A quick look through the major marijuana stocks leads to an unsurprising conclusion: the sector remains in a correction.
The high for the sector was eight weeks ago, while the most recent bottom was just last week—and the slight progress we’ve seen since then has not been impressive. As I write, our portfolio is 63% in cash, while still holding core positions of ten stocks, and I’m not making any changes today.
But I will note that YTD our portfolio is now up 34%, while the Marijuana Index is up just 23%, and the gap is widening as the correction evolves.
How long this correction will last no one knows. I hope it ends soon because up is more fun than down. But hope is not a strategy. What is a good strategy is to watch the charts, which I do frequently, and to stay on top of fundamental developments in the industry, so we’re always on—or about to hop on—the fastest horses.
So, we have two news items this week:
On Monday, Jushi (JUSHF) announced the completed acquisition of Franklin Bioscience (FBS), which currently operates cultivation, production and distribution facilities in North Las Vegas. The indoor cultivation facilities yield approximately 2,500 pounds of high-quality dry flower per year and FBS has partnered with third-party extractors to produce a variety of vape products, concentrates, pre-packaged flower, infused blunts and edibles under the brands The Lab, The Bank, Tasteology and Sèche. The stock was up on Monday but has a clear pattern of lower lows and lower highs, so the best I can rate it is hold.
Also on Monday, Trulieve (TCNNF) announced an agreement to acquire three fully operational dispensaries in the Philadelphia area operating under the name Keystone Shops. Located in Philadelphia, Devon and King of Prussia, the stores will join Trulieve’s current portfolio of 83 dispensaries (mostly in Florida)—and we can assume that as New York and New Jersey open to the industry, Trulieve will be there as well. The stock was up early on Monday but closed the day lower—and it’s even lower now.
Looking at the stocks overall, our most resilient holdings are the lowest-risk non-plant-touching companies—Innovative Industrial Properties (IIPR) and Turning Point Brands (TPB), which are 13% and 18% off their February highs. Still, they are below their 50-day moving averages.
Among the big multistate operators, the best charts belong Curaleaf (CURLF) and Trulieve (TCNNF). Both stocks are just 19% off their February highs, and both did not see new correction lows last week. These two stocks are the portfolio’s largest holdings, and while prospects are very good for long-term success, I cannot advise buying now, while the sector is still in a correction.