I would like to believe that as part of any review of a Canadian company with US operations that the fact that the courts have ruled that the judiciary branch cannot prosecute any person or company in full compliance in a State where marijuana is legal would be taken into consideration. In other words, only those operating out of compliance or in States where it is not legal would be subject to the judiciary branch’s enforcement and prosecution.
We always encourage our readers to also subscribe to the Canadian edition as much of the content in the Canadian edition is applicable to US investors just as much of the content in the US edition is applicable to Canadian investors.
Last month in the Canadian edition was an article on supply and demand forces in Canada with respect to this industry. Not only with respect to the demand and supply of legal marijuana but also for investment dollars – share price on the secondary markets but also for the financings of companies.
Because of the prolonged bull run, some Canadian companies took the opportunity to raise capital through equity financing affecting the supply and demand of investment dollars and of the share count itself. Unit prices well below current share prices contributed to a pullback that extended only for a few days. At the same time, the Canadian dollar fell in value against the US dollar.
What about Investing in US listed companies?
The judiciary risk for enforcement regardless of the court ruling may be higher if only perceived due to the current federal administration’s demonstrated willingness to use Executive power. However, with more states legalizing along with larger mainstream companies entering the industry, day zero is likely here or certainly within sight – perhaps in just a few years if not sooner. As more countries legalize, the US risks falling further behind in what many are calling a global trillion-dollar industry (including Hemp and ancillary sectors).
However, the risk of investing in USA companies is indeed lower than it was and this can be seen not only in the CannaInvestor Magazine top 25 Stock Picks but also in the holdings of the world’s first ETF (TSX:HMMJ).
Starting with the CannaInvestor Magazine top stock pick list, if you go back a year or more you will see companies such as Canopy Growth Corporation (TSX:WEED; OTC:TWMJF) frequently appeared in the top 5. The last top 25 list had only 2 that are fully operating within Canada and Canopy Growth had fallen to 10th. A slow and subtle transformation of the stock pick list to include more and more USA companies.
CannaInvestor Magazine introduced this view of the industry as a fast changing ever evolving ecosystem that is now an industry “given” and repeated and used by others. The transformation of our Top Stock Pick list to include more and more USA companies may be indicative of that transformation.
Our case studies this month will look at the top 3. 22nd Century Inc (XXII) may have been #11 but some analysts have given it a one year price target that represents nearly a fourfold increase in share price!
Unlike certain others that simultaneously promote their paid clients while publishing negative and potentially damaging comments on companies that are not their clients, CannaInvestor Magazine continues to cover the industry with a professional approach putting investors and the industry itself first.
If the damaging comments were “true” that would be one thing but what we are seeing is ramped up rhetoric by some including offensive metaphors. Their approach, at least from my perspective, seems at times to be if a company is their client then they are being paid to educate investors but if a company is not their client then they use terms such as “pumping and dumping” to describe that marketing campaign’s intent.
More than a year ago I wrote how this industry is akin to the Wild West. I am sure you can think of a term for those that would damage one’s reputation (and value) unless money is paid to be their “client”. They seem to work independently as well as in packs when necessary. How often have you seen one of them post on social media or a bulletin board and within moments the same small group of characters are endorsing and reposting the original messages – often while also ignoring or discrediting legitimate sources?
We said from the get-go that this industry will see M&A because it cannot escape the consolidation curve and predicted the alcohol industry would enter it. Well it did and how!
On Sunday October 29, 2017, the Wall Street Journal reported the blockbuster news that Constellation Brands (NYSE:STZ) was taking a material stake in Canopy Growth Corporation. There should not be one subscriber of CannaInvestor Magazine surprised. We cannot take credit for this prediction because it was very foreseeable and in fact I would be wary of anyone trying to pretend to take credit for such an obvious prediction.
Shareholders of Canopy Growth were rewarded with a three day potential ROI in excess of 30% and options holders a triple digit ROI! Connecting the dots so you don’t have to!
I hope you consider more than ever the opportunities from investing in US companies in this industry just as I truly hope many of you embraced last month’s strategy to invest in the Canadian listed companies.
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