1. What does SSTB mean? See our glossary of acronyms.
    Dismiss Notice

Investing in Cannabis Related Stocks

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

  1. His_Highness

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

    Messages:
    2,622
    I can't look at any cannabis specific companies as a investment. Trade yes....investment no.

    As an example....If I were going to "invest" in cannabis I'd select a pin-action/related company like Constellation Brands rather than Canopy Growth.

    I'm extremely risk averse which can cause me to pass up decent growth oriented investments if I can find something weighty to worry about.

    I've had folks who know I love Cannabis ass-u-me I am investing in Cannabis companies because of that knowledge and love. I've told them what I said above and add "I'm leery of investing in Cannabis companies because the supply and demand curve is moving way to fast for me in newly legalized geographies which can cause the value of cannabis itself to drop like a rock.

    Another reason I'm leery of cannabis producer investments is I'm concerned about investing in a company that produces something that I believe the public will eventually be able to grow for themselves. The typical response is something like "You can grow your own tomatoes but your not afraid of investing in a company like Del Monte". My response to that is "The cost differential and love for the product itself isn't nearly the same between tomatoes and cannabis. I like tomatoes but I LOVE me some cannabis and I think most cannabis consumers are the same way.

    I know a lot of folks view cannabis investment now as a way to get in on the ground floor and I admire those folks. I sometimes wish I wasn't so risk averse.
     
  2. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    Major players are reporting earning this week ... should be interesting
     
    His_Highness likes this.
  3. FlyingLow

    FlyingLow Team NO SLEEP!

    Messages:
    3,718
    I am really glad I've stayed away from medmen (mmen)... BUT I do think they are going to rebound and survive and be successful over the long term. They have scaled up operations and are about to be in FL and NY.

    I still think I want to jump into some of their stock; the question is, when does it hit the bottom? It was over $8 a few months ago, now at $3.89.

    They are working through a big suit from former employees, the CFO resigned a month or two ago, it could easily drop more before stabilizing... OR Are those signs of the final nails in the coffin?
     
  4. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    It seems like the boss is a bit of an ass. Even if they can get out from under all the litigation, they still have to get a leader in the industry who can do more than raise money in order to take advantage of all the money they spent on capabilities.

    https://mjbizdaily.com/after-string...bis-firm-medmen-forced-to-confront-adversity/
     
  5. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    Pffft, I have been sitting on Canopy and Aurora for months now waiting for it to rebound...not there yet. Plan to wait and to wait a long time with mmen, too. You could make the same argument for INSY as well, but it's been a while and they haven't made much headway to get back into the $10-11 game. Their former CEO cost me about half my investment funds, prick.
     
    LesPlenty, His_Highness and OldNewbie like this.
  6. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    Canopy Growth on the move
     
    LesPlenty, His_Highness and FlyingLow like this.
  7. Nooky72

    Nooky72 Dog Marley

    Messages:
    1,629
    Location:
    Dagobah System
    Cronos Group and the ETF (HMMJ) doing okay for me - going to sit on them for the long haul
     
    LesPlenty and His_Highness like this.
  8. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    Canopy Growth has failed me completely...I'll wait...I have so much tied into that effing stock that it saddens me to check on it daily. If I wasn't so neurotic I would step away from the stock ticker for a few weeks, lol.
     
    macbill, OldNewbie and His_Highness like this.
  9. FlyingLow

    FlyingLow Team NO SLEEP!

    Messages:
    3,718
    I am holding with it.
    We bought later than most... I think low 40s.

    But is has taken a shit ever since we've been with it.
    Not withstanding the performance, I still think they are a good program with a great number of brands under their roof. I trust it will evolve and thrive again, but I don't expect it will be overnight.

    MMEN has been wafting in their own shit for a almost a year. I was proud on this one because I was their customer since they opened in LA... They claim their sales per square foot rivals exceeds an apple store- WHERE THE FUCK DID THE MONEY GO?
     
    His_Highness likes this.
  10. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    It seems a time for not-fun memories for many:
    https://www.forbes.com/sites/alanjb...gh-the-cannabis-stock-graveyard/#150e7516ec6f

    He has some tips too, so read the whole thing. But, his stock errors:
    ...in alphabetical order, beginning with American Green, which has been trading as a cannabis company since 2012. Trading now at just $0.0002 per share, it has lost 96% of its value since spiking in late 2016 to $.005. ERBB has an incredible 29 billion shares outstanding as of March 31st, and the secret here was that the company, which never had a substantive business and generated revenue in the last quarter of just $397,064, used toxic financing allowing its convertible debt holders to convert into stock at 50% of the 52-week low, a doomed capital structure to say the least.

