You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.
Friends,
Cannabis stocks peaked in early 2021 after rallying in 2020, but they have been in a downtrend since then. That 2020 rally was quite large from the depths of the post-pandemic lows, but the Global Cannabis Stock Index rose only 5.2% that year overall. Since then, it has plunged from 44.39 on 12/31/20 to 5.26 currently, a decline of 88.2%. The index was 100 as of 12/31/12, and it is down over 94% since then. Just in 2026, the decline has been 20.2% year-to-date. What a terrible storm this has been!
I wrote about 280E taxation in late 2022, calling its potential elimination one of the two big cannabis catalysts potentially, with the other one being potential uplisting from the OTC for American cannabis companies. While neither of these has happened, 280E taxation could be eliminated if the cannabis rescheduling takes place. The President has issued an executive order, but there is no timeline.
These stocks have soared over the past year, but they are down considerably since the elections in 2024. Cannabis stocks certainly seem cheap by many measures, but the risk remains for some that their balance sheets will leave them in a very bad position. A number of companies have already turned themselves over to debt holders, like 4Front, Ayr Wellness, Cannabist, Gold Flora, MedMen, Schwazze and Tilt Holdings, but others will be forced to refinance their debt. I have called out Curaleaf for its massive debt, and they did extend some of it recently, though the level of debt remains quite high. There are other MSOs that face challenges with their debt as well.
280E taxation remains a big issue for American cannabis operators, but it is not really an issue for Canadian LPs operating in Canada or around the world. Not only are they not subject to 280E taxation, but they do trade on NASDAQ and not the OTC. Yet, these stocks are in a bear market too. My model portfolio at 420 Investor has 42.8% exposure to Canadian LPs currently and only 10.3% exposure to MSOs. The Global Cannabis Stock Index, which was just rebalanced on 3/31, currently has 25.8% exposure to MSOs and 29.1% exposure to Canadian LPs.
What I like about the Canadian LPs is that they have potential exposure to Europe and to Australia, as Canada is quite a mature market. Canada, which doesn’t have 280E taxation, does have a very high tax on cultivation. Perhaps that will change. In any event, that market has begun to consolidate, with acquisitions and license reductions. Still, there are a lot of licenses outstanding (1002 including 110 that are pending removal due to suspension, revocation or expiration). These stocks are trading near tangible book value or below. Some of them have exposure to the end of 280E taxation through their investments.
Here is the action over the past half-year in the seven Canadian LPs that are in the Global Cannabis Stock Index currently:
All are down, and two have lost more than half their value. During this period, MSOS has declined 23.2%, and the Global Cannabis Stock Index has dropped 31.5%.
The American cannabis stocks are all tied to potential rescheduling and the potential elimination of 280E taxation, but these may not happen. Ancillary cannabis companies would benefit if their customers are aided, but most Canadian LPs have no exposure to the U.S. Hopefully, this bear market will end soon. Happy Easter and Passover Holiday to all!
Sincerely,
Alan
This week’s newsletter is sponsored by Paul E. Saperstein Co.
Michigan Uniform Commercial Code (“UCC”) Article 9 Sale
On April 7th, equipment from Monster Holdings Group is being auctioned in Jackson, Michigan at the Jackson County Circuit Courthouse at 9:00 A.M, ET. All bids must be delivered online. Find out more about the Article 9 Sale of all assets of this extraction company.
Interested parties may contact Paul Cotto at 617-227-6553 or by email at pcotto@pesco.com.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past 3 weeks:
Exclusives
Cannabis Stocks Were Crushed in March
Capital Raises
British American Tobacco to Boost Stake in Charlotte’s Web
Jushi Borrows at 12.5% to Refinance Debt
Financial Reports
Tilray Q3 Cannabis Revenue Grew Nicely
To get real-time updates, follow Alan on X.com. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.
View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks.
Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor calendar.
