A staunch Bay Street skeptic about Canada’s cannabis sector isn’t getting caught up in the frenzy ahead of legalized recreational pot consumption.   

“Obviously right now the valuations are beyond ludicrous,” Barry Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management, told BNN Bloomberg Wednesday.

His comments come on the heels of the latest quarterly report from Canopy Growth, the country’s largest licensed cannabis producer, whose market capitalization is hovering around $8 billion.  

The company’s total revenue surged to $22.8 million in its fiscal fourth quarter while its net loss widened to $61.5 million.

“That makes no sense – that’s just stupid” Schwartz said when comparing the firm’s market cap with its sales revenue. “But if they believe that their math makes a lot of sense, and it’s a global industry … then [it’s] possible that they are worth some multiples of billions. But we’ll see. At the moment it makes no sense.”

“Every company that’s coming out that’s a marijuana company says, ‘We’re going to be the ones who survive, everybody else is going to go the way of the toilet.’ So it’s interesting to see what’s going on.”  

Schwartz hasn’t changed his view on cannabis stock valuations since November, when he warned in an interview with BNN Bloomberg that investors “would lose all [their] money” if they invest in the sector.

Shares of Canopy Growth have risen more than 30 per cent so far this year and have surged almost 400 per cent over the last year.

When asked Wednesday if it’s a mistake for skeptics to avoid the space entirely, Schwartz said it depends on the investor.

“It’s a venture capital investment right now,” he said. “And so you have to decide what type of investor you are. We don’t lend out our money to these types of companies –  it’s not for our clients.”

“Obviously we would have loved to have them as a speculative investment, but that’s not how we invest.”

Schwartz added there’s an assumption that cannabis companies will make signficantly more money once marijuana is legalized but warned that may never happen.   

“One can never know,” he said.  

“[Canopy will] have to sell a lot of marijuana in the next few years to justify the current market cap,” he added. “Maybe we’ll get there.”