This Cannabis Sub-Sector Has Become Even More Popular

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.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.


Three months ago, just ahead of the introduction of the New Cannabis Ventures Ancillary Cannabis Index, we discussed how investors were starting to better appreciate ancillary stocks. Ancillary companies provide goods and services that enable companies that grow, process or sell cannabis to operate. We detailed several attributes that make the sub-sector attractive, including not being subject to 280E, the possibility to be traded on higher exchanges and the ability to scale across multiple states relative to cannabis companies restrained by a lack of interstate commerce.

While the index has declined modestly since we introduced it at the end of March, falling 5.3%, it has outpaced the overall market as measured by the Global Cannabis Stock Index, which has declined 7.8% thus far this quarter.

Each quarter, the professionally managed Global Cannabis Stock Index is rebalanced, and we just completed that exercise this week, with the rebalancing taking place at the close of business on June 30th. For a more extensive review of the upcoming changes to the Global Cannabis Stock Index, we encourage readers of this newsletter to join us at our premium subscription service 420 Investor.

The index will include 44 names, with 13 from the ancillary sub-sector, making it, along with MSOs, the largest sub-sector, with each at 29.5% of the index. Joining the index will be four relatively new names from this sub-sector, including  AFC Gamma, Forian, iPower and WM Technology.

The index has changed dramatically over the past year in terms of composition, which is based on trading volumes and minimum price levels. Here are the weightings at 6/30 compared to a year ago, with the ancillary weighting increasing from 21.6% to 29.5%:

The gain in the number of ancillary companies, along with the increases in the number of MSOs and international companies, has come at the expense of Canadian LPs and CBD companies. Of the 13 names in the index after it is rebalanced, 6 have debuted in trading over the past six months.

We continue to believe investors are well-served to pay attention to the ancillary sub-sector, especially as it has joined the MSOs as the largest part of the index. In addition to the advantages relative to direct operators that we have previously described, ancillary companies allow investors to participate in the growth of the industry without having to pick the best operators. From our perspective, ancillary companies offer the liquidity of Canadian LPs with the growth prospects of the American cannabis industry.

Get the facts and be ready for important milestones and catalysts with a subscription to Alan Brochstein’s 420 Investor, the longest running due diligence platform trusted by cannabis investors for over 7 years. The primary goal of 420 Investor is to provide professional, real-time, objective information about the top cannabis companies in the market in order to help investors Capitalize on Cannabis™.

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

To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index and the Ancillary Cannabis Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$12.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.


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

Get Our Sunday Newsletter