The North America Cannabis Industry Has A New Champion

The North America cannabis industry has a new champion. This well-known sector leader just completed an $875 million acquisition that puts it into a position to dominate the U.S. cannabis market.

Even though shares have been rallying for the last few weeks, I see plenty of upside ahead.

Curaleaf Holdings (CURLF) is an early leader in the high-growth U.S. cannabis industry with a market cap of $4.5 billion and operations in 18 states.

However, after one of the largest acquisitions in the history of the U.S. cannabis industry, Curaleaf has definitively taken the crown as the largest cannabis company in North America.

On July 23, Curaleaf completed its $875 million acquisition of Grass Roots, a fellow Chicago-based industry leader that operates in 12 states, owns 52 dispensaries, 14 cultivation sites, and 14 processing sites.

The new combined entity will become the largest cannabis company in the world by revenue. Here are some more details from the press release. Continue reading "The North America Cannabis Industry Has A New Champion"

Will Cannabis Stocks Soar Again?

The most important time of the quarter has arrived for cannabis stocks.

Earnings season is when companies reveal sales and earnings results for the previous quarter – and just as important, the company provides guidance on what investors should expect for the following quarter.

Quarterly earnings that beat expectations have a documented history of helping shares outperform the broader stock market in the following weeks and months.

On Wall Street, this pattern is known as the post-earnings announcement drift (PEAD).

Post-earnings announcement drift is the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (or even several months) following an earnings announcement.

Here are some more details from Wikipedia.

Once a firm’s current earnings become known, the information content should be quickly digested by investors and incorporated into the efficient market price. However, it has long been known that this is not exactly what happens.

For firms that report good news in quarterly earnings, their abnormal security returns tend to drift upwards for at least 60 days following their earnings announcement. Similarly, firms that report bad news in earnings tend to have their abnormal security returns drift downwards for a similar period. This phenomenon is called post-announcement drift.

cannabis stocks

The power and reliability of the PEAD was on full display in the cannabis sector last quarter. An elite group of early cannabis leaders delivered impressive quarterly results that have been driving shares higher for the last two months. Continue reading "Will Cannabis Stocks Soar Again?"

An Industry That Could Be A "Savior"

A few years ago, the investing world was enthralled with the idea that the marijuana industry was going to be the ‘next big investing trend.’ Unfortunately, for most who bought into the hype, the investments in the industry have not lived up to their promises. However, that may soon be changing.

The big marijuana players and their investors have all suffered over the years for several reasons. First, the industry is simply too fragmented for a single or handful of players to dominate the landscape. This is an issue because while competition is good, too much competition doesn’t allow individual companies in the industry to experience the power of ‘scale.’

What that means is, let’s say a marijuana company opens a farm. The farm may be large enough to produce 100 pounds, which is enough to cover the costs of the farm and the farmer. However, that 100 pounds aren’t enough to cover the cost of the transportation of the product from the farm, the distribution center, the security for the farm and distribution center, or the research and development so that the farmer can become more efficient and offer different strains. The fragmentation of the industry also hurts pricing power. The more competition means people trying to push product, perhaps simply to cover costs, means prices hit near rock bottom.

Another reason the industry has suffered is the very slow progress of legalizing marijuana both in most US States and the vast majority of countries around the world. With only a handful of states in the US having legalized the plant and the Federal Government still considering it a controlled substance, adoption rates around the country have been sluggish. When the industry was expecting to grow due to increasing numbers of legalized States rapidly, investors were pouring money into them. However, that money has begun drying up, which is now causing problems on balance sheets and debt levels. Continue reading "An Industry That Could Be A "Savior""

It May Be Time To Buy Marijuana ETFs

All the hype and excitement surrounding the marijuana industry over the past few years has finally died down. Unfortunately for some investors, who got caught up in the hype and excitement, are now realizing what some knew all along; the marijuana industry has a long way to go before it achieves its full potential.

But, regardless of whether you were an ‘early’ investor in the industry or someone who has been sitting on the sidelines, now is the time to start getting serious about marijuana funds. Over the past three months, the five marijuana ETFs have lost 30% or more of their value. Obviously, this is due to the marijuana industry as a whole, seeing their stock values decline. However, this means some of the stocks in the industry which had been trading at ‘lofty’ valuations have come back down to earth quite a bit.

Over the last three months, Tilray is down 45%, Canopy is down 38%, Aurora is down 42%, Cronos is off by 40%. These are some of the big names in the marijuana industry and stocks held by the marijuana ETFs; ETFMG Alternative Harvest ETF (MJ), AdvisoreShares Pure Cannabis ETF (YOLO) , Cambria Cannabis ETF (TOKE), The Cannabis ETF (THCX), and Amplify Seymour Cannabis ETF (CNBS).

But why is now the time to start buying? Continue reading "It May Be Time To Buy Marijuana ETFs"

5 Marijuana ETFs You Can Invest In Today

Until April Exchange Traded Fund investors only had one legitimate option, the ETFMG Alternative Harvest ETF (MJ), if they wanted to invest in the marijuana industry. But in April the AdvisoreShares Pure Cannabis ETF (YOLO) began trading. Then in July, the industry saw a marijuana boom when three new ETFs focused on the controversial industry began trading. On July 9th The Cannabis ETF (THCX) began trading, then the 23rd saw the Amplify Seymour Cannabis ETF (CNBS) begin trading and finally on the 25th the Cambria Cannabis ETF (TOKE) opened for business.

Before we get into the differences of each ETF, I wanted to let everyone know that for the most part, all five of these ETFs are rather easy to buy. In the past when I have written about the marijuana ETFs, I often mentioned the Horizons Marijuana Life Sciences Index ETF (HMMJ) which is actually traded on the Toronto Stock Exchange. Thus for U.S. investors, it can be difficult to purchase this fund unless you have an account which allows trading on foreign exchanges and in my experience, most retail investors don’t have those types of accounts.

I know these five are all easy to buy because I actually bought all five of them. I have two different brokerage accounts, one with Merrill Lynch and one with TD Ameritrade. The TD account allowed me to purchase all five ETFs with absolutely no issues and the Merrill Lynch account allowed me to buy MJ no problem. However, the Merrill Lynch account required that I call in and have a Merrill Lynch representative assist with the purchase of YOLO, THCX, CNBS, and TOKE, but not because they were marijuana ETFs but because they were thinly traded or had small asset bases.

So, let’s take a look at the five US listed marijuana ETFs and see what makes them different. Continue reading "5 Marijuana ETFs You Can Invest In Today"