    Cannabis Sciences is another of the "OG" cannabis stocks, trading publicly under the name since 2009. The company, which is now quite delinquent on its filings, had revenue of just $6,302 in the first three quarters of 2017. At $.03, the stock is down about 96% over the past decade as it has put out questionable press releases and has failed to accomplish much at all beyond boosting its share-count.

    Cannagrow Holdings was a big stock promotion from early 2015 that traded briefly above $3.00 in late 2016 but now trades at $0.375 with very light volume. This company had a big red flag: The person responsible for preparing financial resports, Brent Crouch, is self-interested, as he owns a big chunk of the company, which has no real assets beyond receivables from its customer but stands between the owner of a facility and a Colorado license holder that leases the facility.

    CannLabs is one of many companies in the lab testing sector that have failed. It went public in 2014 with the leading share in the Colorado market and had a license in Nevada. While the stock still trades, surprisingly, there is absolutely no business after Colorado shut it down for violations in 2015. The company hasn't filed a financial report since 2015. Founder Gen Murray, who was ousted, claims that the she was the victim of fraud conducted by the person who put together the reverse-merger, Steven Solomon, who was accused of fraud at Palmaz Scientific as well.

    Creative Edge Nutrition was a company I thought had a chance to execute on its plans to build a massive cannabis cultivation facility in Ontario, though there were always lots of reasons to be skeptical. I actually visited the company headquarters in Detroit in 2014 and realized it was even dicier than I had figured. That should have been enough to make me run, but, I was slow to do so. When I caught management in a lie a few months later, I abandoned all hope that the company would ever succeed and avoided in my model portfolios the almost 100% decline since then. The guy who was running the show, Bill Chaaban, is a lawyer licensed in both the U.S. and Canada. The facility was never licensed and was being marketed a couple of years ago as a movie studio.

    FusionPharm was a company I never trusted due to several issues, including some accounting irregularities that I uncovered as well as a bad capital structure. The company, which retrofitted shipping containers as pods for cultivators, looked very busy when I visited it in Denver in 2014, but it turned out to be a fraud, with the stock suspended by the SEC and the CEO charged in a criminal complaint for illegal stock sales.

    Generation Alpha, previously known as SolisTek trades down 96% from where it traded at the beginning of 2018, and was one about which I was optimistic at one point given its substantial revenue. The founder's decision to bring in an outsider to run the company proved to be a grave mistake. The company's lighting business imploded, and it decided to pivot into the direct cannabis industry and change its name. The good news on this one is that investors had plenty of time to figure out what was going on and sell.

    Golden Leaf Holdings isn't quite dead, but it certainly appears to be headed in that direction. The company was struggling when it merged with a leading Oregon cannabis company, Chalice, changing its business model from exclusive focus on extraction to one that involved cultivation and retail as well. The founder was named CEO, but he departed earlier this year, with now 3 different CEOs since he left. Revenue in the most recent quarter grew 34% to $4.1 million, but the company continued to post big losses. The challenge for the company is a balance sheet laden with convertible debt.

    GreenGro Technologies is another former high-flyer that trades at about .01 after spiking to $1.20 in early 2014 and then $0.16 in late 2016. The company has never delivered on any of its initiatives, with sales of $93,327 in Q1.

    Growlife was the biggest stock in terms of both market cap and investor interest in 2014. I had some concerns with valuation, but the business model of expanding its footprint of hydroponics stores seemed promising. The SEC suspended the stock out of the blue in April 2014 for reasons that have never been disclosed, and there was never any sort of litigation subsequently. The company managed to regain its OTC listing, but it has struggled with its toxic convertible debt.

    Hemp, Inc. has a great ticker but no real business. Its founder, Bruce Perlowin, was charged by the SEC with illegal stock trading in 2016, a case that remains open. I have called out many issues with this company publicly since 2013. It hasn't filed its financials with OTC Markets in over two years. The lesson on this one is to look past the ticker!

