Where the Cannabis Value Is

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.

Friends,

Cannabis stocks shot up early in the year, but they have pulled back from their highs. The NCV Global Cannabis Stock Index is now up 7.2% in 2024 so far, but it is down 87.4% from its peak almost 3 years ago:

Right before the news broke that the Department of Health & Human Services was asking the DEA to reschedule cannabis, we introduced an idea to our readers to pay attention to tangible book value. We pointed out that the MSOs had very high ratios or even negative, and this has gotten worse. Here they are updated:

Three of the five have negative tangible book values, and Curaleaf has a much higher valuation relative to its projected adjusted EBITDA for 2024. Trulieve has a positive tangible book value, and it trades below its peers on an enterprise value to projected adjusted EBITDA basis.

In late August, these stocks were trading at 4.0X to 8.5X, but they have rallied substantially. Again, if 280E goes away, they should continue to rally. If it remains, there is substantial downside.

We continue to believe that other sub-sectors offer better risk/reward ratios. We said then and continue to see some Canadian LPs trading below tangible book value. Their balance sheets are much better than the MSOs. We also continue to view positively some of the ancillary names, as they haven’t gone up and could benefit from their customers doing better. For those that want to choose only an MSO, we wrote up Planet 13 in early December as the best choice. The stock is marginally higher but not nearly as much as the largest MSOs. Trading now at about 1.5X tangible book value, the company stands out from peers by this metric.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

Exclusives

Michigan Cannabis Sales Surge

Capital Raising

Canopy Growth Raises $35 Million Selling Units

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 & Joel

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email