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Investing in Cannabis Related Stocks

Discussion in 'Cannabis News and Activism' started by TwistedGray, Jan 13, 2017.

  1. Silver420Surfer

    Silver420Surfer Well-Known Member

    Agree to disagree.
  2. OldNewbie

    OldNewbie Well-Known Member

    I've been seeing proposals from Canadian companies that want to use CA residents to grow, etc. and have been amazed at the profits they claim. Apparently, part of the issue gets to the exciting world of...accounting.


    Before investing in Canadian entities in the market, make sure you know how the financials are prepared. Some assumptions U.S. citizens might make will be wrong. From the article:

    Accountants and analysts will tell you that no matter the price of which you sell something, you can only get so close to a gross margin of 100%. Even software companies with their de minimis product delivery costs don’t hit gross margins of 100%, let alone exceed them by a few hundred percentage points. This begs the question, how has Canopy, and more importantly, an entire industry worth billions found a way to seemingly defy financial gravity? Whether you are a current investor or considering adding a cannabis producer to your portfolio, the devil of accounting is in the details, and the devil’s name is IFRS.
    The issue?

    As it turns out, the source of these enormous gross margins has little to do with the pent-up demand for adult-use cannabis (although it is an indirect factor), but is primarily a result of the mandated accounting standards for Canadian public companies. Unlike US public companies that report their financials using US GAAP as set out by the Financial Accounting Standards Board (FASB), Canadian companies report their financials using International Financial Reporting Standards (IFRS) as set out by the International Accounting Standards Board (IASB). Though there are considerable differences between the two that go beyond the scope of this article, the root cause of financial oddities for cannabis producers comes from a section of IFRS, specifically IAS 41, that sets the accounting standards for agricultural activity and biological assets.

    Under IAS 41, producers of cannabis are required to recognize the fair value of their biological assets (cannabis plants) less the cost to sell them, on their income statement prior to having sold the product or even lining up a potential purchaser. If this sounds completely absurd, I assure you, its because it is. What makes it even more challenging is that the fair value of a cannabis plant is something that changes as it grows, matures, and flowers, meaning that licenced producers need to constantly adjust this figure throughout the plant’s life cycle. Creating even more confusion is that IAS 41 does not dictate where on the income statement this recognition of fair value must occur.

    Canadian cannabis producers seem to have set the standard of recognizing this fair value above the gross profit line, leading to the direct impact on gross margin noted earlier.
    macbill likes this.
  3. TwistedGray

    TwistedGray Well-Known Member

    Well, back in the REGN game; we'll see if I get slaughtered again or not. I made some $$$ in Bitcoin over the last few days that I'll experiment again with.
  4. OldNewbie

    OldNewbie Well-Known Member

  5. TwistedGray

    TwistedGray Well-Known Member

    Yeahhhhh nahhhhhhh brahhhhhhhhh

    The rise and fall and re-rise of weed stock has done more than bite me in the ass!
  6. dannydroid

    dannydroid Google Nazi

    Anyone know how GWP / Greenwich BioSciences feel about the right to access?
    (i.e. it should only be dispensed by a company / doctor in pill form, and not grown in your home ?)

    Don't quote me on this, and I can't seem to find anything on Google, but I think one of the biggest players in keeping cannabis illegal in the UK is GWP.

    If Puffitup was a publicly trading company, I'd be all over that!

    edit: Did find a company called "Canopy Growth Corp" that may be a little more up my street (may have been posted here to)
  7. TwistedGray

    TwistedGray Well-Known Member

    Yeah they've been in the news for a bit, probably covered on here somewhere.
  8. Doktor Dub

    Doktor Dub Well-Known Member

    ...the return of investment is high with cannabis...

    Sorry, couldn t resist :-)
  9. TwistedGray

    TwistedGray Well-Known Member

    ...if only...
  10. Nooky72

    Nooky72 Dog Marley

    Dagobah System
    Marijuana investments : The long term fundamentals remain strong. Just like force does in so many Jedi.
    Fear leads to anger. Anger leads to hate. Hate leads to suffering.
  11. TwistedGray

    TwistedGray Well-Known Member

    Made a few tens of dollars on REGN, sold and back in the GBTC game since it got pummeled. I'll pull at $18 again and set to make a few stacks. Maybe back in REGN which I hope catapults back up. We'll see...INSY got slammed a second time, lol. F*** INSY!
  12. TwistedGray

    TwistedGray Well-Known Member

    Well, that's come to bite me in the ass. I was hoping / anticipating a quick rebound and got the opposite. Should've waited a little bit :( eeeeeeek!
    His_Highness and dannydroid like this.
  13. OldNewbie

    OldNewbie Well-Known Member

    Mr. Wonderful's position on cannabis investing:

    Billions of dollars in investment capital are waiting on the sidelines, watching the global marijuana industry boom.

