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Pot stocks fighting


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2019 Feb 18, 5:41pm   1,807 views  15 comments

by Patrick   ➕follow (55)   💰tip   ignore  

Got these in the mail recently:



Green Growth is offering $9 and change per share of Aphria. I don't like it because I paid $11 per share.

There is no clear way to vote though, probably because they are Canadian companies.

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1   Ceffer   2019 Feb 18, 8:01pm  

Moosehead Pot: It's time has come!
2   Patrick   2019 Feb 18, 8:24pm  

What is Moosehead Pot?
3   Ceffer   2019 Feb 18, 10:32pm  

Patrick says
What is Moosehead Pot?

As in Moosehead Beer, a Canadian label.
4   AD   2019 Feb 19, 7:23pm  

Been long on Altria (MO) since it was $30 a share. Now it owns major stakes in Cronos and Juul as far as diversifying from tobacco (i.e., Marlboro brand).
5   Onvacation   2019 Feb 20, 6:24am  

I heard some pundit say, " why isn't their corn mania". Like tulips, more pot can easily be grown than can ever be smoked.

I suspect prices will continue to fall as long as anyone can grow a couple plants without the threat of police raiding with m16's locked and loaded and flash bang pins pulled.
6   mell   2019 Feb 20, 8:31am  

Onvacation says
I heard some pundit say, " why isn't their corn mania". Like tulips, more pot can easily be grown than can ever be smoked.

I suspect prices will continue to fall as long as anyone can grow a couple plants without the threat of police raiding with m16's locked and loaded and flash bang pins pulled.


Agreed - there will be few players that will make money and appreciate bigly but the rest will falter due to overproduction and falling prices - consolidation ahead. There was a time to buy pot stocks but it likely passed.
7   anonymous   2019 Feb 20, 8:17pm  

Barron's Magazine - You’d Have to Be High to Buy American Marijuana Stocks

Beth Stavola feared she’d made a terrible investment mistake.

After having twins, the New Jersey mother of five took a break from her Wall Street career. In 2012, she heard of a business for sale in a small Arizona town. A visit impressed her enough to convince her husband that they should put about $1 million into a medical-marijuana venture.

“I didn’t know anything about growing, producing, dispensing,” Stavola recalls. So they found an experienced manager to run the operation, while she kept the books. But she says she soon noticed checks written for cash and a wedding dress charged to the business. With the help of a private eye, the Stavolas say, they found that the manager hadn’t come clean about his background—leaving out convictions for robbery conspiracy and other crimes.

When they fired him, she says he threatened her family. “It was scary. We were sick to our stomachs,” Beth Stavola says. “I was never in a world like that.”

Determined to salvage their stake, she took charge of the 47-acre pot farm. She opened her first dispensary in Douglas, Ariz., a few streets from where convicted drug lord Joaquín “El Chapo” Guzmán Loera once had a tunnel under the border with Mexico.

When two more dispensaries came up for sale, she bought them. By 2017, when her company was acquired for $25 million, it had expanded to Nevada, Maryland, and Pennsylvania. This month,the buyer, MPX Bioceutical, combined with another U.S. chain of marijuana outlets, iAnthus Capital Holdings (ticker: IAN.Canada), in exchange for stock worth about $600 million.

Stavola is staying on at iAnthus. She and her co-workers are now part of an organization that’s among about a half-dozen contestants racing to establish multistate marijuana chains, hoping for a chunk of what some claim could be more than $50 billion in annual sales of legal cannabis products. How long that takes and what it ultimately will look like are among the questions the young, fragmented marketplace must answer.

Investors interested in U.S. cannabis companies face a less frightful challenge than Stavola did—but still a daunting one. Just finding the stocks is hard. Although marijuana is legal for recreational or medical use in many states, it remains illegal under federal law. As a result, the companies can’t list on the Nasdaq or New York Stock Exchange, so they’ve gone to the Canadian Securities Exchange in Toronto (and the OTC Markets Group in the U.S.). Companies that sell only in Canada, like Canopy Growth (CGC), can list in the U.S. and tap deeper-pocketed investors.

