It’s been eleven weeks since the marijuana sector topped, sending the Marijuana Index down 50%. But as the picture of this correction gets clearer, every day I get a little more bullish about the possibility that the sector is ready to turn up again.

Two weeks ago, acting on this belief, I used half our cash to average up in the industry leaders and add one new small stock to the portfolio and today I’m doing just a little more buying, averaging up in another small operator.



After this buying, the portfolio will be roughly 29% in cash, and going forward, we’ll continue to take our cues from the market, always working to own the market’s leaders as we move closer and closer to full federal legalization.



Full details in the issue.

It’s been seven weeks since the marijuana sector topped, and every day the picture of this correction gets clearer. For example, today saw a rally across the board in the sector, but if you look at the charts, you see it’s really just an inconsequential blip.

Thus, defense remains the watchword for now. In fact, I am selling one stock in this issue, taking profits and freeing up a little more cash.



Long term, however, prospects for the sector remain very bright, as was made clear by our companies’ latest quarterly reports. And of course, we will always hold the leaders of the sector.



Full details in the issue.

Yesterday was a rough day for stocks in the marijuana sector. Today was better. But overall, I continue to hold the opinion that the sector peaked two weeks ago and that it needs a longer cooling-off phase—a real correction.

Such a correction can take many forms, and it’s hardly worth speculating about what form this one will take. Yet by managing your portfolio carefully, based in large part on the action of each stock, you can get through this correction with minimal pain and be well-positioned to add to your gains when the uptrend resumes—because in the long run, this remains a fantastic sector to be invested in.



Full details in the issue.

2021 kicked off with a bang, as investors small and large poured money into marijuana stocks in anticipation of growing legalization, so our portfolio is off to a fine start.

But the threat of a downturn is ever-present, and the longer the bull market runs, the greater my unease.



Still, I can’t argue with the trend, which by all measurements remains up, so I’m keeping the portfolio fully invested. And if you’ve got cash, the softness of recent days is now presenting some buying opportunities!Full details in the issue.



Full details in the issue.

As we near the end of 2020, I’m thankful that 2020 was so very good to the leading marijuana stocks, and that we managed, overall, to ride the trend quite profitably.

As I write, the uptrend is intact and we remain fully invested, but as the calendar turns to 2021, there’s a chance that the trend (and the trend of the broad market as well) might turn down.



Thus I’m on alert.



But I learned long ago not to argue with the trend of the market, so until the trend changes, I recommend staying heavily invested.



Full details in the issue.

The past month has been the best of the year for our marijuana stocks, and while there’s a chance the sector could top out now (there’s so much good news out there), I learned long ago that it doesn’t pay to fight the trend.

The fact is, this sector strength could easily run to the end of the year as investors rush into this high-growth sector. So, we’ll now become fully invested, adding one new stock at the same time.



Full details in the issue.

The past month has brought great performances from many of our marijuana stocks, but right now, there’s a risk that the market is turning down, preparing to take some of our profits.

Long-term, however, trends toward increased legalization mean prospects for the marijuana sector are brighter than ever; next week’s election will tell us a lot about what the next few years might bring.



How do we balance this short-term risk with this long-term opportunity? By remaining invested in the best-performing stocks, of course.

Over the past seven weeks, we’ve been steadily lightening up in our marijuana stock portfolio, initially taking profits within a day of the top, and more recently continuing to shift to cash as the sector weakened.

Today we’re raising just a little more cash, with the sale of Aphria (APHA)—a sale that will take us to a roughly 52% cash position.



But overall, I’m still very bullish on the sector as a whole as a long-term investment and I fully expect to be moving back into the leading stocks in the sector once the tide starts coming in again.



Full details in the issue.

A lot has happened with our marijuana stocks in recent weeks, with the most important being the release of excellent quarterly reports by all the major U.S. multi-state operators that explained why the sector had been so strong in recent months.

