Headwinds Aren’t Yet Lifting

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This week, Q2 will end. At this point, the New Cannabis Ventures Global Cannabis Stock Index, which closed at an all-time low on Friday, is down 10.5% so far this quarter and will likely post its 9th consecutive quarterly decline. Since the streak of quarterly declines began on 3/31/21, the cannabis sector has dropped 88.2%, while the S&P 500 has returned 13.4%.

We have been cautious on the cannabis sector this year, and we continue to believe that the recovery won’t be quick. Again, the two big issues that we think could help turn around the sector include the ability of American cannabis companies to potentially trade on a higher exchange rather than the OTC and the elimination of the onerous taxation of 280E. We aren’t sure when either of these will change. Until then, volumes remain very low, and there are several regulatory issues as well. Additionally, there are limited dividends, and mergers are few and far between. Our caution has been warranted.

While the near-term catalysts remain elusive, valuations seem very attractive for the most part. We have been sharing some better ideas for investors to consider and some worse ones to avoid. Despite the tremendous decline in prices, there are still some stocks where we can’t yet justify their prices, like Canopy Growth.

The presence of industry headwinds shouldn’t discourage long-term investors, but all investors need to appreciate that the turnaround in prices is likely to take a while to happen.

This week’s newsletter is sponsored by FTI Consulting Canada, Inc.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


BC Helps Drive Canadian Cannabis Sales Higher in April

Financial Reports

Canopy Growth Q4 Cannabis Revenue Drops 20% Sequentially to C$68.2 Million

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Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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