Top Contenders in the U.S. Marijuana Market - The leading companies are pursuing varied strategies. Only two are profitable so far.
(more details in the chart in the article)

Acreage Holdings / ACRG.U / ACRGF

Green Thumb Industries / GTII / GTBIF

MedMen Enterprises / MMEN / MMNFF

Harvest Health & Recreation / HARV / HRVSF

Trulieve Cannabis / TRUL / TCNNF

iAnthus Capital Holdings / IAN / ITHUF

The U.S. companies have disclosed investment risks ranging from federal investigations to allegations of self-dealing. Heightening the risk is thin trading in Canada’s market, which can scarcely accommodate both the investing public and early-stage private-equity investors—some itching to unload stock at the first chance.

These potential problems don’t seem to be reflected in U.S. cannabis stock prices, which carry a hefty collective market valuation of US$14 billion, despite modest revenues and the ferocious cash-burn rates at loss-making start-ups.

“It’s difficult to do due diligence on these operations right now,” says Stavola’s new colleague, iAnthus CEO Hadley Ford. “The store counts are small and with the massive upfront spending, free cash flow doesn’t exist.”

Sorting winners and losers so early on is virtually impossible. Better to wait and see how many of these outfits can turn a profit. For speculative investors who can’t wait, there are two possibilities: Spread small bets across the U.S. industry, a strategy suggested by Ford, or buy one of the handful of weed-focused exchange-traded funds, such as Horizons Emerging Marijuana Growers Index (HMJR.Canada, and HZEMF in the States).

Cannabis is legal by prescription in 33 states, and big ones like New York, New Jersey, and Illinois are eager to join the 10 that allow recreational use. The multistate pot dealerships see a once-in-a-lifetime opportunity in the end of pot’s prohibition, as $50 billion in annual black-market spending rolls into a new consumer packaged-goods industry. Canada’s national legalization made stocks such as Canopy and Tilray (TLRY) high-priced favorites. Fans of the U.S. growers boast that America’s legal weed market eventually will be the world’s biggest.

Besides iAnthus, the main multistate U.S. operators include Curaleaf Holdings (CURA.Canada), Acreage Holdings (ACRG.U.Canada), Green Thumb Industries (GTII.Canada), MedMen Enterprises (MMEN.Canada), Harvest Health & Recreation (HARV.Canada), and Trulieve Cannabis (TRUL.Canada).

The stocks of these American expats trade, on average, for some 30 times annualized last-quarter sales. That’s far less than the multiples fetched by Canada’s licensed producers, but still no bargain. Only two of the multistate contenders have turned a profit: Harvest Health earned $4 million in the first nine months of 2018, on revenue of $30 million, while Trulieve made $32 million on $67 million in the same stretch, in its lucrative home base of Florida. The rest run millions of dollars in annual negative free cash flow.

“The conversation we need to be having is about earnings,” says Harvest’s chief executive, Steve White. “The real way that you evaluate companies in any industry is based on their earnings.”

Much more including additional graphics etc. and financial details etc.

https://www.barrons.com/articles/why-you-should-take-a-pass-on-u-s-marijuana-stocks-51550285414

NOTE: This is a long article with a lot of detail
8   MisdemeanorRebel   2019 Feb 20, 8:29pm  

Onvacation says
I heard some pundit say, " why isn't their corn mania". Like tulips, more pot can easily be grown than can ever be smoked.

I suspect prices will continue to fall as long as anyone can grow a couple plants without the threat of police raiding with m16's locked and loaded and flash bang pins pulled.


Agreed. It's a weed, It grows pretty much anywhere. Most of the shit people smoked the past 50 years was grown in a patch in a vacant lot that was barely attended.

