fbpx
Is now the time to invest in cannabis stocks?

Is now the time to invest in cannabis stocks?

How to invest in cannabis stocks

Legalization talk and Reddit stock warriors are driving more people to invest in cannabis stocks, but the stocks aren’t returning on the investments yet.

The industry is booming and growing at an exponential rate, but due to federal law, there are very few publicly traded “cannabis” companies. For this reason, investors in the US looking to cash in on cannabis will look to Canada.

Aphria, Tilray, and Canopy Growth are a few of the big players in Canada, with billions in investment assets. However anybody who actually follows the industry in Canada could see plain as day that these companies are not performing.

So why are people just now deciding to invest in these companies?

Legalization and Reddit

Unless you’ve been living under a few rocks for the last month, you have likely heard about the GameStop Reddit controversy. If not, here’s what happened; hundreds of users of the social media platform’s subreddit r/WallStreetBets found out that a billion dollar hedge fund was shorting GameStop stock, buying stock in advance to drive down price with the goal of being bought out at their original buying price.

Investors from r/WallStreetBets decided to buy up as much GameStop stock as possible, forcing the hedge fund to cover its losses and pay out for the increased stock price. If it hasn’t become obvious, I’m not a stock expert, so excuse the lazy explanation.

Long story short, GameStop’s stock price rose from $34 to $340 in a couple days, making those who cashed out a lot of money, while others bought in late thinking the stock would continue to rise, only to watch it tank days later.

Now, with a democrat majority in the House and Senate and control of White House, the party is pushing for cannabis reform, and likely federal legalization. With multiple party members publicly speaking about their intentions, the Reddit swarm caught wind and started talking cannabis stocks. But unlike GameStop, Reddit couldn’t manipulate the cannabis stocks in the same way.

Tilray and Aphria Merger

After news surfaced that two of the largest cannabis companies in Canada would be merging together, a lot of investors tried to cash in on the opportunity. In December of 2020 when the merger was initially announced, the stock began to sore as more began to invest.

The investment experts at Reddit appear to have caught on a little too late, pushing everybody on the platform to invest in these companies just in the last week. Unfortunately they couldn’t drive up the price in the same way as GameStop, and the stock eventually fell 4% despite the increased activity.

In other words, the stock spiked temporarily, and smart investors who already bought in at $23/share at the beginning of February were able to cash out at $63/share on February 10th. By February 11th the stock price was halved.

All of this drives the questions a lot of enthusiasts and investors are asking; is now the time to invest in cannabis stocks?

Wait for legalization?

The reality is that for most Americans trying to cash in on cannabis, the market is very small, niche and not very profitable in the United States market. This is why you see so much attention focused on Canada’s cannabis companies, because they federally legalized cannabis in 2018.

While there are some companies in the United States that work within the cannabis industry and are listed on the stock exchange, they are typically ancillary businesses, in other words businesses that don’t work directly with the plant. Equipment supply companies, pharmaceutical companies that research cannabis, etc. are the typical companies you’ll find in the US market.

With little information and education regarding these companies and the industry as a whole in the US due to no federal reporting, now is not the best time to invest in cannabis stocks in the US. Keep in mind that THIS IS NOT FINANCIAL ADVICE, WE ARE NOT FINANCIAL EXPERTS, WE JUST LOVE CANNABIS.

Politicians in the US have been talking about legalizing cannabis for close to a decade, and it has yet to even be decriminalized. To put hope into our politicians and betting money on them (literally) actually making progress toward legalization would be unwise at this time.

Consider that it wasn’t Republicans, but moderate Democrats in the House that refused to pass the MORE Act last October, opting to wait until after the election because they had their own seats to protect. With more elections coming up in 2022, we can expect a similar approach by moderates in the party, inadvertently blocking any sort of legalization from passing.

For now, the smart move is to closely watch the Canadian market, and push your local legislators to support legalization in your state and on the federal level. It’s your money, so spend it wisely!

Jamaica faces marijuana shortage as farmers struggle

Jamaica faces marijuana shortage as farmers struggle

Jamaican cannabis industry struggles due to supply and demand

Jamaica is running low on ganja.

Heavy rains followed by an extended drought, an increase in local consumption and a drop in the number of marijuana farmers have caused a shortage in the island’s famed but largely illegal market that experts say is the worst they’ve seen.

“It’s a cultural embarrassment,” said Triston Thompson, chief opportunity explorer for Tacaya, a consulting and brokerage firm for the country’s nascent legal cannabis industry.

