Investing in Cannabis Related Stocks

[Tranquility]

Canopy growth is not really "growing" anything other than pot and losses.
https://cannabislifenetwork.com/canopy-growth-reports-374-6m-q2-loss/

Last QUARTER (Q2), they lost almost $375 million on revenue of about $76 million.

Pretty soon, they'll be running out of other people's money.

SMITH FALLS, Ont. — Canopy Growth Corp. reported a $374.6-million loss in its latest quarter as the company restructured its portfolio of cannabis softgels and oils.

The cannabis producer says the loss amounted to $1.08 per share for the quarter ended Sept. 30 compared with a loss of $330.6 million or $1.52 per share a year ago when it had fewer shares outstanding.

Net revenue in what was the second quarter of Canopy’s financial year totalled $76.6 million.

That compared with $23.3 million in the same quarter last year before the legalization of recreational cannabis in Canada, but down from $90.5 million in its first quarter.

The company says the second-quarter results included a restructuring charge of $32.7 million for returns, return provisions, and pricing allowances primarily related to changes to its softgel and oil portfolio.

Canopy Growth also took an $15.9-million inventory charge related to the change in strategy which includes new retail pricing, a rationalized package assortment and a focused marketing and educational plan.

“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” Canopy chief executive Mark Zekulin said in a statement.

“However, we believe these conditions are a short-term headwind in what is a brand-new industry, and Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property to deliver sustained, long-term market leadership.”​

 

[Tranquility]

I don't know if it is directly a "stock" thing, but, cheap Chinese manufacturing supply chains might be a problem in the near future. (Not just because of the cost of the tariffs.)

https://www.chinalawblog.com/2019/1...chinese-companies-that-see-a-dark-future.html

Basically, when the smaller Chinese companies feel there is not going to be a long-term relationship with buyers because of political reasons, they get a bit...casual...with contractual (and other) responsibilities.

 

[TwistedGray]

Timeout folks - this is about investing in cannabis stocks...let's keep it related to that; thank you

ps: California's increased tax on the cannabis industry isn't going to help things.

 

[Tranquility]

Timeout folks - this is about investing in cannabis stocks...let's keep it related to that; thank you

ps: California's increased tax on the cannabis industry isn't going to help things.

I assume you're talking to me, but, the supply chain is of great importance to many area of the industry. This is going to be a problem for vertically integrated industries.

 

[Vape_Or_Die420]

I bought some Canopy Growth stocks because i thought it would be cool to own a piece of Storz & Bickel. Now i am worried that S&B has changed for the worst.

 

[FlyingLow]

Canopy Growth took a dump. I don't think it will ever recover...

 

[TwistedGray]

^ I keep telling myself it can't get worse...it can't get worse...but they surprise me week after week. I'm at the point of no return though; it's really just a matter of when I want to take a massive loss and stop bothering with the market because I'll never recover what I've invested/lost.

 

[Tranquility]

You know there's a problem when the guys who grow and sell an agricultural product focus on intellectual property. The companies seem to need some claim to get drug-dealer money rather than farming and/or produce-section money.

https://mjbizdaily.com/company-rebranding-for-marijuana-firms-adapting-to-industry/

As the cannabis industry has moved to shed the “stoner” stereotype many have held of its consumers, several marijuana businesses are rebranding themselves via name changes and other steps to try to reflect the companies they’ve become.

Whether the decision revolves around an initial public offering (IPO), including Akerna’s, or the acquisition of multiple dispensaries such as Cresco Labs, many companies are working toward creating a unified, professional brand.

Bill Winchester, president and chief creative officer of marketing firm Lindsay, Stone & Briggs, which has offices in Madison, Wisconsin, and Minneapolis, said the following are other potential reasons a marijuana firm might rebrand:

• It has launched new and different services.
• The competitive landscape in the industry has shifted, and it wants its brand to reflect those changes.
• It wants to stress the growing professionalism surrounding the marijuana industry.

“The industry is changing and sort of going from possibly something that’s sort of way recreational and goofy to something that’s a little more serious and medicinal,” Winchester said.

Rebranding and going public

An IPO was the impetus behind the renaming of Denver cannabis technology company MJ Freeway to Akerna, which trades on the Nasdaq as KERN.

