In case you haven’t noticed, the green rush is well under way. Having long been considered a taboo industry, the legal marijuana industry is stepping out of the shadows and into the spotlight. After generating $5.4 billion in legal worldwide sales in 2015, according to Arcview Market Research and BDS Analytics, one Wall Street firm is forecasting $75 billion in annual sales potential by 2030. If accurate, this represents a compound annual growth rate of more than 19%, and it’d undoubtedly make legal weed the growth story of our generation.
It’s also an industry with increasing breadth. Mexico looks to be on the verge of recreational legalization within the next couple of months, while a number of U.S. states are pushing for medical or recreational legalization. Altogether, more than 40 countries worldwide have given the green light to cannabis in some capacity.
Are marijuana companies lying to you?
But the industry also has a dark side, according to Tilray (NASDAQ: TLRY) CEO Brendan Kennedy. In a telephone interview with MarketWatch, Kennedy suggested that marijuana companies essentially lied to investors, and each other, about how much cannabis they could produce to support inflated market valuations.
In particular, Kennedy homed in on the industry’s use of “funded capacity” — i.e., the aggregate cultivation square footage cannabis growers could construct without needing an additional infusion of capital. Whereas a few reasonably large players existed in the very early stages of Canada’s medical marijuana rollout, the only tangible means of expressing size and success was by analyzing the number of registered medical marijuana patients each company had. But this wasn’t possible for early-stage small-cap companies that had no registered patients and were still in the process of gathering capital or constructing their grow farms.