Most surburban homeowners could grow as much weed as they would smoke in a garden patch next to the tomatoes.
9   AD   2019 Feb 20, 8:55pm  

I am not sure how many people would grow their own and how it would impact the price. How hard is it to grow effective strains of cannabis (i.e., indica and sativa) ? Maybe the chronic smoker may grow it inside their home but unlikely the casual one would grow it.

Can you say the same thing about alcohol like whiskey and beer ? How many make their own alcohol at home ?
10   Patrick   2019 Feb 20, 9:04pm  

I've made my own alcohol now and then, but it's really not worth it unless you happen to love the process or the chemistry.

Similarly, I've baked my own weed (240 degrees for 40 minutes in a toaster oven kids, or shut just won't work) and made brownies, etc, but it's also a lot of work.

So the big producers do have a place and some of them will make money.

BTW, I've read that "pot" is for the Spanish "potacion" (potion) which was brandy and marijuana somehow, but haven't found a good recipe. If you know one, please post here.
11   MisdemeanorRebel   2019 Feb 20, 10:04pm  

AD says
Can you say the same thing about alcohol like whiskey and beer ? How many make their own alcohol at home ?


Alcohol needs a still and is a process.

Beer is easier and who knows how many thousands or ten thousands regularly brew their own beer. But still a process.

Processing a Marijuana Plant is a cinch, like toasting bread. It's about as hard as making sun dried tomatoes.

Point is, Marijuana is a commodity, like Soybeans. You can grow your own tobacco too, but pot is even easier to process.
12   CBOEtrader   2019 Feb 21, 2:39am  

MisterLearnToCode says
Most of the shit people smoked the past 50 years was grown in a patch in a vacant lot that was barely attended.


Not today or for the last 10 years. Today's product is professional grade, or noone will buy it. Very tough for someone at home to do. The point is valid w new competitors though. The main barrier to entry is the license.
13   MisdemeanorRebel   2019 Feb 21, 8:37am  

CBOEtrader says
Not today or for the last 10 years. Today's product is professional grade, or noone will buy it. Very tough for someone at home to do. The point is valid w new competitors though. The main barrier to entry is the license.


Yes, and with legal marijuana, eventually more and more home growing will be allowed. The people most likely to buy the most pot will also be the most devoted home growers. Just like beer afficionados are more likely than casual drinkers to brew their own beer.

There's no money in a weed that grows everywhere.
14   anonymous   2019 Feb 21, 9:24am  

California reports far less tax revenue from first year of marijuana sales than initially projected

Recreational marijuana sales generated fewer than $350 million in tax revenue for the state of California during 2018, regulators announced Tuesday — a far cry from the billion dollars in annual revenue previously projected.

California collected a total of $345.2 million in revenue last year as a result of excise, sales and cultivation taxes imposed on its infant recreational marijuana industry, according to figures released by the state Department of Tax and Fee Administration.

Implemented in the wake of voters casting ballots to legalize marijuana in November 2016, California’s scheme for taxing and regulating retail sales took effect Jan. 1, 2018, making the state the most populous of the seven and counting that currently permit adults to legally purchase pot for recreational purposes.

The state’s independent Legislative Analyst’s Office had projected that legalizing recreational marijuana within California could generate upwards of $1 billion in annual tax revenue, and former Gov. Jerry Brown, a Democrat, at one point estimated the state would reap $643 million in related taxes during the fiscal year ending July 1, 2019. Mr. Brown’s successor, Gov. Gavin Newsom, a Democrat, has since significantly lowered that projection to $355 million.

California reaped $204.1 million in recreational marijuana-related tax revenue during the first half of the current fiscal year, putting the state on path to likely meet the governor’s latest, revised projection.

Recreational marijuana sold by licensed vendors in California is subject to a cultivation tax

https://www.washingtontimes.com/news/2019/feb/20/california-reports-far-less-tax-revenue-from-first/
15   CBOEtrader   2019 Feb 21, 9:41am  

Not true.

Currently each plant can yield between $3000 and $20000 of product per season, so there is massive money in it today. This requires high levels of technology and skill to accomplish. Very few home growers can pull this off

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