The name change occurred when MJ Freeway merged with MTech, a special purpose acquisition firm, according to MJ Freeway’s vice president of global marketing and communications, Jeanette Ward Horton.

The new name was built around “kern,” which she said represents an organic kernel of corn or a kernel of data.

The rebranding process led the team to a better understanding of what the company offers to the market, Horton added.

“We really wanted for the public listing a name that was not so quickly tied to cannabis but would make a more balanced connection between cannabis and tracking systems,” she said, referring to seed-to-sale tracking software.

“It’s really a reflection of the maturation of the space. There is a lot of movement from private companies to public companies and people being acquired by larger companies.”

High Street become Acreage

In March 2018, High Street Capital Partners became Acreage Holdings as part of its plan to pursue an IPO.

Acreage Holdings trades on the Canadian Securities Exchange (CSE) as ACRG.U and on the over-the-counter exchanges as ACRGF.

Kevin Murphy, the company’s founder, chair and CEO, came from the financial industry and started the company in 2011 as an investment vehicle.

Several years later, he turned his focus to cannabis and invited other investors to participate.

“High Street Capital Partners was a brand for the investment community specifically,” said Howard Schacter, vice president of communications at Acreage Holdings. “Acreage had real resonance in a couple of different places.

“It’s an illustration of the part of the business that’s about growing, and growing is what we looked to do and continue to do as a company. It’s a good reflection of growth in all of its different meanings.”

Creating a national brand

Industry watchers note that as some companies expand their footprints into new areas by acquiring dispensaries, they’re choosing to change their names and remodel shops to convey a unified message to customers.

For example, medical marijuana company Vireo Health International, based in Minneapolis, recently launched its first Green Goods-branded dispensary in Scranton, Pennsylvania, and has plans for two more retail stores in Bethlehem and Stroudsburg, pending regulatory approval.

The name of the umbrella company will remain Vireo, which trades on the CSE as VREO. But going forward, Green Goods will be the retail brand.

Vireo CEO Kyle Kingsley said there is no additional cost to build out new stores under the Green Goods brand, but rebranding existing stores requires a significant investment that could run into the hundreds of thousands of dollars for larger shops.

“We’re doing this in a very cost-effective way,” Kingsley said. “It’s a marvelous unifying brand for our dispensaries.”

The rebranding effort also involves focusing on Vireo’s e-commerce platform.

Customers can order online to buy products through in-store pickup or delivery, which is Vireo’s largest revenue generator in locations where the service is allowed.

“We’re looking to make it easy for folks,” Kingsley said. “If they do an online refill, it can be a two-minute interaction. Online orders have increased substantially – more than half of our transactions are e-commerce.”

Conveying a happy image

Another example is Chicago-based Cresco Labs (CSE: CL), which owns 31 retail licenses in 11 states and 21 operating dispensaries – all acquired through mergers and acquisitions of other companies.

Cresco is rebranding all the dispensaries it’s acquired as Sunnyside, a name that’s intended to convey happiness.

But the process isn’t simple.

“When you want to change the name of a dispensary, it’s not as easy as other businesses,” said Jason Erkes, chief communications officer for Cresco Labs.

“You’re dealing with the government and regulators and a lot of firsts. It’s very burdensome.”
​

 

[FlyingLow]

There are no pot stocks that get me remotely interested anymore.

I am an investor by trade and have never suffered the losses I've seen in cannabis. It is simply ridiculous.

 

[macbill]

Maybe now is the time to pick something up.

 

[Tranquility]

There are no pot stocks that get me remotely interested anymore.

I am an investor by trade and have never suffered the losses I've seen in cannabis. It is simply ridiculous.

Some are going to make money, especially if they go by @macbill's thoughts about buying low. But, there is no way *I* have the expertise to know which are which. If you're going to invest, rather than gamble, you're going to have to get some of the premium news services out there that gives you the skinny on the people in the industry and what is going on. It will still be mercurial, its just that you might be able to catch a rocket that beats the competition for some reason. (Most likely, serious and competent people who work hard at the top of the organization will be key. There's money here. The issue is how to get it when you're selling (essentially) the same thing everyone else is.)

