One of the many dark dirty secrets of the cannabis industry that even many sophisticated investors are unaware of.
Cannabis companies often pay for premium product placement in dispensaries, pay budtenders to recommend their products, and/or have undisclosed interest/influence over dispensaries to get products sold instead of the competition.
These same companies then raise money, using these sales numbers as "evidence" of their brand dominance.
Why is this tactic smoke and mirrors? Because, although this strategy may work to get short term sales, it in no way guarantees future success, and it certainly doesn't prove that shoppers prefer the brand.
Investors are sold this story and invest in these companies at a premium, expecting sales dominance to continue and for the company to deliver a beautiful profitable return sometime in the future.
However, the sad truth is that many of these cannabis company owners have no plan of being around to deliver on promises made. They instead look to cash out long before the due date arrives, leaving the brand to fizzle out.
(1) buy sales using any short-term means necessary
(2) advertise "strong" sales compared to others
(3) raise $$ as a "preferred" brand
(4) double-down on the scheme and/or
(5) run away with the $$
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