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Investing in Cannabis (1 Viewer)

Chadstroma

Chadstroma

Footballguy
I have never smoked or otherwise used cannabis. Never tried it once. I have no intention on trying it as well. However, the winds of momentum are going in cannabis favor. The continued legalization of medial and recreational use continues and I do not see where it will stop. The flood gates will open up with Federal legalization which will eventually happen once there is enough states that have legalized it and there is nothing crazy that happens as a result. 

About mid last month, a friend of mine posted on FB about his investment in Canopy Growth (CGC) and the big return he got largely due to the Constellation Brands (STZ) investment of $4 Billion. At that time, I knew that there were some companies scattered around in states that has legalized cannabis in some form and watched/read some news reports on them. Most of my attention was on the banking side of it just because that is my background. I had no idea that Canada had legalized cannabis for recreational use in October and that there were some companies actually listed on exchanges to buy stock. I then did some research. 

I found that Tilray (TLRY) seemed to be an interested option to buy. It seemed like they have had some time to build up a presence in Canada and a leader in establishing contracts that were crucial. It did not already have any major investors from the beverage or other industries like there was with Canopy Growth. It seemed to be that they were a leader in the space and potentially with some room to get return. So, I bought at $29.05. I wish I could say that I expected that in less than a month the stock would zoom to $97.36 before edging down to closing Friday at $77.89 but no way could I have anticipated that if I did I would have bought a whole lot more stock! It really jumped when it came out with 90+% increase in sales on it's reporting and continued to jump and jump. 

Tirlay is not along in the rocket ascension over the last month. It is on Bitcoin and glory days of the dotcom boom levels. The excitement has been edged as famed short seller Andrew Left with Citron came out first hitting Cronos (CRON) and then later Tilray (TLRY). At first, it didn't seem to have much impact as both still gained but I think people were looking at the valuations and they truly are insane if you look at the short term. However, long term the market is ridiculously enormous. The US will get to see a good test case as to how it goes with Canada giving it a try. Long term, the right company that navigates this will easily be a Fortune 100 or will be bought out by a large company with large premiums to be expected. 

I am pretty decent at buying. I do tend to be a buy and hold investor. I am horrible at selling though. Is it a time to sell and hope for a continued dip to buy again? I don't know. I have been considering it was in the high 80's. 

Are you investing in this space? What are your expectations? Favorite companies? Talk to me. 

 
There was a mj ETF a few months a go that I tracked. I don't think it made much of a splash.

 
I would look into delivery systems: both the conveyance type (I.e. cannabis delivered to your door), and injestion type (bongs, pipes, vaping oil, edibles, tinctures, etc). 

 
comfortably numb said:
I bought canopy a few months ago i wanna say at 28. Can I retire?
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I'm pretty sure this is the big canadian company right? My only concern is local us based companies pressure states to give them better deals so it's more difficult for CGC to grow. Otherwise, I think we are looking at :boatloads:

 
I want to invest in this, quantum computing and labgrown meat.  Is there an easy way for a very lazy person to do that on the Robinhood app or something?  

 
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I started thinking about this two years ago, and bought a bunch of Aurora Cannabis. Did well so far, but it's more of a buy and hold - we'll see where they are in a decade or so. 

 
Dude my boy Philly has been growing for years and has a sick spot in his basement. I've been investing heavily for awhile now. 

 
The Profit did a show on this last year on CNBC.  Came to the conclusion that supply was bigger than demand and not an area where his money was best invested.

 
I invested in some penny stock a couple years ago. Hasn't done much. Holding in the hopes that some blue chip buys them out. 

 
I cleaned up in 2014 on TRTC, ATHX, PHOT, HEMP, MJNA. It was an amazing run. I took $5K and turned it into about $40K. That boomshot is way behind us.

Now I only own 2, a penny that is an ancillary play - SRNA (good time right now to get in around .15, I've been adding to my position). And XXII which is a low nicotine tobacco play but they also develop cannabis experimenting with low TCH plants. Proceed with caution on both as they are both highly speculative gambles.

 
Quint said:
I would look into delivery systems: both the conveyance type (I.e. cannabis delivered to your door), and injestion type (bongs, pipes, vaping oil, edibles, tinctures, etc). 
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Or products made from agricultural waste from the plant (of which there is likely to be a lot, waste, that is)

 
msommer said:
Or products made from agricultural waste from the plant (of which there is likely to be a lot, waste, that is)
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and that waste will need to be treated before it can be converted to other products or put back into the ecosystem, so there's another avenue for investment.

 
Arizona Ron said:
I think you're way late but I'll hang up and listen.  Thanks for taking my call.
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ha, not way late.

i bought CRON about a month ago and made 100% profit in two weeks time.

How can it be way late when its not even legal across the U.S. yet? That day is coming.

The only thing I would say is that these pure cannabis plays are Canadian companies since its not legal federally in US yet. While these companies will have a leg up, certainly American companies will also emerge.

Another play that is not strictly cannabis is Scotts Miracle Gro who is specializing in cannabis pesticides.

 
Arizona Ron said:
I think you're way late but I'll hang up and listen.  Thanks for taking my call.
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Sure as #### is risky...

I have an investment in a P/E firm in this arena that invests in cultivation/distribution/dispensaries/etc.. I went in a few other people so that we could hit a minimum threshold, I consider it high risk / high reward. Basically made the investment with the acceptance that this can be a total loss. 

