MedReleaf: Two Days After the IPO

“Damn it, I knew I should have bought it.” At the $7 range it was said to be a “screaming buy” by marijuana stocks researcher, Alan Brochstein. Unfortunately for some, the recent doom and gloom of the industry may have stopped them from picking this one up. In terms of revenue MedReleaf(LEAF) is an equal rival to Canopy Growth.

MedReleaf is now hovering in the low $9 range meaning us chumps missed out on about a 20% gain. Been there done that but it never feels good. The way I see it is that at $7.50 even if it went lower the price would eventually get back to $7.50. In the weed space, MedReleaf is a solid company being one of the early LPs providing medical marijuana since 2014. The experience, quality of products and attractive valuation should have made it almost a no-brainer. But when the rest of the space are at their recent depressing lows it’s hard to pull the trigger. In this type of environment many can’t help but think, “maybe it will go lower.”

 

Chuck Rifici and Tweed Feud

Recent tweets from Tweed co-founder Chuck Rifici have given the strong impression that he harbours some angst towards Tweed or at least towards some of the people who run it. It remains publicly unknown why he got voted out of the Tweed island but it is likely the source of his negative feelings towards them. Whatever the reason is it must have been something colossal to want to kick out one of the founding members. One would think that you would rather have Rifici on the Tweed team than against.

Now Chuck appears to want revenge with the launch of his new company, Cannabis Wheaton. To form a larger LP than Tweed perhaps seemed daunting so his plan is to gather a bunch of smaller fries. Whether Cannabis Wheaton is a well-thought out idea or just a desperate attempt to make another name for himself in the weed game remains to be seen. He may not be necessarily driven by revenge but you have to think that it’s a big part of his fuel mixture.

Rifici tweeted that he has sold off all of his Tweed shares and referred to it as, “good riddance.” I wouldn’t doubt that his sell off of millions of shares contributed to a recent drop in Tweed’s share price. Any comment he has recently expressed about Tweed have appeared to be jabs. Just days ago he announced the “poaching” of Tweed’s master grower.

If I were Chuck Rifici I would be swimming in the millions of dollars he has gained from shares of Tweed, Aurora Cannabis and Supreme Pharmaceuticals instead of tears and rage but it’s probably not about the money anymore.

 

 

Recent Lows in Canadian LP Share Prices

An unwritten agreement that you made with yourself when you signed up to be in this industry was that volatility would punch you in the gut at times. I’m not too bothered with Canopy Growth being in the $8 range but any lower would bug me. It shouldn’t bug me given that I’d still be up but giving up all those gains is a stinger.

To put it back in perspective when I started this journey of investing in marijuana stocks I told myself that I was in it for the long run. I didn’t even expect Canopy Growth to be at $8 at this time. If these stocks just arrived to where they are now I would be insanely happy. It just goes to show that emotions are a victim of the current trajectory and not the destination. Damn you feelings.

The bright side is that legislation has been announced furthering the possibility of legalization. The bad side is that the number of publicly traded LPs has increased which dilutes the industry. I think I’m more worried about potential regret than I am of this sector not working out.

 

Canopy Growth & Tesla

Detractors of the Canadian marijuana industry say the stocks in the industry are WAY overvalued, wouldn’t touch them and recommend others not to as well. Yes, from a value perspective it would go against conventional rules to do so. What some of these old guys in suits who have never smoked a joint in their life before don’t realize is that there is a huge marijuana market going on right now. These guys have the same rationale as Warren Buffett with technology stocks. Recently, he admitted that he “blew it.” If a guy like Warren Buffett can blow it then these guys on BNN can as well. They don’t even have the talent that Buffett ¬†possesses in one fingernail.

If you think Canopy Growth shares are overvalued then you shouldn’t even think about Tesla. Sure, Elon Musk is a wizard but his ambitions are much more speculative than a thriving Canadian marijuana market. Electric cars have not solidified its place yet in society and there are existing giant car makers all over the world who are competing in this industry. Tesla isn’t just a car maker but its other industries also face the same challenges and more. The only real hurdle that I see for Canopy Growth is whether or not legalization happens as planned. It is believed that there will be a shortage of marijuana supply for the recreational and medical markets or if not then just enough. If Canopy Growth can sell to its maximum capacity which will be close to 100 million grams then the share price will leave the single digits forever.

It’s easy to be scared off by these old stiffs bashing Canopy Growth but in my opinion there’s much more promise for delivery of success than there is with Tesla.

Marijuana Legalization & UN Treaties

As far as an average schmuck can tell, the road to marijuana legalization appears to be on its way. Those of us with Canadian pot stocks though might not feel as secure as others. Aside from the legislation not being passed yet there’s still the question of the UN drug treaties that the Canadian government hasn’t addressed.

If Canada does not deal with the legalities of their position with the treaties by July 1st, 2017 then they will not be able to legally legalize marijuana in the eye of international law. It sounds like a big deal but maybe it’s not. Still, investors do not like uncertainty. More importantly I do not like uncertainty.

One of the options and possibly the best option is for Canada to simply withdraw from the treaties. It makes you wonder why they just don’t go ahead and do this. Does the government have more ambitious plans with dealing with the treaty issue? When asked about this issue last week, Trudeau deflected with a politician’s answer leaving everyone to wonder.