Cannabis stocks are screaming higher this morning. Our AdvisorShares Pure US Cannabis (MSOS) ETF is up over 8%. Three of our portfolio names are up even more, 9% to 15%.
Volume is enormous.
We’ve had very nice trading gains. I suggested adding to MSOS with an 11.45 buy limit on November 22. That order hit. MSOS is now up over 25% in nine trading days.
What to do now? I’m holding for more gains.
Cannabis is strong because of speculation the cannabis sector-related banking reform known as SAFE banking will be incorporated into the National Defense Authorization Act that might be voted on Tuesday.
Advocates are trying to get capital market access in, on the logic that minorities who are favored in licensing are at a disadvantage because they have trouble getting financing. Depending on how it is written, this could be big because it might allow public companies to list on better exchanges.
Of course, there are no guarantees that any progress whatsoever will be made. Nevertheless, I suggest continuing to hold MSOS despite the 25% gains since I suggested it on the basis of my political analysis in late November. This is a “gamble” that actual progress will be made, which would send the cannabis sector and MSOS even higher.
Depending on the details of what happens, an MSOS spike on SAFE banking reform approval would likely be sellable, at least partially. Yes, there are several potential catalysts for the group in 2023, as I’ve described. But they will dribble out piecemeal, so theoretically, the sector will have time to retreat. Whether to sell the day of SAFE banking approval or hold for more gains, that’ll be the issue. We’ll cross that bridge when we get to it.
Keep in mind that there is no certainty Congress will approve any form of SAFE banking in the lame-duck session which runs through January 3. Though this is my base case at the moment. So far, I am happy I got us fully invested ahead of this big move.