You’re reading a copy of 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 want to welcome our readers to the new year and are thankful that the atrocious year for cannabis stocks is finally over. The New Cannabis Ventures Global Cannabis Stock Index fell more than 70% in 2022 and endured a rough December.
After such a massive decline, the worst in the history of the index, the market could offer high returns to investors in 2023 and beyond. If the index were to triple, it would still be down since the end of 2021. To get to the level it reached at the end of 2020, it would need to increase more than 4.5 times.
Just because a stock or a sector declines doesn’t mean that it will rally. We believe, though, that the market is very oversold and offers great valuations for good companies.
I am reading a fantastic book now, Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice by Bill Browder, the founder and CEO of Hermitage Capital. Browder discusses his building of a massive Russian-focused investment fund and seeing it collapse in 1998. He was down over 90% quickly and was facing a plethora of challenges in Russia at the time. Hermitage recovered and became larger than ever shortly after the collapse. We hope that cannabis stocks recover from the big losses in 2021 and 2022 that have left the Global Cannabis Stock Index down 89.5% since the peak of 2021 in February.
We have shared the reasons for our positive outlook and have discussed the current challenges the stocks face. Even without two catalysts that could really ignite investor interest, which include NASDAQ listing for American cannabis companies or the end of 280E taxation, we think that there are drivers ahead that could restore confidence in investors, who are struggling with the current slowing of sales, the tightening of margins and the limited access to capital.
New Cannabis Ventures wishes you a great and prosperous new year and for the industry to recover.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
Empowering people of color in the cannabis business is Amber Senter’s passion. Founder and CEO of MAKR House and the co-founder, chair of the board and executive director of Supernova Women, Senter says much work needs to be done when it comes to social equity within the cannabis industry. In an exclusive interview, Senter discusses the challenges she had faced while growing her own California cannabis house of brands. She also talks about how other cities can learn from Oakland California’s robust social equity program that has helped to remove barriers to entry into the cannabis market.
After spending the year on a roller coaster, the Global Cannabis Stock Index declined 29.0% to 9.71 in December and down 70.4% for the year. Since its peak in February 2021, the index has dropped 89.5% from the 92.48 closing high. Jazz Pharmaceuticals, Turning Point Brands, Chicago Atlantic Real Estate Finance and AFC Gamma were the strongest four names – although Jazz was the only one to see an increase (1.5%). The four weakest were Ayr Wellness, Columbia Care, Hempacco and Cresco Labs – all were down significantly. There are some changes to the index for the new year.
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Alan & Joel
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