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Michael Brush

Michael Brush

Chief Analyst, SX Cannabis Advisor

Michael Brush is an award-winning Manhattan-based financial writer who writes a stock market column for MarketWatch. He is editor of Brush Up on Stocks, an investment newsletter. Brush previously covered the stock market, business and economics for the New York Times, the Economist Group, MSN Money, and Money magazine.

Brush attended Columbia University Business School (Knight-Bagehot Fellowship program), and the Johns Hopkins University School of Advanced International Studies (SAIS).

He is the author of Lessons from the Front Line (published by John Wiley), a book offering investing insights based on the experiences of leading professional money managers he’s met on the job.

Brush has received several awards for excellence in journalism including the Best in Business award from the Society of American Business Editors (SABEW), the American Society of Magazine Editors’ National Magazine Award for General Excellence in New Media, and awards for excellence in local news coverage in Pennsylvania, where he started his career.

From this author
Although cannabis stocks remain weak, recent polling from Florida, “The Sunshine State,” is improving industry sentiment and pointing to better conditions ahead.
Many of the underlying trends in cannabis continue to be favorable even if this is not reflected in the stock prices, which are down sharply this month.

States continue to advance legalization of recreational use. Lawmakers remind us that federal regulatory reform in banking remains on the table, and will get taken up by key Congressional committees this year. Europe should begin to advance recreational use legalization within the next several weeks, starting with Germany. Cannabis sector insiders are stepping up to buy stock. Industry consulting firms continue to affirm robust sales growth projections of 13% a year through 2027. There are tentative signs that price compression is neutralizing.
Strong negative sentiment on the sector and rays of light on the federal level are combining to make a contrarian case for cannabis companies.
Here are the latest developments in the cannabis sector over the past two weeks.

The bottom line: States continue to march forward with legalization, but the negative trends of price compression and higher financing costs weigh on weaker players. That will create acquisition opportunities for the stronger companies in the space.
Despite double-digit growth rates in their end markets, cannabis stocks are trading at or near their all-time lows. That doesn’t scream bullish, but it does scream bargain for contrarian investors.
Prices are low and sentiment is negative, but there remain a number of promising bullish trends for cannabis stocks, especially at the state level.
Though cannabis sector sentiment is extremely dark because of price compression and lingering bitterness after the December drubbing, there are several reasons to be bullish on the group.

This suggests that it’s a good time to add to cannabis names as a contrarian investment. Warren Buffett tells us that the market should serve us, rather than influence our moods. If I am right about the underlying bullish trends, the market is serving up an opportunity in cannabis. But you have to look at this as a medium-term play.

We know about all the negativity in the space – declining wholesale prices, overproduction, the failure of politicians to get the ball over the line in banking reform in December. But what about the positives?
With ongoing state-level developments and marijuana stocks trading at some of their lowest levels ever, there’s a contrarian case for averaging into cannabis stocks.
Throughout U.S. history, federalists and states’ rights advocates have battled it out. Federalists believe in strong centralized power. The other side wants issues to get resolved locally. Federalists are usually on the left, and states’ rights advocates are normally conservatives. But not always. It depends on the issue.
Cannabis stocks rose briefly at the end of 2022 on hopes for SAFE Banking passage. That didn’t come to pass, but there’s a good reason to believe the sector can turn around in 2023.
Cannabis stocks perked up at the end of last year before giving back those gains on a lack of federal action. Are cannabis stocks now undervalued?
We are back in earnings season again. This season tells us more about our companies, but it also helps us get a read on sector trends.

Let’s start with a look at takeaways on key sector trends from the quarterly earnings call by executives at Organigram (OGI). This Toronto-based company serving Canada, Israel and Australia may be small, with a market cap of $300 million. But its executives know the space as well as anyone, and they offered the following insights.
Cannabis stocks fell on failure to push through SAFE Banking in Washington. Fortunately, state-level growth remains robust and cannabis names remain undervalued.
Cannabis stocks continue to get weighed down by the SAFE banking debacle. As you recall, late last year legislators failed to approve cannabis sector banking reform called the SAFE Banking Act that would have made it easier for banks to serve cannabis companies.
Year-end tax loss selling continues to pressure cannabis stocks, but that is leading to some attractive discounts in what could be a relatively healthy year ahead.
Cannabis stocks and exchange-traded funds (ETFs) are ending the year at their lowest levels ever, and everyone knows exactly why. Sector investors were let down by lawmakers in Washington, D.C. who had suggested they’d secure approval of favorable banking reform by year-end while they still had the votes. This reform would have been a game changer since it would provide cannabis companies access to banking services and maybe even listings on major exchanges.
Cannabis stocks are getting sold down as if the industry has no future.

This makes no sense, but there is a good explanation. Traders and investors bought the group heavily on expectations that cannabis sector banking reform would be passed in Congress by year’s end. The AdvisorShares Pure U.S. Cannabis (MSOS) exchange-traded fund (ETF) saw five to ten times normal volume on four days in early December, following two months of accumulation.
Last week saw cannabis stocks spike higher on news out of Washington before selling off on more of the same. Here are 3 reasons they still look like a buy.
Cannabis is the rare industry where sector-moving catalysts can seemingly come out of nowhere, here are 4 that we’re watching closely.
The high-growth cannabis sector continues to be full of rapidly evolving developments that could move our stocks significantly at any moment.

Beyond the potentially transformative changes in the works on legalization, almost all our companies just reported solid third-quarter revenue growth.

That means this issue of the Cabot SX Cannabis Advisor focuses heavily on corporate trends and developments in the company update section, below. The updates are longer than usual, covering the key news events and developments at our companies revealed in quarterly results and other news flow.
Cannabis stocks have been trending lower all year, but I’m looking at 3 cannabis stock catalysts that could arrive sooner than you think.
Yesterday I suggested adding $40,000 of our cash to AdvisorShares Pure US Cannabis (MSOS) with a buy limit of 11.45.
Today I am adding $40,000 of our cash to AdvisorShares Pure US Cannabis (MSOS) with a buy limit of 11.45.
Given the shifting political winds, these catalysts could trigger profitable short-term trades in volatile cannabis stocks.
Election season lurks just around the corner.

The looming midterm outcomes have huge implications for cannabis – since the group is so dependent on legal reform in the hands of politicians.

There are going to be plenty of (tradeable) election-related ups and downs. But for reasons I will explain, cannabis stocks might see some very bullish catalysts near term, no matter which party takes the Congressional elections.
Cannabis stocks have been in a sell-off since February of last year. Here are the 3 most important factors to focus on when they turn around.
Sentiment remains extremely negative towards the cannabis sector and the overall stock market.

You can look at this situation and get depressed. Or you can see it as an opportunity to buy cheaper shares for the long term. Being a contrarian, I prefer to do the latter. I think both cannabis stocks and the broad market are buyable right now. And that’s why I am adding two new positions to the Sector Xpress Cannabis Advisor portfolio today, and rate all our existing stocks “Buys.”

Fundamentally, all is well in the marijuana sector as the industry’s leaders continue to grow, both organically and by acquisition. The average rate of revenue growth for the plant-touching companies in our portfolio in the most recent quarter was an amazing 132% from the previous year.