You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.
Friends,
This newsletter is coming a bit later than the time at which it has been published recently. The month ending on Thursday kind of got in the way!
As one who has been watching the cannabis sector for 11+ years, I am well aware of how the stocks can go up too much (like 2021) or down too much (like now). Stocks in general have been soaring, which makes it even more frustrating for investors in the cannabis sector, where the index was up just 1.4% year-to-date last night at the close. It is up more than that just today as I type, but the change in cannabis stocks has been worse than the return on cash has been and a lot worse than the S&P 500’s return.
Many folks are super excited about Florida voters potentially approving adult-use in the state, but it may not happen. Why? Well, 60% of voters must approve it, and the Governor is fighting hard against it. It remains to be seen. I will say again that it sure seems priced in. Just look at the returns year-to-date of Trulieve and Ayr Wellness, for instance. If it passes, there are some other stocks that could do very well that are down year-to-date, like Planet 13 and Verano Holdings. I include both in my model portfolio at 420 Investor that aims to beat and is beating the Global Cannabis Stock Index. If it fails, it will be very bad for some cannabis stocks.
While the index is rebounding a bit today after a loss in October, it is down a lot since the peak in 2021, as I shared in the index update article linked below. Even on the bounce today to 8.43 currently, it is down almost 91% since that peak:
So, are cannabis stocks cheap? Well, yes for many, but no for some. At New Cannabis Ventures, we have called out a few, and I write some negative articles about cannabis companies at Seeking Alpha at times. The challenge for many is that it can be difficult to tell which are the good ones and which are not. I have seen some stocks stay very popular for way too long.
There are a lot of potential bullish catalysts, but the most important one is rescheduling, which will wipe out 280E taxation. Again, as I have been writing, this is not a done deal. But, it seems very likely to happen. In August, the DEA announced that it was hosting a hearing on December 2nd. This week, some cannabis-focused media teams pointed out incorrectly that the rescheduling has been delayed. This is not the case. I have always assumed that it will take some time for cannabis to be rescheduled, and the December 2nd DEA hearing is still taking place. The new information is that there will be a second hearing day in January or February. Again, there has never been a finalization timeline laid out.
I wrote here about how 280E elimination would be a big catalyst in late 2022, and this remains the case. While the cannabis analysts and investors have been dismayed over how long this process has been taking since the DEA announced it would reschedule cannabis in late April, it remains on track. The “bad news” about the “delay” came out yesterday afternoon, and cannabis stocks are up today. They had a rough October! There is no delay in rescheduling. It’s just taking a long time. What has been delayed is the new bull market, which is long overdue. The low was in 2023, more than a year ago, but the cannabis sector has struggled to advance. I think that it will, as the valuations are very low and some things are finally picking up, like New York’s adult-use market.
I have moved from overly cautious in late 2022 to optimistic this summer, but I have been very careful not to get overly optimistic. The universe of cannabis investors is mainly individuals and not institutions, and people are tired of losing money on cannabis stocks. Few seem to care about the cannabis sector right now, and that adds to my bullishness.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:
Exclusives
Ancillary Cannabis Stocks Continue to Lead the Sector
Cannabis Earnings Season Is About to Begin
Cannabis Stocks Begin the 4th Quarter Sliding Lower
To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.
Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer the Canadian Cannabis LP Index, the American Cannabis Operator Index and the Ancillary Cannabis Index.
View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks.
Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.
Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.
Sincerely,
Alan
