Tag: Tilray

Financial Magazine Barron’s Provides Cannabis Industry Investment Advice

Like various investment sectors and hot trends (GameStop!!!), the cannabis industry has been a wild roller coaster ride for investors. Before there was the GameStop short squeeze saga, there was Tilray. Canadian cannabis companies, thanks to their nation’s wise decision to legalize first, were able to get a jump on the competition, but financial magazine Barron’s has provided tips on investing in the future American market as federal legalization seems inevitable in the United States:

Now, events are breaking in favor of the American operators. On April 19, the House of Representatives passed a bill by a 3-to-1 margin that would allow the pot industry to use the federally regulated banking system. Senate Democratic leaders support a matching bank bill. Meanwhile, Covid-19 has left state governments desperate for tax revenue. New York, Virginia, and New Mexico recently joined the 13 states that have allowed recreational sales to adults. Over time, recreational sales will probably come to the 20 states that now allow sale by prescription. That could spur the remaining state holdouts to fall in line, if federal legalization doesn’t happen first. So, sales can’t help but grow.


While the stocks of most Canadian producers have fallen sharply in the past two years, the shares of U.S. operators have gained. Upside remains. The market caps of the eight biggest U.S. cannabis companies add up to $33 billion. That’s a reasonable four times the $7.5 billion in aggregate sales that analysts forecast for next year, and 10 times the expected cash flows. The overall U.S. market is several times larger than the leading companies, and market researcher BDS Analytics foresees sales topping $40 billion by 2026. The illicit market is perhaps twice that size. If the history of the alcoholic-beverage industry is any guide, customers will eventually come over to the legal market.


What makes less sense is the lopsided attention that investors pay to Canadian pot producers, who may be listed in the U.S. but mainly have Canada’s tiny market for their sales. The real action is right under their nose.

As Barron’s noted, the lack of banking access and the 280E IRS tax code have been heavy burdens on the cannabis industry, even more so on small, local craft cannabis boutiques like Kind Leaf, than on wealthy multi-state actors and international corporations. With any investment, it’s buyer beware, but the cannabis industry is even more volatile as the whims of politicians and voters can change, but it certainly looks like the future is bright. While the time could be now to invest, it’s definitely a good time to start doing your homework if investing in domestic U.S. companies intrigues you.

Whether you choose to invest in cannabis stocks or not, it’s always a good time to invest in your own happiness and the local economy by supporting Kind Leaf in beautiful Pendleton. At Eastern Oregon’s premier craft cannabis boutique, you get to choose from the best selection in the Great Northwest and you know that your hard-earned dollars stay in the Beaver State to promote the local economy and fund important services, including much-needed drug treatment and recovery programs. This week’s specials, while supplies last, include 30% off Charvak, Zurple Punch and Platinum Cookies flower. For extracts, there’s 30% off Self Made Shatter, East Fork Cultivar PAX Pod Cherry Wine. If edibles are more your speed, then you can enjoy 30% off Mr. Moxey’s Ginger 5:1 Mints, Golden Fruit Chew Blast Lemon Ginger, Magic Soda, and Muru Cannamixer.

A Big Investment Fund Makes a Big Investment in Cannabis

Thanks to recent technological advances, investing has come to the masses in a big way. Small investors can purchase stocks, funds, and cryptocurrencies in ways that have been widely unavailable before, such as the ability to purchase a portion of a share of an expensive stock. The little guy can decide to take on the billion dollar funds, like the subreddit Wallstreetbets called for with purchases of GameStop, Tilray, AMC, and other stocks. Or you can learn from the big-time investors and follow their lead. Some investment apps such as Stash allow you to invest as Warren Buffet does. If you are interested in following the lead of an established fund, you may want to take note that British Columbia Investment Management (BCI) just made a big purchase of Aurora Cannabis.

Barrons reported:

BCI bought 232,058 additional shares of Aurora Cannabis to end 2020 with 290,404 shares.

Aurora Cannabis stock cratered 68% in 2020, but so far in 2021, it is up 50.2%. In contrast, the S&P 500 index, a measure of the broader market, rose 16.3% last year, and gained 4.8% so far in 2021.

Earlier this month, three Democratic senators led by Majority Leader Chuck Schumer said they would make marijuana-reform legislation a key priority, sending the sector soaring. Reddit message-board users have focused on the marijuana sector for trading, adding to the volatility. Speaking of volatility, on Friday alone Aurora Cannabis stock tumbled nearly 14% on disappointing results.

As Barron’s noted, BCI manages $135 billion in assets, and it also increased its stake in Mastercard while selling shares of Visa and Shopify last quarter, according to filings with the Securities and Exchange Commission. The Canadian investment company was established in 1999 to manage the wealth of British Columbia, with its biggest clients being 12 public sector unions, such as the the pension funds of hundreds of thousands of public sector employees that includes teachers, government staffers, and healthcare workers.

