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.
Last year began with a big rally for cannabis stocks that left us quite skeptical. We warned in early February to go slow when things are hot. We were bullish longer-term, but the low-volume rally left us concerned.
This year, the NCV Global Cannabis Stock Index has rallied too, though not as strongly as last year’s start. Again, the volume is quite low. A year ago, when we warned about the low volume, we cited that only 7 of the cannabis names traded more than $5 million worth of stock on the first Friday of the year. This compared to 21 in 2022 and 21 in 2022. Well, today only 7 stocks exceeded $5 million in trading value.
The market sank on the first day with the overall stock market. For the week, the overall market fell sharply, while the GCSI rallied. The GCSI gained 5.2%, while the S&P 500 lost 1.5%. Last year, when the cannabis stocks rallied in the first week, the S&P 500 did too.
The reason cannabis stocks jumped on Wednesday and Thursday seems silly to us. It related to an article that was published on Wednesday that discussed how the DEA is considering rescheduling cannabis. Old news!
The story remains the same in our view. The DEA may reschedule cannabis from Schedule 1 to Schedule 3. If that happens, then 280E taxation would by law go away. The news this week did not change the probability of this outcome. We continue to keep our fingers crossed, but we have no basis for concluding that this will happen or when it might happen.
We are cautious about this rally to begin 2024. It happened on very low volume. We will repeat what we said to conclude the letter a year ago: The lack of trading volume concerned us.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
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Alan & Joel