MJ Stocks Analysis

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MJ Stocks in March and Beyond
March came in like a lion and went out like a lamb dismembered and devoured by that very lion.

The same beast that ran the MJ markets up has also been the reason for its demise. The run up created all sorts of weak handed players and flippers in search of short term gains. The flippers obviously had no intention of holding and the weak hands couldn't hold as the value of those positions eroded, therefore there is no real support for most MJ stocks.

Unfortunately this is the annual cycle for the MJ penny plays; a major run up in the first quarter of the year followed by a sell off into the remaining 3 quarters, as we have seen for the past 3 years with the publicly traded MJ market.

The fevered pitch reached by the MJ industry this year was unprecedented due to Colorado's legalization and while many MJ equities are well of their Feb/March highs, many of the same stocks are still at all time highs, a fact that seems to be forgotten in the recent spiral downwards.

I must say that I expected 2014 to be the year the MJ industry breaks the sell off cycle described above. The American public and more important, market participants have been given an excellent preview of the newly illuminated and legal cannabis market thanks to the stunningly successful legalization efforts in Colorado. The second state to legalize cannabis, Washington will be online in a few weeks. I'm not sure where, why, or how this cycle has not been broken by these developments alone but nevertheless, here we are steadily fading away.

I'm fully vested at this point having cleaned out my MJ portfolio with players I felt were undesirable. I have rolled some profits into VAPE but that will be the last of my buying until Q4 later this year.

The market needs a major catalyst right now. I'm skeptical that earnings reports could be that catalyst because with of the nature of earnings reported by pink sheet and OTC stocks. Several popular MJ companies have announced multi-millions dollar deals but were met with muted responses in the equities that track the companies.

The biggest catalyst needed is rescheduling of cannabis. Despite the new DOJ "guidelines" for institutional banking involvement in the legal cannabis markets, from what I have been hearing, those banks are still hesitant to do business with any MJ companies. Ironically, Bank of America and several others have been fined in recent years for laundering hundreds of millions of cartel drug money but that's beside the point.

The point is rescheduling cannabis is probably the biggest catalyst aside from full scale federal legalization. Unfortunately we all know how slow the government bureaucracy moves unless they are lying to rush the country to war or cover up some malfeasance. Rescheduling cannabis is probably at the very least a year away. Everyone is awaiting the conclusions of the recreational legalization in Colorado and Washington before making any further changes to existing regulations. The US Government is wary of acknowledging the 8 plus decade of lies about cannabis but more significantly, they do not want to repeat what happened in California back in 2003 when Prop 215 was passed and hundreds of dispensaries opened up before legal infrastructure was in place to regulate the new industry.

Thankfully, the cannabis movement is way too far along to backtrack and public support for legalization is near an all time high across the country. I'm sure the MJ market and the MJ equities will boom again. Maybe we'll have to wait until Q1 of 2015 or maybe it comes sooner but it will return.