    Indoor Harvest held early promise as it pursued its aeroponics technology. After going public through the S-1 process rather than a reverse-merger, the company failed to execute. The CEO, Chad Sykes, was formerly a stock promoter, which was probably a good sign that the organization wouldn't succeed.

    Marijuana Company of America has seen an incredible amount of selling by insiders and little progress in its business. The people behind it had ties formerly to Medical Marijuana, Inc., which I discuss below.

    MassRoots is one of the biggest failures the sector has seen to date. The company hyped its app but was never able to monetize and drowned in toxic debt.

    Medical Marijuana, Inc. has been a very controversial company since it began trading in 2009, founded by Bruce Perlowin before new management took over in 2011. The person behind the company, who died in early 2018 when he crashed his Lamborghini, Michael Llamas, had to step down as CEO when he was indicted for mortgage fraud, but he ran the company surreptitiously by many accounts. While MJNA has and continues to generate substantial revenue, it has relied upon toxic debt to fund its losses, diluting shareholders along the way quite substantially. At $0.05 per share, the stock trades on volume that continues to erode and is down 90% from where it was in early 2014. The company promised in 2013 to begin filing with the SEC, a promise it has yet to fulfill.

    Notis Global, better known by its predecessor name, Medbox skyrocketed in late 2012 to over $100 per share but now trades at $0.0002. The company's founder, Vincent Mehdizadeh, took on toxic financing and also got squeezed in his personal investment account along with CEO Bruce Bedrick by margin calls on the stock. The company also had to restate its financials, and it was never able to recover. The details are spelled out in the SEC litigation with the company.

    Pazoo struck a deal to open a Steep Hill cannabis testing lab in Nevada, but struggled to do so. I actually visited the facility in 2015, which finally was licensed in 2018 but not under the Steep Hill name. The company relied on toxic debt financing, which was its ultimate downfall.

    Sunset Island Group is a more recent cannabis play that failed. The guy behind it ultimately, Joseph Wade, used a different company, 1PM Industries, before trying to exploit investors with this one, which I called out publicly and then followed up with additional information about how the insiders cashed out $3 million. The company was delinquent on its filings for 2017 until just recently, and the filings revealed that the company never booked a dime of revenue despite claims to have generated it. This is a prime example of why it is so important to know the financiers.

    Terra Tech investors might not agree that the company is dead, but the prospects are grim in my view. Earlier this month it revealed it is borrowing money at 5% per month! I was both a critic of the company but also a supporter until late last year, when yet another lawsuit was filed against the company, which has been plagued by not only legal issues but also incredibly poor financial decisions. The company failed to see how the industry was getting financed in Canada and continued to rely on toxic debt, which left it disadvantaged to rivals. The regulatory transition in California challenged the company, which also operates in Nevada, and its sales have been in decline as losses expand.​
     
    His_Highness likes this.
  11. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    You were smarter than me; I bought at $49, eek! Anyways, I'll just wait it out as there is no reason to bail on it now. I'd just be combusting cash, and I'm not doing that again. I'd rather watch it slowly combust than have a bonfire, lol. Ughhhhhhhhh it's just deflating to watch.
     
    OldNewbie and His_Highness like this.
  12. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    Canopy growth. They lose a little on every sale. How do they try to fix it? VOLUME!

    https://mjbizdaily.com/marijuana-giant-canopys-revenues-soar-but-losses-widen/

    The world’s largest marijuana company, Canopy Growth, on Wednesday reported improved revenue in its latest quarter, but its losses widened substantially from the same period a year ago.


    Smiths Falls, Ontario-based Canopy saw revenue rise 250% in the first fiscal quarter of 2020 to 90.5 million Canadian dollars ($67 million) compared with the same period last year.
    Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter, which ended June 30, amounted to a CA$92 million loss, up more than 300% from a year ago.

    Canopy attributed its net loss of CA$1.2 billion to a one-time, noncash loss on the extinguishment of warrants held by Constellation Brands – the Canadian company’s largest shareholder.

    Canopy trades on the New York Stock Exchange as CGC and on the Toronto Stock Exchange as WEED.

    The company’s stock was down almost 11% after releasing its earnings after the market close.

    More earning details can be found here.
     
  13. FlyingLow

    FlyingLow Team NO SLEEP!

    Messages:
    3,718
    Fuck CGC for taking a shit on everyone!

