Bottom Line: Grizzle and CB1 put together the most comprehensive list out there of publicly listed US cannabis companies. The guide provides a description of the company’s business, the investment thesis and valuation metrics where available. This is the only guide you need to invest in US cannabis.
Bottom Line: Investors and management teams think that the value of cannabis will mainly accrue to those who own the brands and make the products consumers want. We take a look at branding and advertising regulations in the US and Canada to see which country has the best chance of eventually owning the global brands and most of the profits.
Bottom Line: Pete Sessions, chairman of the House rules committee and major foe of the marijuana industry lost his elected seat in the midterm election and will likely be replaced by Massachusetts Democrat Jim McGovern. Rep. McGovern is rated a B on marijuana issues compared to Pete Sessions who was a hard F according to NORML (National Organization for the Reform of Marijuana Laws)
Marijuana advocates could not have asked for a better turn of events during the midterms. This doesn’t mean national legalization is near, but there is the potential for marijuana bills to at least make it to the house floor for a vote under Rep. McGovern.
NORML Analysis of Rep. Jim McGovern
Bottom Line: Only a week after the Mexican supreme court struck down the criminalization of cannabis, a bill has been introduced to legalize the production and sale of the drug. The President-elect Andrés Manuel López Obrador has already publicly endorsed the supreme court’s decision which is a good sign for this bill having a real chance of becoming law. Mexico is an example of how legalization in Canada seems to be speeding up the acceptance of cannabis among other countries.
Global marijuana stocks were down 2% this week with some big swings seen mid-week. U.S. names were down 1%, while Canadian names increased 1% led by midcaps, up 4%. Midterm elections in the U.S. did not turn out to be the catalyst investors were looking for and just increased volatility midweek.
The Canopy Constellation deal gave the market some new momentum, though this has largely dissipated in the last month. Stocks should languish through year-end unless another consumer goods company buys into the space. If this happens stocks may be off to the races again.
From a fundamental perspective, until we have 1 to 3 months of data from the legal market in Canada, stocks may struggle to find a direction and will continue to be volatile.
With the Canadian market legalized we expect retail and wholesale price compression from a legal oversupply by the second half of 2019. Falling cannabis prices will pressure producer stocks later in 2019.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.