    And that money will continue sitting the game out until Congress takes action to resolve the fact that marijuana is illegal at the federal level.

    That’s the core message from deep-pocketed investor Kevin O’Leary, a star on the popular reality TV show “Shark Tank” whose personal net worth is over $400 million.

    O’Leary has an investment portfolio that spans several continents and hundreds of businesses, and his central message to cannabis entrepreneurs is simple.

    “The whole energy of the industry should be towards resolving the federal mandate,” O’Leary told Marijuana Business Daily.

    “It’s great to have opportunity at the state level, but what good is it if it’s awry of federal law?”....​
    grokit likes this.
  14. OldNewbie

    OldNewbie Well-Known Member

    Now is the time to invest! The stock will rally from this or lower levels.


    Canadian cannabis stocks are down over 40% since peaking in early January, leading analysts to speculate about what might ultimately trigger a rebound.

    The Canadian Marijuana Index, a basket of the leading cannabis stocks operating in Canada, is 40% off its peak, or a loss of nearly 15 billion Canadian dollars ($12 billion) in market capitalization.

    The index was down as much as 7% in morning trading Wednesday but rebounded to close even by the end of the day.

    The volatility is an extension of a months-long correction that some analysts said was overdue. They contend marijuana share prices had climbed to unreasonably high levels by early 2018.

    Among the biggest losers so far this year are Aphria (down as much as 45%), MedReleaf (down 40%) and Aurora (down 38%).

    Canopy Growth lost 13% over the same period, while Cronos and CannTrust fell 25% and 26%, respectively.

    Amid the selloff, Eight Capital analyst Daniel Pearlstein sent a bullish research note to clients Wednesday, recommending investors take “a tactical approach” and keep an eye out for major industry developments, or “catalysts.”

    “We had said back in January that we’d be watching for April as the next entry point – and we believe that time has come,” he wrote in the note. “We still view the largest Health Canada LPs as the best way to play the sector.”

    Some developments experts are watching for include:
    Jason Zandberg, analyst at PI Financial in Vancouver, British Columbia, said previous major industry developments have led to stock price rallies over the past year, such as Constellation Brand’s investment in Canopy.

    However, Zandberg warns that investors “need to be selective.”

    “Quality always wins out in the long run, so stick with the market leaders.”

    Financing down but not out

    Crashing stock prices usually reduce or eliminate equity financing.

    Not this time.

    “Surprisingly, with the large drop we still have very healthy demand for certain equity financings, but there will likely be some that are delayed,” Zandberg noted.

    Financing had been exclusively led by investment banks such as Canaccord Genuity and Eight Capital, but falling stock prices didn’t deter one of Canada’s biggest banks from providing financing to cannabis businesses.

    And more banks appear to be warming to working with the industry.

    Stocks ‘inflated’

    Some analysts don’t expect cannabis stocks to revisit their highs anytime soon.

    Chris Damas, editor of the Barrie, Ontario-based BCMI Cannabis Report, cited the March 30 article “Marijuana Stocks Could Be a Buzzkill” in Barron’s as the catalyst for the recent downturn – a demonstration, he said, that international investors are important to Canadian cannabis stock prices.

    “Stocks are coming back to Earth after a very unusual spike in December,” Damas said in February. “They had no business being where they were and now they’re coming back to more reasonable levels.”

    And now?

    “Stocks have been inflated in price for a long time,” he said.

    “(Cannabis) stocks remain in a bearish trend. We don’t think analyst estimates for recreational cannabis sales volumes and margins are reasonable.”​
  15. OldNewbie

    OldNewbie Well-Known Member

    When the industry has a former (Republican) Speaker of the House on one of its boards, it might be time to invest.


    John Boehner is heading for the boardroom of a cannabis company, the former Speaker of the House announced Wednesday.​

    "I'm joining the board of #AcreageHoldings because my thinking on cannabis has evolved," the Ohio Republican tweeted. " I'm convinced de-scheduling the drug is needed so we can do research, help our veterans, and reverse the opioid epidemic ravaging our communities."