Whether Aurora ends up being one of the best cannabis stocks to own is anyone’s educated guess, but investors could probably do worse than following the lead of one of Canada’s, and the world’s, largest investment firms. Certainly one thing to follow is how BCI has a diverse group of holdings, so it’s not beholden to the swings of one particular industry. As the United States moves towards ending federal cannabis prohibition, through either piecemeal legislation or big reforms such as the MORE and the STATES Acts, we’ll likely see more big funds backing cannabis stocks, Canadian companies have gotten a head start. Hopefully, some U.S. companies will be able to compete for their fair share of the pie, but everyday that craft cannabis companies are denied banking services and are taxed at a ridiculously exorbitant rate, the wealthy multinational companies strengthen their grip on the market.

Like GameStop, Cannabis Stocks Are Currently on a Reddit-Inspired Adventure

The financial world was set ablaze by the Reddit-inspired GameStop stock purchases that pit everyday investors against billion-dollar hedge funds. Wealthy hedge funds placed huge bets that video game retailer GameStop’s stock would decrease, so members of the Wallstreetbets forum (known as a subreddit to those that utilize the Reddit website) urged folks to purchase GameStop stocks, causing the price to skyrocket and costing hedge funds billions of dollars.

The entire Reddit vs. the Hedge Funds GameStop battle created quite the kerfuffle, especially when some brokerages like the Robin Hood app prohibited purchases of Gamestop. It was a whole thing and if you need an explanation, there the GameStop Short Squeeze Wikipedia page provides a breakdown. As I previously blogged, Canadian cannabis company Tilray was involved in a short squeeze itself. Several cannabis stocks have recently been publicized by the Wallstreetbets subreddit this week, sending the stocks up for a day, but then they tumbled back down.

While this Reddit-inspired rollercoaster-like adventure for cannabis stocks has some similarities with the GameStop saga, a big difference is that the cannabis industry is poised to have a brighter future, while video game stores are likely on their way out as the industry has moved online. While there is some gambling involved in trying to gauge when cannabis is going to be regulated federally like beer and wine and who the winners and losers will be, investors can, and should, do their due diligence in figuring out which companies have bright futures and which are more likely flash in the pans.

With cannabis will likely be in the news a lot over the coming years as piecemeal legislation gets passed, such as the SAFE Banking Act and speculation will arise if and when the House takes up the MORE Act again in an attempt to end cannabis prohibition at the federal level, cannabis stocks will probably be a volatile investment to own. However, to those that weather the storm and find the right companies that are poised to capture significant market share, the sky will be the limit. I’m no stock expert, so please do your research and listen to those that know a log more than me about the market, but it is apparent that opportunities will abound both short and longer term. Buyer beware and best of luck, investors.

Power to the People: Before Gamestop, there Was the Cannabis Stock Tilray

If you are on the internet, you have probably heard about Gamestop and the billion dollar financial losses that some hedge funds are in line to suffer because they bet on the gaming retailers stock to plunge, a practice known as short selling. A short squeeze has occurred because folks in a Reddit forum got wind of the intentions of these billion dollar hedge funds and encouraged folks to buy up Gamestop stock, ruining the bet of those that gambled on the company losing value. I’m no financial markets expert, and must of what I knew about short selling is from watching the movie The Big Short about the housing market collapse. The situation is pretty confusing for lay people like myself, so I started educating myself.

One of the things that I learned is that the Canadian cannabis company Tilray experienced a similar short squeeze situation, albeit on a smaller scale, as CNBC reported:

The trading frenzy in shares of GameStop and now AMC Entertainment looks familiar to Tilray CEO Brendan Kennedy.

Back in 2018, shortly after it went public, the Canadian pot producer’s stock was ensnared in a wild short squeeze and rose about 1,400% between July and September of that year on an intraday basis.

“I’ve had a little bit of PTSD over the last couple of days,” Kennedy said Wednesday on CNBC’s “Squawk on the Street.” “I remember getting five different calls from Nasdaq in a single day about our stock being halted because the short sellers were being squeezed so badly.”

As noted by CNBC, Tilray’s stock rose from about $20 to $300 and hedge fund short sellers lost about $600 million. With billions of dollars at stake on the Gamestop short squeeze saga, the Wall Street empire has struck back against the Reddit rebels and Robinhood and other stock trading apps have temporarily frozen the ability to trade Gamestop stocks. Robinhood has since been hit with a class action lawsuit. Wall Street watchers, grab your popcorn.

With cannabis likely being legal in a few years, Tilray’s CEO is on the record expecting federal legalization within two years while I’m not quite as optimistic, the cannabis industry will only get bigger. As more cannabis stocks are traded, more will likely be put in positions like Gamestop or Tilray was in, unless regulations are put into place to curtail short selling. If you’re gonna invest in cannabis or any other stocks, you’ll want to do your due diligence as it is always buyer beware. In the meantime be sure to support locally owned businesses like Pendleton’s Kind Leaf as the money spent there helps the local economy, not foreign corporations or billion dollar hedge fund operators.