Two of the biggest marijuana players - Aurora (ACB) and Canopy Growth (CGC) - have not been figuratively on "a high" as they disclosed weak quarterly earnings in the last seven days.
Yet Roy Bingham, chief executive officer and owner of marijuana data firm BDS Analytics, informed YFi PM of Yahoo Finance that he is still aiming to hit $30 billion in the next five years on the U.S. weed industry.
"You learn these huge numbers like a demand of $150 billion or $200 billion," says Bingham. "That's the total market size. Our prediction is more like a $30 billion industry based on how long it takes to carry out the shops and get the legislation accepted.
According to New Frontier Research, total sales of legalized marijuana in the U.S. breached the $10 billion mark last year.
Despite a dismal quarterly result, Aurora Cannabis did exceed its quarterly earnings expectations on Thursday's top and bottom lines, reporting an estimated C$ 39.8 million EBITDA loss - higher than the analysts' projected C$ 20.7 million. It also reported that to boost its balance sheet, it is suspending development activities at its plants in Canada and Denmark.
Aurora Chief Executive Officer Cam Battley said on the earnings call that the challenges facing the company are governance issues and changing consumer demand.
This came when competitor Canopy Growth also reported earnings that were weaker than expected.
"For the Canadian marijuana industry, the last two years have been daunting as provinces have decreased sales to lower inventory levels, retail store launches have dropped short of expectations, and Marijuana 2.0 items are still on the shelf," said Mark Zekulin, chief executive officer of Canopy Growth, after the miss.
Alternative Harvest ETF (MJ) is down more than 30 percent this year, but Bingham believes structural consumer adoption of drugs will be the biggest factor in turning things around for the marijuana sector - especially in the U.S.
"In the U.S. this year, we expect market growth of around 21 million in developed markets, and then you apply to the new states that are going to be used by adults.
But some in the sector worry that if marijuana were regulated nationally, Canadian firms could dominate the U.S. market, speculating that more developed multinational businesses might be able to build their supply chains quicker than smaller U.S. labels.
"The current environment is enticing for me to make my company meaningful and competitive," says Bingham. "By the current situation, though, it is impossible to extend from one state to multiple states.