However, growth stocks in general—and marijuana stocks in particular—have now begun a well-deserved correction, so I’m now getting a bit more cautious.



Full details in the issue.

The broad market remains healthy (climbing a wall of worry) and the marijuana sector is even stronger!

Leading the way are the big U.S. producers (we own them all), but there’s more, including the Canadian volume leader’s earnings report of today and a surprisingly strong performance from our (totally legal nationwide) hydroponics growing supply store, whose stock was up more than 10% just this morning!



Full details in the issue.

After eleven weeks up, the broad market has been correctingfor the past fethreew weeks, and the marijuana stocks are also in gear, totally synchronized—which is good. Bottom line, this correction provides a fine buying opportunity.

I’m taking advantage of this opportunity to average up in Canada’s leading producer, Aphria (APHA). And I’m sticking with all the other portfolio stocks because I truly think we have a portfolio that will thrive as this industry matures.



Full details in the issue.

Since the COVID-19 crash ended just over weeks ago, the market has been impressively strong, with marijuana stocks some of the strongest, as they left behind a two-year bear market.

So even though some of these stocks seem a bit over-extended today, short-term, they still have enormous upside potential in the long-term.



Full details in the issue.

Cannabis stocks look buyable in the current weakness.

Cannabis stocks are always buyable when they are down, but there are potential near-term catalysts on the horizon. That is the case now. There are three to expect over the next few months, and possibly as soon as the middle of May.

Cannabis stocks are generally flat since I sent you the March 27 issue of Cabot Cannabis Investor.

Given the potential magnitude of near-term catalysts, I suggest continuing to hold exposure to the group, and accumulating on weakness. If you have zero exposure, consider buying some now. If you have full exposure, consider adding on any substantial weakness of 2%-4% or more in this highly volatile group.

Since I last wrote to you on February 28, cannabis stocks have fallen nearly 14%, using the AdvisorShares Pure U.S. Cannabis (MSOS) as a proxy for the group.

There are certainly good reasons why “the doubts” have crept back into the minds of cannabis investors, which I will explain in a second. But my take is that by now, the concerns may be fully priced in, so the group looks like a solid buy.

It sounds heartless to say, but successful investing is largely about exploiting the emotions of others.

The two biggest emotions to exploit in the market are obviously fear and greed. When investors are too fearful, it pays to exploit that emotion by betting the other way. And vice versa for greed.

Another common emotion to exploit is impatience.

Back on December 27 I suggested holding off on cannabis sector purchases given the group strength at the time. We had realized nice gains, and it did not make sense to chase the stocks. “I prefer to add on weakness rather than strength,” I wrote. I recommended adding on weakness of 2% to 4% or more in any of our portfolio names.

The AdvisorShares Pure US Cannabis (MSOS) and AdvisorShares MSOS 2X Daily (MSOX) exchange traded funds (ETFs) closed that day at 6.93 and 3.60, respectively, and went on to fall 4.5% to 9% over the next few trading days.

There are three big developments in the cannabis space to report.

* A buyout of one of our portfolio names, which nets us 105% gains in four months.

* A confirmation that the Biden administration is serious about some major cannabis reform, which would be a huge catalyst for the group.

* A buyable selloff. Cannabis stocks sold off sharply Tuesday probably based on false fears that rescheduling won’t happen. I think that’s wrong, and the weakness is a buy.

Cannabis stocks are up 10%-20% since I encouraged you to buy them on weakness in my last update on October 31.

That’s a nice short-term gain – much better than the 5.5% S&P 500 advance over the same time.
I hope you participated.

Traders may want to book profits. The stocks are strong this morning on news that Ohio voters approved a referendum on recreational use legalization. This rally could reverse. However, cannabis stocks are still down sharply from the rescheduling rally last summer. I suggest continuing to stay long in the midst of the overall weakness since that rescheduling news rally last summer.