At the end of the day, it is an agricultural product. It seems like many business plans require drug dealing profit on flower. Once it became legal, those margins should be considered gone.

 

[macbill]

The 10 Top-Selling Marijuana States in 2019

Even though it hasn't exactly been the best year for marijuana stocks, cannabis is still projected to be one of the fastest-growing industries over the next decade. Worldwide weed sales have more than tripled, from $3.4 billion to $10.9 billion between 2014 and 2018, and Wall Street has forecast that sales will grow to between $50 billion and $200 billion by 2030.

 

[macbill]

Pot stock short-sellers net almost $1 billion in 2019

Short-sellers are winning big this year with expensive bets against pot stocks.

Cannabis bears have cleared $993 million in mark-to-market gains so far in 2019, even after losing $132 million this month as stocks bounced off their lows, according to data from financial analytics firm S3 Partners.

 

[macbill]

Is the Pain Over for Pot Stocks? Investors Can Look Forward to a New Year.
https://www.barrons.com/amp/articles/marijuana-stocks-2019-outlook-2020-51577398517
From its March peak, the marijuana-focused ETFMG Alternative Harvest ETF (ticker: MJ) lost half its value, while the overall stock market rose. Few pot stocks now trade above the prices at which they came public on Canada’s stock market, where even U.S. operators had to go to raise equity capital.

 

[Tranquility]

Here are five case studies that talk to some of the problems of getting cannabis into mainstream business.

https://mjbizdaily.com/cannabis-companies-that-try-to-enter-the-mainstream/

Edit:
Aurora still sucks.
https://mjbizdaily.com/aurora-execs...illion-in-debt-illinois-readies-for-mj-sales/

 

[Tranquility]

Trulieve has some churning because of a short-seller's report out claiming they:

• Produces low-quality marijuana based on drone footage.
• “Portrayed profitability” through suspicious accounting.
• Has “extensive ties” with an ongoing FBI investigation of public corruption in north Florida.

The company considers "the Grizzly short report as largely rehashing old information and misleading less sophisticated investors over the company's actually very strong fundamentals".

https://mjbizdaily.com/trulieve-fights-short-seller-report-in-florida-cannabis-market/

 

[TwistedGray]

And I just dumped my stocks, took a big massive hit, and now I'm moving along. I think I lost about 80% of my initial investment by not pulling out when I should have...lesson learned.

 

[FlyingLow]

My wife and I took a beating on canopy... we also got out of it all- none were performing.

My $ is gong back into other investments.

 

[TwistedGray]

My wife and I took a beating on canopy... we also got out of it all- none were performing.

My $ is gong back into other investments.

Join the club :*(

I went with Tesla, and that's already made me more money in three days than cannabis trading has over the past few years! I did buy a handful of GWPH, but nothing life altering...it's already in the red, doh!

 

[FlyingLow]

Out of curiosity, anyone have experience investing in a dispensary?

How did it turn out for you?

 

[Tranquility]

Out of curiosity, anyone have experience investing in a dispensary?

How did it turn out for you?

You can't. Not really.

There is no stock market that goes to a single dispensary right now. That takes the easy way off the table.

The hard way has the investment (And, depending on the state, the investor.) have to go through regulatory hoops before it is allowed. In California, one set of the problem:

https://www.cannalawblog.com/on-the...g-avoiding-ownership-and-financial-interests/

Passage of California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA“) has opened the doors to institutional investing in California cannabis companies. California’s lack of a residency requirement for investors and its relatively limited investor disclosure and background requirements have made it popular for institutional investors looking to invest in cannabis. In that sense, California is building out its program to mirror wide-open states like Oregon, and not protective states like Washington.

There are two main types of California cannabis applicants: owners and financial interest holders. To be legally considered an “owner” under California’s cannabis regulations, one does not actually need equity in the applicant’s cannabis business. “Owner” means any of the following:

1. A person with an aggregate ownership interest of 20 percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, encumbrance;
2. the chief executive officer of a nonprofit or other entity;
3. a member of the board of directors of a nonprofit; and
4. and any individual who will be participating in the direction, control, or management of the person applying for a license.

