Cannabis Stocks Have Retreated Substantially

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,

Tomorrow ends trading in June and marks the midpoint of 2024. This has been a rough month, but cannabis stocks are still up year-to-date. Of course, they are up less than stocks as measured by the S&P 500. Here is a look at the last year, which has been volatile:

Our weekly newsletter was cautious entering the year, as there was a lot of uncertainty about the timing of the potential rescheduling. Now, we are more optimistic, and we are finding many attractive entries across various sub-sectors of the market. Last week, I wrote about WM Technology as an extremely cheap ancillary stock. Two weeks ago, I discussed the big round trip that American cannabis operators had suffered, falling slightly year-to-date after being up 59% on April 30th. Three weeks ago, I explained the current situation as a better time to buy cannabis stocks but that they could go lower. They have! Since 6/06, the New Cannabis Ventures Global Cannabis Stock Index has declined 2.6% now.

While I have been sounding more like a bull recently, I don’t think that all cannabis stocks are attractive. At the end of May, for example, I wrote about Canopy Growth, suggesting that readers exit the stock. It is down 22.4% since then and still unattractive in my view. There are others that I have called out here in the past.

The outlook is indeed better for American cannabis stocks, as rescheduling appears to be on track. Again, this will wipe out the onerous 280E taxation that has hurt American cannabis operators. So, there is a better outlook compared to the beginning of the year with lower prices since the outlook improved. Still, it is not a done deal. Plus, there are a lot of things besides taxation that impact these stocks.

So, when is the right time to bet big on cannabis stocks? Perhaps now, but perhaps not now. What concerns me is that the action in the stocks doesn’t make it seem like we are in a bull market yet. The trading volumes aren’t high at all. Institutions aren’t adding cannabis stocks yet. On the other hand, the best time to buy cheap stocks is when no one else is competing with you. If rescheduling doesn’t go through, many cannabis stocks will get clobbered due to high debt loads and poor cash flow. I continue to value strong balance sheets.

This week’s newsletter is sponsored by Paul E. Saperstein Co.

Paul E. Saperstein Co. is handling three auctions for cannabis businesses in Massachusetts:

BIDDING BY ZOON ONLY FOR QUALIFIED BIDDERS. Interested parties may contact Michael Saperstein at 617-227-6553 or by email at msaperstein@pesco.com.

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

Exclusives

Canadian Cannabis Sales Increased In April

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Sincerely,

Alan

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