    Boehner, who served as Speaker from 2011 until his resignation from Congress in 2015, was appointed to the board of advisers at Acreage Holdings, a multi-state cannabis business that aims to "make cannabis available to any patient who can benefit from safe and reliable access."

    His decision to join the board is a marked shift -- in 2009, Boehner said he was "unalterably opposed" to legalization, according to Bloomberg.

    Former Republican Massachusetts Gov. Bill Weld is also joining the board. The two said in a joint statement that they believe "the time has come for serious consideration of a shift in federal marijuana policy," specifically citing the drug's use by veterans "to self-treat PTSD, chronic pain and other ailments."

    "While the Tenth Amendment has allowed much to occur at the state level, there are still many negative implications of the Federal policy to schedule cannabis as a Class 1 drug: most notably the lack of research, the ambiguity around financial services and the refusal of the VA to offer it as an alternative to the harmful opioids that are ravishing our communities," they wrote.

    The Republican politicians' appointments to the cannabis company come as the current Republican administration has cracked down on state-level marijuana regulations. In January, Attorney General Jeff Sessions rescinded a trio of memos from the Obama administration that had adopted a policy of non-interference with marijuana-friendly state laws.

    The move essentially shifts federal policy from the hands-off approach adopted under the previous administration to unleashing federal prosecutors across the country to decide individually how to prioritize resources to crack down on pot possession, distribution and cultivation of the drug in states where it is legal.​
  16. His_Highness

    His_Highness In the land of the blind, the one-eyed man is king

    Great news for sure but I can't help but wonder......

    Were Boehner and Weld just holding the party line before and now that they no longer feel obligated can express their true beliefs OR were they offered enough money to change their views (and become pseudo lobbyists) OR did they really have an epiphany? I'm guessing it's the money.

    If they were just holding to the party line then fuck em.
    If they're doing it for money then fuck em.
    If they had an epiphany then ... welcome aboard!
    Helios, grokit and OldNewbie like this.
  17. Wahiker

    Wahiker Well-Known Member

    My guess is BEFORE he was just holding to the party line with his VERY hard-line position; and NOW he's mostly in it for the money ... but the money opportunities have probably led him to at least a minor change of heart that maybe pot's not so bad after all! (Funny how enough money can cause people to rethink their deeply entrenched opinions).

    On the subject of pot investments, I bought several pot stocks early last December (Canopy Growth, Aphria, Aurora Cannabis, and Med Relief) -- all Canadian to avoid any US state vs federal law problems. I got lucky, since they all started a fast rise and by Jan 22nd, I had nearly doubled my money (in less than 2 months!). Then as you probably all know, the pot market went sideways for a while, then down to where Canopy, which at one time was up 111% over my purchase price, had slid to around a 50% profit and one of them (Med Relief) had actually lost money. But the combination of Boehner signing on as pot advisor and trump returning to states rights and backing off federal interference, Med Relief is now up 27% and Canopy is up 73%. This might be a good time to buy even more, given the renewed momentum!
    Last edited: Apr 16, 2018
    His_Highness, grokit and dannydroid like this.
  18. OldNewbie

    OldNewbie Well-Known Member

    Some say the smart play is shorting pot stock.


    The pool of bearish wagers on a pot bust in increasing.

    The total value of short positions in global marijuana-related stocks has climbed to a record approaching $2.1 billion, according to Sam Pierson, an analyst at IHS Markit in Boston. Short sellers have increased their positions amid concern that the sector is overvalued, and it’s becoming easier to find shares available to borrow for companies with a large market capitalization, he said.

    “There’s still a concern about valuations,” Pierson said Tuesday in a telephone interview. “By any valuation metric, whether they even have positive earnings or what those earnings are, they’re certainly stretched compared to what you would traditionally see.”

    While cannabis stocks recently have retreated, the value of the nascent market is still much higher than it was 12 month ago. The BI Canada Cannabis Index has almost doubled in the past year.

    In short selling, investors sell stocks that they borrowed with a view to buying them at a cheaper price later when they have to return the shares to the lender. They profit from the price difference minus the cost of borrowing.

    The average cost to borrow marijuana stocks is below 20 percent, according to IHS data. As of May 21, the short position in Canopy Growth Corp., Canada’s largest marijuana producer, was 17.6 million shares at a value of $486 million, while the short interest in Aurora Cannabis Inc. was 46 million shares, or $286 million, IHS data show.​
    His_Highness and grokit like this.
  19. FlyingLow

    FlyingLow Team NO SLEEP!