An individual who directs, controls, or manages the business includes any of the following: a partner of a commercial cannabis business that is organized as a partnership; a member of a limited liability company of a commercial cannabis business that is organized as a limited liability company; and an officer or director of a commercial cannabis business that is organized as a corporation. These are all fairly standard definitions, as far as cannabis regulation goes.

Even if someone is not an “owner,” however, that person or company may still be deemed a financial interest holder (“FIH”). “Financial interest” is broadly defined to mean “an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other ‘equity interest’ in a commercial cannabis business.” California cannabis regulators consider the term “equity interest” to include less than a 20% ownership in the cannabis applicant and pretty much any profit-sharing arrangement or entitlement to profits from cannabis licensee, including IP licensing royalties and percentage rent arrangements. The following are not considered FIHs: banks and financial institutions; diversified mutual funds, blind trusts or similar instruments; holders of security interests, liens, or encumbrances on property that will be used by the commercial cannabis business; and individuals holding less than 5 percent of the total shares in a publicly traded company.

California requires FIHs be disclosed to and vetted by the state upon application for annual cannabis licenses. The license applicant must provide a complete list of all financing it receives. Specifically, the license application mandates that applicants include the name, birthdate, and government-issued identification type and number (i.e., driver’s license) for any individual with a financial interest in a commercial cannabis business. FIHs are not required to submit to criminal background checks but they will still undergo some vetting by state regulators.

Even with these new rules, most institutional investment in the cannabis space is still concentrated in “ancillary services“, i.e. services that support cannabis businesses but do not “touch the plant.” Examples include turnkey real estate, equipment and materials leasing and sales, intellectual property licensing, consulting services, and tech platforms. Many institutional investors still want to stay one or two steps removed from touch-the-plant cannabis businesses and do not like the idea of being listed in a state database as being an owner or FIH. However, given California’s wide-reaching definition of owner and FIH, even these companies and their investors can be deemed by the state to have a direct cannabis business interest. To avoid being considered owners or FIHs in California, ancillary service providers will need to avoid directly providing financing, using profit-sharing or similar performance-based payment schemes with cannabis businesses. They will also need to avoid managing, directing, or controlling the licensed entity.​

 

[His_Highness]

I commented above regarding why I didn't feel comfortable investing in cannabis related stocks so I'm just stopping buy to comment on:

You can't. Not really.

There is no stock market that goes to a single dispensary right now. That takes the easy way off the table.

Trulieve is my dispensary here in Florida.....In Fidelity, among other cannabis stocks....I am able to buy TRULIEVE CANNABIS CORPORATION (TCNNF) and CURALEAF HOLDINGS INC (CURLF).

 

[Tranquility]

I commented above regarding why I didn't feel comfortable investing in cannabis related stocks so I'm just stopping buy to comment on:


Trulieve is my dispensary here in Florida.....In Fidelity, among other cannabis stocks....I am able to buy TRULIEVE CANNABIS CORPORATION (TCNNF) and CURALEAF HOLDINGS INC (CURLF).

There are 44 dispensaries on the Trulieve website for Florida alone. They have products on their website too. They claim from seed to sale so, while I don't see the numbers, they grow too.

A vertically integrated company that spans the market is not a stock that really goes to a single dispensary. (Something I thought @FlyingLow was asking about.)

 

[FlyingLow]

Thanks for the replies...

I was actually not at all referring to markets or publicly traded dispensaries [like Trulieve or MedMen, etc.].

I mean investing and literally owning a physical dispensary in a legal state. Obviously, one would have to jump through all the hoops of background checks and state/city/county requirements... More likely to purchase an existing location than start from scratch.

 

[TwistedGray]

Thanks for the replies...

I was actually not at all referring to markets or publicly traded dispensaries [like Trulieve or MedMen, etc.].

I mean investing and literally owning a physical dispensary in a legal state. Obviously, one would have to jump through all the hoops of background checks and state/city/county requirements... More likely to purchase an existing location than start from scratch.

I looked into it, and I'm still extremely interested; however, the capital requirement is too high. Here in California you need about half a million to just open the doors, from what I understand.