    Gawd... down to 27 and tanking fast.
     
    His_Highness likes this.
  14. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    His_Highness likes this.
  15. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    I dunno, but I'm sitting in a multi-thousand dollar loss situation if I tried selling them now, and I'm sure as hell not investing more until a good chuck is recouped.
     
    His_Highness and OldNewbie like this.
  16. macbill

    macbill Gregarious Misanthrope

    Messages:
    5,695
    Location:
    The Evergreen State
    Value of Portland’s billion-dollar marijuana deal slashed

    Amid a sharp decline in the value of marijuana stocks, the Massachusetts company buying Oregon’s biggest marijuana business has dramatically reduced the value of the all-stock transaction.

    Instead of nearly $1 billion, the deal could now be worth as little as $300 million – though Portland-based Cura Cannabis has the opportunity to boost the value of the transaction to $723 million if it hits newly established sales targets next year.
     
    OldNewbie and His_Highness like this.
  17. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    https://420intel.com/articles/2019/10/31/3-popular-cannabis-stocks-are-more-trick-treat

    Aurora Cannabis has quite the balance sheet. Due to all their manipulations, 58% of their assets are "goodwill". Also, there is a convertible debt mismatch between price promised on the loan and current stock price that is going to call for cash soon. Personally, I've never seen a company with intangible assets of over 1/2 a companies value (outside of a small game company's IP) so would stay away just for that. But, it seems like they want to own it all. If the strategy works...

    They also talk of Medmen Enterprises and @FlyingLow 's favorite, Canopy Growth. You can get more from the article, but, Medmen also seems to have an upcoming cash flow issue with a burn rate that is going to be hard to support if cannabis remains Schedule I and equity is the only way to raise money. CGC? They might make a profit by 2022. (If rosy assumptions come true.)
     
    macbill and His_Highness like this.
  18. TwistedGray

    TwistedGray Well-Known Member

    Messages:
    496
    Andddddddddd I continue to wait and wait and wait, good thing I don't need to use this money but for a lifeline, yikes! Let's see what this election translates to...here's hoping for federal changes :)
     
    OldNewbie and FlyingLow like this.
  19. Sick Vape

    Sick Vape Solar Dabs

    Messages:
    383
    Location:
    Guinea
    Is there any good Q-Tips brand? They must have quite some business increase since the rise of dabbing. :D
     
  20. FlyingLow

    FlyingLow Team NO SLEEP!

    Messages:
    3,718
    I think the little orange colostomy bag will do anything possible to stay in office to maintain some forms of presidential immunity. I have no doubt, the twat will play the pot card before the election.
     
    His_Highness likes this.
  21. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    Trump is not going to play the "pot" card. Being against drugs and alcohol use is one of his values. However, he is not a drug warrior and, if the Congress passes something, he'll sign it. He does not demand everyone do what he feels is best--under penalty of law.

    As to presidential immunity, we read different things. The impeachment is not going to remove him from office AND there have been NO illegal acts alleged--Trump is not going to jail even if he is no longer president. (At least based on any claim made so far.) That is not the same for those in the previous administration who seem to have shut the fuck up now that they realize the IG report on FISA abuse is not going to go their way and Durham has upped his staff.

    To add a bit to the thread other than opinion, short selling in the industry is up.

    https://420intel.com/articles/2019/...ets-cannabis-stocks-even-after-summer-selloff
    Short sellers have continued to build positions in the cannabis sector, even after a broad re-rating of risk following a steep summer selloff, according to financial analytics firm S3 Partners.

    “Bearish speculators have strong conviction maintaining short exposure in the cannabis sector, despite the high borrow/carry costs,” said Matthew Unterman, director at the New York-based firm.

    The cannabis sector has tumbled in the past few months as spooked investors began to re-evaluate its prospects amid a slower and more rocky-than-expected rollout of legal cannabis in Canada, which continues to be hurt by a shortage of stores.

    Corporate governance scandals, such as the one involving illegal growing at CannTrust, and a regulatory clampdown on CBD products have added to the gloom.

    In the U.S., the continued power of the black market and the reluctance of law-enforcement officials to crack down for fear of seeming to revive the war on drugs has hampered the development of the legal market. The continued federal ban on cannabis, and reluctance of federally insured banks to serve the sector, have formed another obstacle. A bill that aims to offer protection for banks has stalled in the Senate for now.

