Cannabis companies listed on the S&P/TSX Composite index (INDEXTSI:OSPTX) such as Canopy Growth Corp (TSE:WEED), Aphria Inc (TSE:APH) (OTCMKTS:APHQF) (FRA:10E) and Aurora Cannabis Inc (TSE:ACB) have been bleeding value lately as a result of media reports that the implementation of Canada’s Bill C-45 Cannabis Act may not take place until August 2018.

This on the heels of a complete sector revolution that has seen bellwether Canopy’s value cut in almost half since its 52-week high of $42.07 back in early January. This unfolded pretty much as we said it would in are article on December 31st titled Warning Signs Flashing for Downward Valuation of Canadian Cannabis Stocks, and so now investors are asking “Where to from here?”.

This is the point in any new industry’s evolution where latecomers to the party are likely going to be disappointed by the performance of their investment, because the perception of the value of the sector as a whole is gradually lowered with each and every new player on the scene. Thus, the newly licensed grower with a phase 15,000 square feet is no longer a groundbreaking accomplishment worthy of an investor stampede. In many cases, a cultivation license in the hands of an individual with no access to capital is better classed a liability than an asset.

Some lesser known companies like CannTrust in the video above actually have very solid business fundamentals realtive to their much larger and well-known competitors.

So does that suggest the space is now full and unicorn-potential entry-level investments are all gone?

Absolutely not.

In fact, with the trailblazing to valuations in the multiples of billions already accomplished by the incumbent monsters who were here first, and with many mega corporations sniffing around the competition, one could argue that this dip in the value curve is a gift from heaven.

So what does a unicorn-potential company look like?

Baby Monster Cannabis Corp

You will forgive me if I lead with an example of a company in which I own a substantial number of shares, but it is precisely the enormous potential inherent in this asset package that is the reason I involved myself with this company in the first place.

Cannacure Corporation is a late stage private applicant who expects to receive their cultivation license at some point in Q2 this year. What differentiates Cannacure from other late stage applicants are two things: 1) It has executed an option to purchase a 3.4 million square foot greenhouse facility in Leamington, On, in an area proven to be a great place to produce cannabis in a greenhouse. Aphria has been producing cannabis here for the last two years, and with a valuation currently above CA$2 billion, the proof is very much in the regional pudding. Leamington is Canada’s southernmost locale, and therefore, receives an abundance of light relative to more northerly jurisdictions.

The second leg in the Cannacure stool that will support the future valuation of this unique company’s value proposition is its possession of a 122,000 square foot former GMP pharma facility that once produced dozens of SKU’s of generic drugs for export to the United States. The company is in discussion with financial partners to finance the refurbishment of the GMP pharma plant back to GMP status.

But in this day and age, what good is a plant to produce consumer products derived from cannabinoids without a channel into which to sell them? Cannacure may have quite the ace up its sleeve in that respect, but you’re going to have to wait until the company becomes a publicly traded entity to see what that is.

Nobody can say with any certainty what the supply-demand scenario is going to look like post-recreational. Certainly the trend, vapid and conflicted predictions of many investment bank analysts notwithstanding, is toward a tremendous oversupply.

This is a reality most ACMPR producers prefer not to acknowledge. But we already know that there is an affinity for optimistic accounting among LP’s. That habit will continue until the spec trade is finished with the sector and the balance sheets detyermine valuation. But don’t worry, we’re still at least a year away from that ugly reality.

But bashing LP accounting aside, my point is that its the LPs with sales channels that are going to be the last ones standing. Fortune 500 entry into the space as demonstrated by Constellation Brands Inc. (NYSE:STZ) in their purchase of 10 percent of Canopy is a case in point.

Producing a million kilograms of marijuana is one thing – selling it reliably and consistently in the upcoming price war environment will turn out to be another thing entirely.

In many respects, we are talking about a commodity crop here that will ultimately be subject to commodity pricing pressures.