The Uptrend Begins?
As I write this, every stock in our portfolio is up today, in what may be the beginning of a new advance for the sector. It’s been more than four months since marijuana stocks’ February peak, so they’ve definitely cooled off, but only time will tell if this is truly the start of a new run. In any case, we’re ready, with the portfolio now 84% invested.
In the meantime, the trend toward legalization in the U.S. continues, as Connecticut’s governor, Ned Lamont, yesterday signed legislation that will make adult-use legal beginning July 1 and will enable retail sales to begin in late 2022. These retail sales will include a 3% municipal sales tax, directed to the city or town where the sale occurs, plus the usual 6.35% state sales tax plus an additional tax based on the THC content of the product—which will be 2.75 cents per milligram of THC for cannabis edibles; 0.625 cents per milligram of THC for cannabis flower; and 0.9 cents per milligram of THC for all other product types. This means that Connecticut generally will have about a 4% lower tax rate than New York and about the same as Massachusetts.
Down in Florida, however, the state’s Supreme Court ruled that a ballot initiative to legalize marijuana was misleading, so for now, the state will continue to allow marijuana use only for approved medical patients.
Turning to our portfolio companies:
Canopy Growth (CGC) today announced the completion of its acquisition of Supreme Cannabis (SPRWF), which brings the company a low-cost scalable cultivation facility in Ontario as well as the premium brand 7ACRES and creates a pro forma 2021 market share of 18.1%. SPRWF should be delisted today.
Cresco Labs (CRLBF) on Monday announced the opening of Sunnyside Philadelphia, its fourth dispensary in Pennsylvania and its 33rd U.S. operating store.
Curaleaf (CURLF) announced a branding partnership with Rolling Stone. The co-branded Rolling Stone by Select products will include two product formats to start, including Select’s first-ever pre-roll, as well as “The Cliq,” Select’s newest proprietary pod system.
Trulieve (TCNNF) last week announced the opening of a dispensary in Tavernier, Florida, its 84th in the state where it is dominant and its 90th nationwide.
Bottom line: Fundamentally, all is well in the industry, and I have no doubt that revenues will continue to boom at the leading companies and that eventually, earnings will, too—and that long-term, the stocks of these companies will soar once again. Over time, I will continue to adjust our portfolio to maximize growth opportunities, but today, I’m making no changes. Today our portfolio is up 22.0% YTD while the Marijuana Index is down 3.3%.
For those of you looking to do more buying, the most attractive stocks for buying now are Columbia Care (CCHWF) (be prepared for volatility), Curaleaf (CURLF), Green Thumb (GTBIF), Innovative Industrial (IIPR) (for lowest risk) and TerrAscend (TRSSF).