Cratering Cannabis Stock Prices

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,

Wednesday was one of the worst days ever for cannabis stocks, with the Global Cannabis Stock Index dropping 13.3%. It was driven primarily by the surprise defeat of adult-use legalization on the ballot in Florida. This required 60% of voters to approve it in order for it to pass, and most polls suggested it would pass. While I never said that it wouldn’t pass, I did warn investors about the four largest operators in Florida, all publicly-traded MSOs. They plunged yesterday:

These stocks all fell way more than the overall market, and they also fell more than the American Cannabis Operator Index, which dropped 27.6% to a new all-time low. Most of these stocks are down year-to-date now, with Trulieve actually up 38.2%. The others are all down more than 44% in 2024, with Verano, which I actually find very attractive, down over 50%.

Are these companies a buy? Well, I think Verano is, but it reported a Q3 that was weaker than expected today. I continue to think that Ayr Wellness and Curaleaf do not look attractive due to their balance sheets, while Trulieve is better than it was recently. I downgraded it at Seeking Alpha recently to Sell, and I would now be Neutral if I were to write about it again. Trulieve and Curaleaf reported disappointing Q3 financials as well.

I don’t think that Trump’s election as President is necessarily negative for cannabis stocks, but one never can tell with any politician what will happen, and this could have weighed on the sector too. I continue to view the cannabis opportunity as much more favorable than I did in the past given that rescheduling remains on track to take place in early 2025. As I have said, it is not a done deal and will be disastrous for the MSOs if 280E remains. Cannabis stocks are very cheap, with some seemingly not facing big downside risk if 280E remains.

Cannabis investors made a big mistake counting on Florida to become adult-use, and there aren’t too many folks looking to start buying cannabis stocks. So, the bad news led to a big flushing. I continue to believe that the elimination of 280E will boost cash flow for the MSOs, improve their buying of products and services from ancillary providers and strongly increase investor sentiment. The Global Cannabis Stock Index did not make a new all-time low yesterday, though it is down 7.6% year-to-date now.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:

Financial Reports

Scotts Miracle-Gro Cannabis Unit Q4 Revenue Falls 46%

Trulieve Q3 Revenue Growth Slows Significantly

Verano Q3 Declines Sharply

Capital Raises

Agrify Adds $10 Million and an Interim CEO from Green Thumb Industries

Mergers and Acquisitions

SNDL Buys Indiva Assets

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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.

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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