Jamaica, which foreigners have long associated with pot, reggae and Rastafarians, authorized a regulated medical marijuana industry and decriminalized small amounts of weed in 2015.

People caught with 2 ounces (56 grams) or less of cannabis are supposed to pay a small fine and face no arrest or criminal record. The island also allows individuals to cultivate up to five plants, and Rastafarians are legally allowed to smoke ganja for sacramental purposes.

But enforcement is spotty as many tourists and locals continue to buy marijuana on the street, where it has grown more scarce — and more expensive.

Heavy rains during last year’s hurricane season pummeled marijuana fields that were later scorched in the drought that followed, causing tens of thousands of dollars in losses, according to farmers who cultivate pot outside the legal system.

“It destroyed everything,” said Daneyel Bozra, who grows marijuana in the southwest part of Jamaica, in a historical village called Accompong founded by escaped 18th-century slaves known as Maroons.

Worsening the problem were strict COVID-19 measures, including a 6 p.m. curfew that meant farmers couldn’t tend to their fields at night as is routine, said Kenrick Wallace, 29, who cultivates 2 acres (nearly a hectare) in Accompong with the help of 20 other farmers.

He noted that a lack of roads forces many farmers to walk to reach their fields — and then to get water from wells and springs. Many were unable to do those chores at night due to the curfew.

Wallace estimated he lost more than $18,000 in recent months and cultivated only 300 pounds, compared with an average of 700 to 800 pounds the group normally produces.

Activists say they believe the pandemic and a loosening of Jamaica’s marijuana laws has led to an increase in local consumption that has contributed to the scarcity, even if the pandemic has put a dent in the arrival of ganja-seeking tourists.

“Last year was the worst year. … We’ve never had this amount of loss,” Thompson said. “It’s something so laughable that cannabis is short in Jamaica.”

Tourists, too, have taken note, placing posts on travel websites about difficulties finding the drug.

Read the Full Story from AP

Will 2021 be the year of cannabis delivery?

Will 2021 be the year of cannabis delivery?

Cannabis delivery could become more available in 2021

With more sales than any other year and demand for cannabis higher than ever, will 2021 be the year cannabis delivery becomes widespread?

2020 was a difficult year, as if that even needs to be said. But there was one thing that helped millions of Americans get through the year.

Cannabis.

That’s not an exaggeration either. Americans bought 67% more cannabis in 2020 than the year before to deal with the stress of COVID-19, record unemployment and peak division in the country.

However despite the huge increase in sales, only a handful of states offer delivery options for recreational cannabis consumers.

Cannabis Delivery

Arizona, Arkansas, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, Oregon, Rhode Island and Vermont, are all technically states that offer some form of delivery service for consumers.

Strict regulations and limitations however have made it so only a few of the states listed actually have a current, implemented delivery system. For example, Massachusetts has been dealing with resistance to their new delivery rules, with the cannabis dispensary association in the state going so far as to sue. Colorado, while passing a law allowing delivery in 2019, has yet to implement it for medical patients, while recreational consumers might have to wait until 2022 for access to the same service.

Other states in the list have only recently legalized medical or recreational cannabis with inclusions for delivery in their legislation. These states such as Arizona, Arkansas, New Mexico and others, while passing legalization bills in 2020, have yet to begin sales of cannabis in general, meaning delivery also hasn’t begun.

The question that a lot of consumers are asking, especially after going through a year of the country’s worst pandemic since the early 1900s and bolstering cannabis sales like never before, is where the hell is the delivery option?

COVID and cannabis

The impact of COVID-19 on businesses across every industry in the country has been stark. Yet while thousands of businesses suffered and even closed down, cannabis businesses everywhere thrived. But almost every single sale was done in-person.

This doesn’t seem to fit the overarching narrative of the last year that social distancing and avoiding others is all but paramount. In this same time Drizly, an alcohol delivery app, became available in 26 states.

In other words, half the country can get alcohol delivered to their door, yet only a couple states allow those with legal access to cannabis to have it delivered. And that is all missed revenue. Bud.com, a delivery service that operates in Northern California, experienced a 500 percent increase in sales after lockdown orders in mid-March, according to Dean Arbit, the chief executive of the company.

So if there’s no shortage of evidence that cannabis delivery can be highly profitable, what are we, or more accurately, what are states waiting for?

Will 2021 be the year?

The events (and profits) of 2020 definitely have more states and cannabis businesses talking about delivery. With no end to social distancing and COVID restrictions in sight, we should expect cannabis sales to continue to grow through 2021, with demand for delivery options growing as well.