    Sell-side analysts, who were mostly bullish at the start of the year, have started to rein in their recommendations and shave stock price targets.

    “Rather than be wildly profitable in two years, we expect the Canadian LPs to be roughly break-even,” is how MKM analyst Bill Kirk summed it up in a recent note. “.. Companies with near-term funding needs may have difficulty,” he added.

    Against that backdrop, short positions in seven of the better-known Canadian names have spiked higher, according to data provided by S3.

    Short sellers take a view on a stock that it will fall in price. They then borrow the shares so they can sell them, hoping they can later scoop them up at a lower price, return them to the original lender and pocket the difference.

    Short positions in Tilray Inc. TLRY, +3.77%, which is based in Toronto but listed only on Nasdaq, have increased to 38% of the float on Wednesday from about 22% on Jan. 1, according to S3 data.

    For market leader Canopy Growth Corp. CGC, +2.41% , WEED, +2.19% which trades on the Toronto Stock Exchange and the New York Stock Exchange, short interest has increased to an aggregate 25% from about 14% in January.

    At Aurora Cannabis ACB, +0.70% , ACB, +0.64% the most widely held cannabis stock which also trades on the TSX and NYSE, short positions now account for an aggregate 19% of the float versus 12% in January. At Aphria Inc. APHA, -1.35% , APHA, -0.47% also traded on TSX and NYSE, shorts account for 16% of the float compared with 15% in January.

    At Hexo Corp. HEXO, +6.33% , HEXO, +6.14% which is dual listed on the TSX and NYSE, short positions account for 15% of the float compared with just 6% in January.

    For Cronos Group Inc. CRON, +0.88% , CRON, +1.24% which trades on the TSX and on Nasdaq, short positions have grown to 26% of its float from 14%, while at Green Organic TGODF, -0.36% TGOD, +2.72% which trades on the TSE and the U.S. over-the-counter market, short positions have climbed to 5% from 2%.

    One bank is now betting that the worst is over and that stocks have bottomed out. Cantor Fitzgerald said Tuesday it expects positive catalysts to outweigh negative ones in the coming year.

    All seven stocks tracked by S3 have lost ground this year, led by Tilray, which is down 67%. U.S.-listed shares of Green Organic Dutchman are down 57%, Hexo is down 37%, Canopy is down 29%, Aurora is down 26%, Cronos is down 19% and Aphria is down 12%.

    ETFMG Alternative Harvest ETF MJ, +0.78% has fallen 22%, while the S&P 500 SPX, -0.07% has gained 23% and the Dow Jones Industrial Average DJIA, -0.20% has gained about 18%.
     
  22. Adobewan

    Adobewan Well-Known Member

    Messages:
    1,071
    Location:
    So Cal
    I feel Obama really missed an opportunity with cannabis legalization, but the FBI says cannabis related arrests have risen for the third year in a row under Trump, but I'm not sure I agree that he wouldn't pull the cannabis card. He's got a black belt in self-preservation that comes from using any/every tool/angle. It's like his super-power. As things continue to look worse for him, particularly if the Republicans oppose him in masse, I have my fingers crossed he'll reach across the aisle and dangle legalization.

    @OldNewbie I'm not a political scientist but most of what I've read says that pressuring a foreign government to investigate a political rival by withholding already agreed upon aid, or be involved in any aspect of our elections, is an illegal act. I agree, I can't see him serving time, but it does appear there was an illegal act committed.
     
    OldNewbie likes this.
  23. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    In all the reading you've done, has anyone pointed to a statute?

    Also, change "political rival" to "suspect".

    Edit:
    The vast majority of cannabis arrests are at the state level. Trump has no control over those.
     
    Last edited: Nov 8, 2019 at 2:25 PM
    macbill likes this.
  24. macbill

    macbill Gregarious Misanthrope

    Messages:
    5,695
    Location:
    The Evergreen State
    I just deleted a political post. I prefer my FC funny!

    please remove
     
    Last edited: Nov 8, 2019 at 4:12 PM
    OldNewbie and His_Highness like this.
  25. OldNewbie

    OldNewbie Well-Known Member

    Messages:
    2,466
    Right back atcha. Please remove.
     

Support FC, visit our trusted friends and sponsors