Nonetheless, a space you would like some sort of exposure to.

 
Tilray’s going to open up another 45%, and around $225 per share this morning

Canopy and Cronos also huge gains in early trading

 
Epic Problem said:
Tilray’s going to open up another 45%, and around $225 per share this morning

Canopy and Cronos also huge gains in early trading
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Finally on the downside. Still higher from where I sold though. I made $8K off of it with just about a months worth of investment. If I stayed longer, and sold at the 52 week high- I could have made $27K. 

I am hoping it gets hammered. I would like to get back in long term. But the valuation at these levels do not make any sense at all. I am going to look at some other companies related that I might be able to park some money in. 

 
EYLive said:
There was a mj ETF a few months a go that I tracked. I don't think it made much of a splash.
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A couple of business execs that I respect (who do some work here at my university) were talking about the MJ fund.  They've invested in it and spoke highly (pun intended) of it.  I'm seriously looking at this.  The beauty is that it's a blend of companies, so you're not trying to pick one winner.

 
tri-man 47 said:
A couple of business execs that I respect (who do some work here at my university) were talking about the MJ fund.  They've invested in it and spoke highly (pun intended) of it.  I'm seriously looking at this.  The beauty is that it's a blend of companies, so you're not trying to pick one winner.
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Could be a good way to ride long term investment into an area that I expect continued growth in markets opening up. Interestingly to me, TLRY is only 3% of fund. They must have had a very small investment in it or perhaps that sold off? I am curious though since it is an ETF with a relatively high expense ratio for an ETF but low for a fund so it shouldn't be actively managed. 

ETA: nevermind, whatever I was looking at must have been old data on holdings. My trade account shows TLRY position as the 5th largest position and more closer to 6% of holdings.

 
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This from today's WSJ.   

Investors in a popular marijuana fund have been overpaying for their shares this week as demand for pot stocks surged.

The $629 million ETFMG Alternative Harvest exchange-traded fund owns shares in about 35 companies, including Canadian cannabis growers, a Spanish manufacturer of cigarette papers and the maker of Miracle-Gro fertilizer, according to FactSet. The ETF ended Thursday’s session at $43.01 a share, 41 cents above the value of its underlying assets, according to data from Bloomberg LP. The spread narrowed to 14 cents a share Friday.

“Investors have been buying and selling at dislocated prices,” said Phil Bak, founder and chief executive of Exponential ETFs, a Detroit ETF firm that is trying to launch a marijuana fund of its own.

Marijuana stocks have been on a wild ride in recent days as volume surged in stocks likeTilray Inc., Aurora Cannabis Inc. and Green Organic Dutchman Holdings Ltd. Trading in Tilray was halted several times Wednesday after its stock price rose as much as 94% to $300 a share. Tilray ended the week at $123 a share.

Typically, certain specialized traders keep an ETF’s price in line with its assets by swapping ETF shares for a basket of the underlying stocks. When that mechanism breaks down, demand for the ETF shares can outstrip supply, inflating the price.

Investors can be left holding the bag: Such premiums can evaporate in seconds when normal trading resumes, leaving unwitting investors with abrupt losses.

The company behind the ETF blames the premium on a sudden surge in demand for marijuana stocks. Tilray, Aurora and Green Organic Dutchman are among the fund’s largest holdings, and shares have been hard to get because of heightened demand, said Sam Masucci, founder and chief executive of ETF Managers Group, the fund’s issuer.

“It’s been crazy this week,” Mr. Masucci said. “In reality, the premium was created by the hyperactivity in the cannabis market.”

But some industry analysts say the premium may be a sign that something has gone wrong with the fund itself. The ETF recently replaced several service providers that handle back-office tasks like fund accounting and reporting, and the premiums may be a sign that those firms are off to a rocky start, said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. Investors should keep a close eye on the ETF until the premium returns to normal, he said.
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ren hoek said:
I want to invest in this, quantum computing and labgrown meat.  Is there an easy way for a very lazy person to do that on the Robinhood app or something?  
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Also industrial hemp production.  There a good way to invest in that?  

 
Interesting article in Bloomberg today - could be huge for cannabis growth as the banking regulations make it very difficult to transact in the US for states that have legalized.
 

By Felice Maranz
(Bloomberg) -- Comments by House Democratic Leader Nancy
Pelosi on Friday about cannabis legislation are consistent with
Cowen’s view that Congress is likely to open cannabis to banking
by the 2020 presidential election, analyst Jaret Seiberg writes
in a note.
* That would be positive for cannabis-related cos., may mean
opportunity for regional banks
** Cowen sees cannabis bill as unlikely to move in lame duck
session, and sees Pelosi comments as a reminder enactment in
next Congress "is not a lock"; keeps odds for enactment at 75%
* Notes banks generally won’t service cannabis-related cos. even
in states that have legalized the drug for medical or
recreational use because it’s still illegal under the Controlled
Substances Act; 2 bills are pending to open cannabis to banking:

** SAFE Act would bar federal govt from taking enforcement
actions against banks that provide services to cannabis cos.,
would let cannabis cos. accept credit cards
** STATES Act would open cannabis to banking and defers to the
state on the question of whether cannabis should be illegal;
would protect cannabis cos. from federal prosecution, punitive
tax treatment
* ETFMG Alternative Harvest ETF (MJ) rallies as much as 3.6%
* NOTE: Earlier, Tilray Gains for 5th Day as Pot Peers Rally
Into Canada Change
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