Similarly to legalization in general, no state has the same cannabis delivery laws. In other words, there is no single template for states to follow that has seen continued success. Like legalization, some states may be waiting to see another implement delivery successfully from the start, and copy them.

Other states have issues with the laws they already have, such as competition against brick and mortar stores in states that allow delivery straight from distribution centers.

There is little doubt the more states will legalize some form of cannabis delivery in 2021. To expect every state with recreational or medical cannabis to make it available however is a big ask. One that is highly unlikely to happen in just one year.

But if there is any way to describe the cannabis legalization movement, it’s unpredictable.

Cannabis dispensary association drops suit over delivery rules

Cannabis dispensary association drops suit over delivery rules

Massachusetts Cannabis association pulls lawsuit against delivery option

Stung by an exodus of members since it filed suit to block new cannabis industry rules permitting home delivery, the business group that represents most of the state’s brick-and-mortar marijuana shops announced Monday morning that it is dropping the legal challenge.

The Commonwealth Dispensary Association and its attorneys from Foley Hoag argued in a suit that the new delivery-only license types created by the Cannabis Control Commission violated the state’s marijuana law, which they said gives the retailers the right to deliver cannabis under their existing licenses.

“Simply, the CCC overstepped its authority and disregarded state law, radically upending the established rules that hundreds of small businesses and their host communities operated in accordance with since 2016,” the CDA said in a statement when it filed its suit earlier this month.

The lawsuit was seen by some as an attack on the disadvantaged entrepreneurs and small businesses that the CCC’s new delivery model was intended to help and a number of retailers publicly broke from the CDA as news of the suit spread. Delivery-only licenses with the ability to buy marijuana wholesale will be available exclusively to participants in the CCC’s social equity program and economic empowerment applicants for the first three years.

“We are leaving because of our belief in creating economic opportunity for social equity applicants,” Cultivate, which has shops in Leicester and Framingham and was one of the first two non-medical retailers to open in the state, said. New England Treatment Access, one of the state’s largest marijuana firms with shops in Northampton and Brookline, and about 10 other companies also left the CDA in recent days, the Boston Globe reported.

The CCC’s new regulations create two delivery license types: a “marijuana delivery operator” that can buy products wholesale from growers and manufacturers and sell them to their own customers, and a “marijuana courier” that can charge a fee to make deliveries from CCC-licensed retailers and dispensaries. Advocates have argued that delivery-only licenses will help level the playing field between large corporations and small businesses because the barriers to entry for delivery are less burdensome than those for retail licenses.

The CDA said the “difficult decision” to sue the CCC over the delivery rules was “supported by the vast majority of members” and “reflected our concerns on the negative impact these regulatory changes might have on the industry as a whole.” Still, CDA leaders said they decided “it is in the best interest of the industry and our members to drop the lawsuit.”

“We all need to be working together on achieving our many shared objectives, including increasing the participation of a diverse set of entrepreneurs in the industry,” the group said as it pledged to work with groups like the Massachusetts Cannabis Association for Delivery (MCAD).

Czech medical cannabis sales surge, but market remains small

Czech medical cannabis sales surge, but market remains small

czech medical marijuana sales surge but industry remains small

The Czech market for medical cannabis flower quadrupled last year compared to 2019, according to data published by the State Agency for Medical Cannabis.

However, the market remains very small.

In 2020, roughly 68 kilograms (150 pounds) of medical cannabis flower was sold to patients in Czech pharmacies, compared with 17 kilograms the year before, the data shows.

Expectations that the market would see a tremendous boost after medical cannabis was included in the country’s public health insurance in early 2020 have so far failed to materialize.

Experts say that is partly because insurance coverage is only one of many factors guiding the market’s development.

As Marijuana Business Daily previously reported, bureaucratic hurdles and limited participation in the medical marijuana program by doctors and pharmacies represent challenges that were not resolved with the introduction of the health insurance-coverage scheme.

Despite that, the market is growing with improved access.

October and November saw record sales of medical cannabis, with about 7 kilograms sold each month.

The number of unique patients, which was below 500 at the end of 2019, doubled to 1,103 in December 2020.

The number of doctors prescribing cannabis products also increased.

In December 2019, 78 doctors prescribed cannabis. That number grew to 123 by December 2020.

Since the beginning of last year, Czech patients have been entitled to insurance coverage on 90% of the retail price for 30 grams of flower per month for medical use, regardless of THC content.

