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Cannabis Investor
Profit from the Best Cannabis Stocks

March 9, 2022

In my issue two weeks ago, the day before Russia invaded Ukraine, I told you that my favorite three cannabis stocks for buying (not that there was any hurry) were Cresco Labs (CRLBF) for its value and chart; Curaleaf (CURLF) for its size and speed of growth; and Verano (VRNOF) for its speed of growth and chart.



Those are still my favorites. Not much has changed. And while so many of the world’s economic connections have been affected by the actions in Ukraine, the elements of the U.S. cannabis economy, which is heavily domestic, seem fairly immune.

In my issue two weeks ago, the day before Russia invaded Ukraine, I told you that my favorite three cannabis stocks for buying (not that there was any hurry) were Cresco Labs (CRLBF) for its value and chart; Curaleaf (CURLF) for its size and speed of growth; and Verano (VRNOF) for its speed of growth and chart.

Those are still my favorites. Not much has changed. And while so many of the world’s economic connections have been affected by the actions in Ukraine, the elements of the U.S. cannabis economy, which is heavily domestic, seem fairly immune.

Yet the stocks are still not strong. The broad market is not strong either.

Still, there is reason for optimism, as the basing pattern for the sector continues, fundamental growth is still impressive, and the prospects for future growth remain very bright as New York is likely to legalize recreational use in 2023—taking us one step closer to full national legalization.

In the meantime, there have been a couple of quarterly reports from our portfolio companies.

Cresco Labs (CRLBF) is due to report fourth-quarter results March 23 and its stock continues to hold above its January low, which is good. CRLBF is the portfolio’s largest position.

Curaleaf (CURLF) reported fourth-quarter results on March 3 after the market close. Revenues were $320 million, up 39% from the prior year, and net loss was $0.04 per share, as the company continues to invest aggressively in the future. Retail revenue was $226 million, or 71% of the total, while wholesale revenue was $94 million. Gross profit margin was 49.7%, an increase of approximately 190 basis points from the fourth quarter of 2020, reflecting continued efficiency in all operations and improving economies of scale. As of March 3, Curaleaf had 126 retail locations and thus it remains king of the hill in the industry.

But the stock has fallen to new lows over the past week, in part because of perceptions that the company has ties to Russia. Previously, it did, but the company took pains to clarify its distance from Russia with a letter to shareholders that included these lines: “Our Executive Chairman and largest shareholder, Boris Jordan, is an American citizen, born and raised on Long Island, New York. He is not, and has never been, a citizen of any other country. Mr. Jordan spent several years working in Europe and Russia and currently has several businesses in the U.S. (Curaleaf among them), Europe and Russia.

Our second largest shareholder is Andrei Blokh, a successful retired CPG entrepreneur who is not active in the Company. Mr. Blokh is a U.S. citizen, who also holds a Russian passport. The substantial majority of our shares are owned by the retail investor community and institutional investors.” CURLF is now trading 67% off its high of last February, and by valuation measures (which I discussed in the latest issue) it has become substantially more attractive over the past week.

Green Thumb (GTBIF) reported fourth-quarter results March 1 before the market open. Revenue was $244 million, up 37% from the prior year and eps was $.10, marking the company’s sixth consecutive quarter of GAAP net income, the result of a careful expansion program. Green Thumb now has 73 stores in 15 states, but in the past week the stock has fallen through its January low.

Innovative Industrial Properties (IIPR), our marijuana REIT, reported way back on February 23, so there’s nothing new to report, but the stock is holding at its January low, so if a REIT makes sense for your portfolio, this is attractive here. In our portfolio, we’re underweight IIPR because we’re looking to ride faster horses once the sector turns up.

TerrAscend (TRSSF) is the smallest of the vertically integrated multistate operators in our portfolio, but it’s getting larger. Its acquisition of Gage, due to be completed March 10 (tomorrow), will bring it a leadership position in the Michigan market, which is currently the third-largest legal cannabis market in the U.S. After the acquisition, TerrAscend will be in six states and have 25 operating dispensaries. As for the chart, it’s impressive (in a relative way). Because the stock was less heavily owned, it was less heavily sold, and thus its stock has been holding at support since way back in November.

Trulieve (TCNNF) has no news, but the company is due to release fourth quarter results March 30, before the market open and the stock is holding right at its late-January low, which is good.

Verano Holdings (VRNOF) has not yet announced an earnings release date (positive earnings are expected once more), but the stock has fallen to new lows, which is not good.

Summing up, while the cannabis industry has minimal worries about international geopolitical forces, the stocks in the sector are still not strong. We’re in a bear market. But as the trend toward legalization slowly continues and these companies continue to see good fundamental growth, it is inevitable that these stocks will turn up again. Patience.