Cannabis stocks are astonishingly weak following the nomination of Rep. Mike Johnson (R-LA) as House speaker. He has always opposed cannabis legislation. So, the fear is that Secure and Fair Enforcement Regulation (SAFER) Banking Act reform (allowing banks to serve cannabis companies) cannot get out of the House. This is probably true. However, Senate leaders could put the reform in must-pass legislation, and the House may well accept it, given how many current House members have approved the bill in the past.

Cannabis stocks have retreated from recent highs in the rally sparked by news that the government may reschedule marijuana under the Controlled Substances Act.

Retraces are perfectly normal after big moves. Many traders typically expect a 33% give-back.

The key question is whether the pullback is buyable. I say yes, for two reasons – one fundamental (catalysts, below) and one technical. Let’s start with the technical factor.

After the close Friday, we learned that the Senate banking committee has scheduled a vote on key cannabis sector banking reform on September 27.

Of course, we do not know that the committee will stick to its schedule. But it is likely, so I will assume that will be the case. This timing suggests a possible course of action for cannabis holdings.

Monday after the close, sources close to the Senate banking committee said the panel will delay its vote on key cannabis banking reform known as the SAFE Banking Act. Some investors had expected the vote to happen next week. This update probably helps explain sector weakness Tuesday.

You are receiving this unscheduled update due to recent strength in cannabis names. Your regularly scheduled update will be published on September 13.

For all of the past year, I have been steadfastly bullish on cannabis names. The group was hated, but several underlying trends told us that was likely to change. This set it up as an ideal contrarian play.

Now, the steady buying I’ve been suggesting is paying off.

The big news in the marijuana industry this week is that the Tilray/Aphria merger is complete, turning these two Canadian firms into the biggest marijuana company in the world—for now.

Today, for a change, I’ll cover the news first, and the investing advice second. In Illinois, marijuana taxes exceeded alcohol taxes in the first three months of 2021. Marijuana tax revenue amounted to $86,537,000 while alcohol taxes brought in $72,281,000. I expect the gap to widen from here and there’s no question other states have taken note.

Nine weeks ago, as the marijuana sector was completing what looked like a climax top, I took the risky step of taking partial profits in ten of our stocks, moving to a 45% cash position.

A quick look through the major marijuana stocks leads to an unsurprising conclusion: the sector remains in a correction.

The marijuana sector, in general, remains in a correction. The high for the sector was six weeks ago, while the most recent bottom was two and a half weeks ago.

The good news is that one of our stocks, Trulieve (TCNNF), closed at a record high yesterday. The bad news is that none of our other stocks did. The sector as a whole remains in the moderate correction that began five weeks ago, and I continue to think that we are likely to see lower prices in the near future.

The Dow hit a new high today, but marijuana stocks didn’t; their correction, which was richly deserved, is now one month old. And the fact is this correction is likely to run further, mainly because the broad market still needs a correction.

I’m tempted—I really am—to take some of our 46% cash position and move it back into marijuana stocks. Since the sector peaked three weeks ago, most of the stocks have had a decent pullback and now the best are moving up again, heading toward those old highs.

As I’ve explained previously, I’ve become increasingly concerned that the blistering advance of the marijuana sector had progressed so far so fast that it was getting increasingly ripe for a correction. But as long as the stocks were advancing, I was happy to stay fully invested.

The GameStop Affair last week offered great entertainment for those of us neither long nor short the stock, but in the end what does it mean? In my opinion, the market worked; I don’t see any real problems revealed (aside from naivety of many of the individuals). But I do think the spotlight on the power of individuals vs. professionals is likely to bring some legal outcome that will further empower individual investors, especially given today’s Democratic control of Washington.

Over the long run, the S&P 500 has produced an average annual return of about 10% per year. Our aim at Cabot, through our various services, is to do better, and in the long run we do.

Part of the marijuana sector’s strength, of course, is because the broad market is also trending higher. But a substantial part comes from the growing realization, especially in wake of last week’s election that promised us a uniformly Democratic federal government, that this industry will continue to boom as legal barriers are removed.