JohnCM Investment Corner

[JohnCM]

INVESTMENT TOPICS 11/15/2020

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CANNABIS STOCK PICK OF THE WEEK
HIGH TIDE HITIF $0.1529
Leading Canadian Cannabis Retailer with 65 Operating Retail Locations and $148 million in Annualized Revenue.

Why Cannabis?

I have followed the Cannabis sector for over 7 years. There are now 3 solid reasons to look at the Cannabis sector in regard to your investment portfolio.

Number one. MOMENTUM. States are falling like dominos legalizing marijuana for recreational use. Throw in the Biden win, and this is a trend that cannot be stopped.

Number two. FINALLY, cannabis companies are reporting net profitable quarters. Look what happened to Tesla when they reported their first profitable quarter. Two companies of note, Trulieve and Cresco.

Number three. The ARBITRAGE play. American companies, wanting to partner with or purchase Cannabis companies, have to stay at arm’s length from Cannabis companies because marijuana is a schedule one substance (the most dangerous) and it is illegal federally.

When the fed loosens its grip and/or marijuana is legalized federally, BIG business will rush in to swoop up already established Cannabis companies at a premium. BIG tobacco, BIG liquor, BIG beverage, BIG pharmaceutical, BIG leisure, retail grocer, health food and nutritional companies.

Banks cannot do business with marijuana. IRS does not recognize Cannabis businesses. They cannot write off their business expenses. So, what do we see taking place in the future? The next Stimulus Bill contains the “Safe Banking Act” (pork) that will give banks the ability to do business with Cannabis companies. Marijuana should get rescheduled within the next 2 years. It is recognized as having no medical value for the past 90 years. It needs to be rescheduled down to at least number three from one (the most dangerous) to allow businesses to be recognized, as all other businesses are, in the eyes of the IRS.

Federal legalization of Marijuana. Pretty soon everyone, save a few of the states, will legalize marijuana. At some point it only makes sense to legalize on a federal level.

Big names – Trulieve. Cresco. Curaleaf. AYR Strategies. Green Thumb

Medium names – Terrascend. Charlotte’s Web. Harvest Health. Jushi. Columbia.

Small names – MedMen. High Tide. Tilt. 4Front.