Still In a Bear Market

You’re reading a copy of 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,

A year ago, we wrote about the cannabis market having a great week. In early October, President Biden had surprised the world with his pardoning of cannabis consumers in federal prison and by suggesting that he would order a review of the DEA scheduling of cannabis. The NCV Global Cannabis Stock Index rose 12.2% during the week off an all-time low. We said then that this could mean little for the industry, or that it could allow for uplisting to major exchanges by American cannabis companies or the end of 280E taxation. We ended that newsletter by expressing hope for the industry.

A year later, we are still in a bear market. The Global Cannabis Stock Index ended Q2 at 7.50, down 40.6% from the level where it was at the end of the first week in October a year ago of 12.63. Even now, despite the big rally since the end of Q2, it is still down 32.8% from a year ago. What a year it has been:

The two things that we think could happen and that would catalyze the market, if so, are still potentially happening: the end of 280E and the potential uplisting to the NASDAQ or NYSE by American cannabis companies. We have been monitoring the DEA potentially rescheduling cannabis, which could be very good, but we have warned that it could take a while and may not play out exactly like many seem to expect. As we said in early September, cannabis stocks may escape from hell.

And hell it has been! Cannabis stocks are now down 90.8% from the February 2021 peak. We see a lot of potential value in the sector, but the MSOs generally have a lot of risk if 280E does not go away. In late August, we suggested that investors should start to look at tangible book value as a metric for the sector during the bear market. Things changed dramatically, though, at the end of the month and into September for the MSOs.

We continue to hope that things get better, but we are not sure that they will real soon. If 280E does not vanish, the American operators will struggle. Already capital raises are crushing the issuers, and it’s just beginning. Hopefully, taxation changes and investors regain the optimism from late 2020. Just because we want the bear market to be over doesn’t make it end.

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

Exclusives

Cannabis Sales Pick Up In August

Illinois Reports Flat September Cannabis Sales

Financial Reports

Tilray Q1 Cannabis Revenue Increases 9% Sequentially

Capital Raises

Lowell Farms Completes Convertible Debt Elimination

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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