percent average from the S&P 500. In the company’s third quarter financial report, Canopy Growth reported net income of about $56.8 million, up 580 percent from the year-earlier period. Revenue increased 282 percent.

Wholesale Growth

The pending earnings release from Canopy Growth comes amid another recent report that also shows how much money is flowing to this emerging area of legitimate commerce. As reported by The Motely Fool, LeafLink, an eCommerce wholesale marketplace for legal marijuana, said that “$1 billion in annualized orders are now moving through its platform.”

The report also noted that “since launching in Colorado in 2016, privately held LeafLink has quickly gained traction. The platform empowers licensed cannabis retailers to order from legal brands, which number in the quadruple digits, across 20 territories in the U.S. and Canada. If we annualize the value of the orders placed through LeafLink’s marketplace in May, the figure equals $1.007 billion.”

The growth of legal retail cannabis is story that involves more than financial reports. It is about an industry seeking to essentially rebrand itself into something clean, safe and even suburban — no more sketchy dealers and dealers, no more feeling as those the police sirens might start screeching as one buys this particular product.

Evidence of that comes not only from ongoing attempts to bring a luxury retail feel to the cannabis market, but the strong role of women entrepreneurs in helping to drive the early growth of this new segment of retail. Women have become involved in all facets of the legal cannabis operations across the United States and Canada.

One of the most recent and reliable measures of women’s leadership in the legal cannabis industry, this one from Marijuana Business Daily, found that 27 percent of executive-level roles are held by women. That actually represented a decline from 2015, but is still higher than the 23 percent of executive roles held by women in U.S. businesses as a whole, the publication said.

Payments Problem

Of course, legal cannabis retail has a major payments problem — because U.S. federal law still considers the drug illegal, financial institutions, card networks and other payments players are for the most part sitting on the sidelines, which means cash dominates the industry. The situation applies to Canada, too, given its ties with U.S. banks, but federal lawmakers are trying to find a solution to the problem in order to bring more digital payments and banking services to legal cannabis.

For now, the industry continues to grow up, with more fuel certain to come whenever payments is able to take part fully in legal cannabis.