This Week in Cannabis Investing November 29th

This Week in Cannabis Investing November 29th

What a difference a week makes! Cannabis stocks have reversed lower after week’s sudden bounce. Cannabis sales fell in Canada in September (thanks to weak sales in Eastern Canada). This breaks several consecutive months of strong/rising sales.

In the U.S., California hammered its legal cannabis industry with another tax increase. Federally, the DEA has announced it plans to “study cannabis” by growing even more hemp. Needless to say, it was a crazy, volatile week for the cannabis industry.

Monday, The Seed Investor addressed the latest (disappointing) number from Statistics Canada on Canadian retail store cannabis sales. After six consecutive months of rising sales – and growing momentum – cannabis sales surprisingly slipped. We called it a “body blow”.

Weakness in sales was focused in the East, specifically Canada’s largest provinces: Quebec and Ontario. Combined, these two provinces have a total population in excess of 22 million people. That’s nearly 60% of the total population of Canada. Yet they account for roughly 6% of Canada’s total cannabis stores.

As a consequence of this sales weakness, Eastern Canada-based Organigram Holdings (US:OGI / CAN:OGI) reported a very weak fiscal Q4. Revenues plunged. Margins evaporated. These bad results came despite increased operational efficiency in its cannabis cultivation. Canadian LP’s (especially in the East) remain hostage to Canada’s provincial governments.

Tuesday, we looked (again) at Big Pharma: the malevolent corporate presence lurking behind the legal cannabis industry and continually seeking to undermine cannabis legalization. Big Pharma kills and sickens us – with its Nursery Rhyme business model.

Big Pharma gets fat selling us drugs we don’t need. Cannabis is a major threat to the drug industry’s $1 trillion per year of blood-tainted revenues.

We then switched gears to look at a positive quarterly result for a cannabis company. U.S.-based SLANG Worldwide (CAN:SLNG / US:SLGWF) announced improved results on both the topline and bottom-line. The stock slid (back to last week’s level) on concurrent news that the company was also raising $15 million via private placement.

Wednesday, we reported that Choom Holdings (CAN:CHOO / US:CHOOF) was at it again. Choom is adding to its Alberta cannabis retail operations with another new retail store – this one in Camrose, Alberta. With a strong focus in Western Canada, Choom continues to steadily build its retail cannabis footprint.

The Seed Investor concluded its Wednesday coverage with a look ahead to Thanksgiving. While Black Friday’s shopping orgy immediately follows Turkey Day, the cannabis industry is positing itself ahead of that frenzy.

“Green Wednesday” gives U.S. shoppers a chance to stock up on their favorite cannabis treats – in time for Thursday’s holiday festivities. We looked at cannabis for Thanksgiving, including a cannabis recipe suggestion.

Thursday, we gave readers something to chew on besides turkey. We attacked California’s “cannabis taxation insanity”. With a legal industry that has flatlined and a growing/thriving cannabis black market, the state government is undercutting the legal cannabis industry even further.

With state cannabis taxes already as high as 45%, California has raised cannabis taxes again. Incredibly, these tax increases are automatic under the state’s punitive “formula” for taxing (crucifying) the legal cannabis industry.

Friday, we closed out a holiday-shortened week by looking at more cannabis insanity in the U.S. – this time from the federal government. To put it succinctly, the Drug Enforcement Agency (DEA) is growing hemp in order to “study cannabis”.

In the DEA’s ivory tower, they don’t think that anyone needs cannabis any stronger than the low-potency cannabis (hemp) that they criminalized in the 1980’s. So that’s all that they are willing to study. How can the U.S. government produce intelligent laws and policy decisions on legal cannabis when it won’t even study the cannabis that is actually being sold and consumed?

It can’t. Which is precisely what the problem is.

It was a much less upbeat week for the cannabis industry this week. With tax-loss selling upon us and disappointing industry news just released, it probably isn’t going to get much better before year end.

Fundamentally, nothing changes for the legal cannabis industry. Canadian cannabis sales will (quickly) bounce back. The foot-dragging by politicians can delay but not prevent the rise of legal cannabis.

DISCLOSURE: Choom Holdings is a client of The Seed Investor
 

Published at Fri, 29 Nov 2019 22:28:43 +0000

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