    I have been on the sidelines watching medmen, not invested in them.
    I really thought they would have done better...
  20. analytika

    analytika Well-Known Member

    San Francisco, California
    Or it might be time to run for the Hills.

    It cannot be overstated the extent to which these two Republicans are on the outs, from their own party, from anything masquerading itself as the center these days, and of course from Democrat circles.

    Financial institutions still won't touch cannabis transactions despite all the money changing hands.

    All of the financial wherewithal and mechanisms of the black market have flooded cannabis markets with cash, so called legitimate or straight investment money is late to the game, timid and quick to flee. Meanwhile Regulators are out of control slamming doors, changing up the rules, constricting Supply and in fact bolstering t black market.

    Most investment opportunities in the sector are cons.
  21. unsorted

    unsorted Well-Known Member

    Off Center
    His_Highness likes this.
  22. OldNewbie

    OldNewbie Well-Known Member

    The short sellers are winning the day against Aphria.


    The blows to Aphria’s stock continued Wednesday as the Canadian cannabis giant’s share price tumbled in the wake of a scathing short-seller report.

    Aphria’s stock (Nasdaq: APHA) closed Wednesday at $4.51 – down more than 25% for the day.

    The company has been on the defensive since Monday, refuting claims lobbed by short sellers Quintessential Capital Management and Hindenburg Research that Aphria’s management is a part of shell game controlled by insiders raiding company coffers to line their own pockets.

    Aphria, in a statement issued Monday, called the allegations “malicious.”

    But some of the concerns raised by the short-seller report could have broader implications for the rapidly growing cannabis industry, analysts and observers say.

    “This could be the proverbial straw that breaks the camel’s back,” said Chris Damas, editor of BCMI Cannabis Report.

    “The overvaluation case (for the Canadian licensed producers) could finally be resonating with investors, and it takes something like this to break down the floodgates.”

    As the fallout evolves, here are five key takeaways for investors and cannabis operators to consider:...​
  23. Helios

    Helios Well-Known Member

    down by the river
    His_Highness likes this.
  24. mrbonsai420

    mrbonsai420 Accessory Maker

  25. OldNewbie

    OldNewbie Well-Known Member

    There's too much weed in Canada. Article thinks a lot of investors will go short.


    Short seller attacks, shareholder activism, and consolidation will intensify in Canada’s cannabis sector, solidifying dominant players and weeding out weaker rivals, predicts Canaccord Genuity analyst Matt Bottomley.

    Speaking at the Canadian Club of Toronto’s 2019 Cannabis Outlook event, Bottomley said while the industry on the whole has a “tremendous amount of legitimacy,” Canada has more publicly-listed cannabis companies than it needs."

    “If you include every single company that has cannabis in its description, there are probably 100 or 200 of them. In Canada, we have three or four telecom companies [and] four, five, six banks, we don’t need 100 cannabis companies,” he told attendees on Tuesday.

    The allegations of cannabis short sellers have wiped out billions in market value, sparked internal investigations, and prompted management overhauls.

    A recent attack by prominent short seller Citron Research on Namaste Technologies Inc. (N.V) caused an investigation that led to the ousting of CEO Sean Dollinger on Monday. In December, Aphria Inc. (APHA.TO) shares tumbled after a report by Quintessential Capital Management and Hindenburg Research accusing the company of buying Latin American assets at inflated prices.

    “I think it’s going to be an increasing theme,” Bottomley said. “There is probably some justified criticisms out there in the market, depending on the companies and depending on how the market plays out.”

    He expects future short seller reports will put a spotlight on overcrowding in the cannabis sector, though he warns investors should carefully weigh the findings against the author’s profit interest.

    He said negative sentiment stirred up by public short attacks impacts the sector as a whole, scaring off long-term institutional investment that could that could help smooth out notoriously volatile share prices.

    “You are affected no matter what producer you are,” he said. “Canopy, for example. Even though they are not named in any of those issues, I’m sure they hate this.”

    Brian Wagner, chief executive officer and founder of Cannabis Compliance Inc., said corporate governance remains a “very overlooked area” in the cannabis sector, and expects to see more companies stumble on that front as the industry matures.

    He likens the situation to a 14-year-old in Alberta who just got their learner’s licence – there’s potential to go fantastic places, but the risk of an accident is high.
    “We haven’t got into too many accidents yet,” he told 2019 Cannabis Outlook event attendees. “I think more accidents will happen.”​
    His_Highness and macbill like this.

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