Projections Fell Short of Expectations

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.


2023 was another tough year for cannabis investors. The NCV Global Cannabis Stock Index fell 16.5%. Since the peak in early 2021, it’s down over 91%. A recovery is long overdue, and perhaps 2024 will be a better year for cannabis stocks. As we have said, we believe that cannabis stocks will react very favorably to the potential rescheduling if 280E taxation on American cannabis producers and sellers is wiped out.

One part of the market that actually gained in price this year was the MSOs. The NCV American Cannabis Operator Index, which includes a dozen MSOs, rallied 7.6% during 2023. This move was fueled by a big gain from an all-time low set in August ahead of the potential rescheduling news:

While the index is up 37.5% from the all-time closing low on 8/24, it is also down 27.7% from the close on 9/15. These stocks have been very volatile! For all of 2023, only two of the top five MSOs by market cap or revenue were up. One was down just slightly, while two fell sharply. The average price gain was 2.6%, a little short of the index but ahead of the return of the MSOS ETF at 0.3%:

We think that one of the big factors that impacts stock prices is revenue or earnings projections. During 2023, expectations for revenue and for adjusted EBITDA fell for the Big 5 MSOs. Here it is (expressed in millions):

The estimates fell sharply for all of these MSOs for both revenue and for adjusted EBITDA in 2023. They also fell for 2024 and 2025.

Revenue shortfalls were not exclusive to the MSO sub-sector, and the lack of strong revenue growth for the MSOs as well as the ancillary companies and the Canadian LPs weighed heavily on investor sentiment. As we said two weeks ago, 280E taxation elimination could set off a big recovery for the entire sector. Still, how much the market goes up will be impacted by revenue growth and earnings improvements. Let’s hope that the legal cannabis market does better in 2024.

Happy New Year!

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


Global Cannabis Stock Index Rallies in December

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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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