What Category Are We In?
Back in early 2000, when the Internet stock bubble was preparing for its long deflationary period, the charting service we used categorized Internet stocks into four groups: ISP/Content, E-Commerce, Software and Security/Solutions. At the time, these groups included 470 stocks.
Today, 21 years later, the charting service we use categorizes Internet stocks into two groups: Content and Network Solutions. And these groups hold just 85 stocks.
What changed? Lots of companies failed, obviously. And the industry evolved. Some of those companies moved to a new category, named Retail-Internet, while others are now in various areas of the larger Computer sector.
By contrast, the Marijuana group today has no stocks—because the charting service has no Marijuana group. Instead, it puts most of the stocks in our portfolio in the Consumer Product—Specialty group. There are just 28 stocks in the group, which means a lot of the smaller marijuana companies (like Jushi Holdings) are missing. And it also includes a handful of companies that are decidedly not in the marijuana business, like Energizer Holdings (batteries), Vuzix Corp. (augmented reality eyeglass) and Oil Dri (absorbent products).
Eventually, things will change. I expect there to be a true Marijuana group. But maybe not until federal legalization.
In the meantime, the industry continues to grow (very fast) and our stocks remain poised to resume their upward trends.
In the news over the past week:
Green Thumb (GTBIF) announced the closing of its acquisition of Dharma Pharmaceuticals, which gets it one of the five licenses in Virginia as well as an operating production facility. The first medical marijuana dispensary opened in Virginia last August, and home growing and possession of marijuana for adult use became legal in Virginia on July 1, but over-the-counter adult-use sales won’t begin until January 2024!
Jushi Holdings (JUSHF) today announced that Franklin Bioscience, a licensed medical marijuana processor to which Jushi provides operational and consulting services, had received authorization to commence operations at its new facility in Columbus, Ohio—and that Jushi had applied for Franklin Bioscience to become a subsidiary of Jushi.
Trulieve (TCNNF) today announced that it had begun planting in West Virginia, making it the first medical marijuana operator to begin operations in the state.
Looking at the charts, several of our stocks remain weak, but I’m not selling. I still think the sector has put in its bottom and the next big move for these stocks is up. But if you’re in the mood for buying, it’s smarter to focus on the strongest stocks, and those are Green Thumb (GTBIF), GrowGeneration (GRWG) and Innovative Industrial Properties (IIPR) (our most conservative holding).