Final answer:
The concept of a cannabis company showing a 100% profit margin is likely a misunderstanding, as this would mean the company has no expenses, which is unrealistic. Profit margin is calculated by dividing net income by total revenue, and a sustainably high profit margin, particularly of 100%, is extremely unlikely in the cannabis industry or any other.
Step-by-step explanation:
The question "How do Cannabis companies show 100% profit margin?" seems to be based on a misunderstanding of financial statements and profit margins. A 100% profit margin would mean that a company's net income (profit after all expenses) is equal to its total revenue, which is highly improbable in practice as it implies that the cost of goods sold and other operating expenses are zero.
In reality, cannabis companies, just like any other businesses, have various costs such as production, distribution, marketing, and administrative expenses. When these companies report their earnings, the profit margin is calculated by taking the net income (which excludes costs and expenses) and dividing it by the total revenue, then multiplying by 100 to get a percentage. The profit margin can vary greatly depending on a multitude of factors such as production efficiency, market demand, competition, and regulatory environment.
Some companies might report high profit margins in a specific quarter due to one-off events such as a sale of an asset or a change in tax legislation, but consistent 100% profit margins are not feasible for any sustainable business, including those in the cannabis industry.