In exceptional cases, doctors may authorize quantities exceeding the monthly limit of 30 grams for reimbursement, up to a maximum of 180 grams per month.

In practice, however, patients received roughly 6 grams per month on average during the final months of 2020.

Almost 80% of the cannabis prescriptions last year were to treat chronic pain.

Elkoplast Slušovice remains the only domestic producer, with the rest of the supply coming from Canadian producers Aurora Cannabis and Canopy Growth.

Enthusiasm For Oklahoma’s Medical Marijuana Boom Tempered By Concerns Of A Bust

Enthusiasm For Oklahoma’s Medical Marijuana Boom Tempered By Concerns Of A Bust

Oklahoma medical marijuana boom could be short lived, some worry

Oklahoma has what many consider to be the only free-enterprise medical marijuana industry in the U.S., with cheap startup fees, no cap on medical marijuana business licenses and few limits on who can get a patient card. But this low barrier to entry could lead to an oversaturated market where cannabis businesses struggle to survive.

Jessica Baker, owner of Bakers Cannabis Dispensary in northwest Oklahoma City, has witnessed the growing pains other young marijuana industries like Oklahoma’s have experienced over her two decade career in the business.

She and her husband Chip started growing medical cannabis in California in 1997, which eventually led them to Colorado, where Chip opened a couple of hydroponic stores.

After the passage of State Question 788 in June of 2018, which legalized medical marijuna in Oklahoma, Chip noticed he started receiving an influx of business from Oklahoma.

“People were ordering lights and soil and nutrients,” Jessica said.

The Bakers saw promise in Oklahoma’s medical marijuana market and decided to move to the state at the end of 2018.

In addition to the dispensary and its attached clone nursery, Chip owns a nearby hydroponic store in OKC, and Jessica has a marijuana farm and processor about 40 miles northeast of the city.

Jessica said it’s been a nice change of pace doing business in Oklahoma’s medical marijuana market.

“My businesses have primarily been in California where it’s very difficult and expensive,” Jessica said. “Oklahoma in general… they made it pretty easy for people, which is nice and affordable.”

Oklahoma has some of the cheapest annual commercial licensing fees in the country at $2,500, especially compared to California where licensing fees can reach six figures and range depending on estimated annual gross revenue.

There’s also no limit on licensed medical marijuana businesses in Oklahoma unlike other states such as Louisiana where only one dispensary is allowed in each of the state’s nine regions.

And with no list of qualifying conditions, it’s easy to get a physician to write a recommendation for a medical marujuana patient card. This has led to over 367,000 Oklahomans, nearly 10% of the state’s population, obtaining a medical marijuana patient card, which according to Politico makes Oklahoma the largest medical marijuana market per capita.

Jay Czarkowski, founding partner of the marijuana business consulting firm Canna Advisors, said Oklahoma’s medical marijuana program has grown rapidly. 

“The medical marijuana program in Oklahoma, it’s such an open, liberal program, it is almost like adult use legalization,” Czarkowski said. 

Oklahoma is just shy of having 10,000 active licensed medical marijuana businesses, which includes over 2,000 dispensaries and about 6,500 growers. 

Jessica was surprised about Oklahoma’s medical marijuana industry. So many people with little to no prior experience with cannabis were so eager to get into the business.  

“It says something about people from Oklahoma… that they would just jump into something of the unknown and kind of gamble on it, which is a pretty cool quality,” she said. 

But the flip side to Oklahoma’s low barrier of entry for starting a medical marijuana business is the pressure it puts on the market. 

Sarah Lee Gossett Parrish, an Oklahoma attorney who represents over 150 cannabis businesses, said some enter the market with the misconception that it will be fast money. 

“You have people getting into it who don’t understand that the cannabis industry is just like any other business,” she said. “You have to work hard and have a strong business acumen and know what you’re doing.”

Because there are so many growers, Gossett Parrish said they need to zero in on a market to avoid being eclipsed by larger growers that generate a massive supply of product. 

“If you are a craft grower and maybe an organic grower and you pick and choose certain illnesses and conditions for which you grow strains and you target your market, then you’re going to fare well,” Gossett Parrish said. 

Unless the state legalizes recreational marijuana within the year, Jessica expects many cannabis businesses will have to shut down. She said there’s more marijuana than there is demand from patients.

Original Story from KGOU

KGOU is a community-supported news organization and relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online, or by contacting our Membership department.

Social Share Buttons and Icons powered by Ultimatelysocial
error

Like The Real Dirt? Please spread the word :)