Hey folks, I wanted to let you know I’ll be stepping back from TheCannalysts project.
Back in February 2021 I “hit my number” for retirement, as I sold the rally and liquidated all but a small percentage of my cannabis portfolio. As a self employed entrepreneur with very little pension the feeling of hitting that number is extremely liberating.
I still remember 2008-09 and Automotive Armageddon and the considerable sleepless nights trying to figure out if my clients were going to survive. The COVID crisis and the present stock market decline did not cause me the level of consternation that seeing two of the big three automakers go into bankruptcy did.
Why? I was in a far more secure financial position. 2015 is when I hired a wealth management professional and slowly built a blue chip portfolio. Though I did handle my cannabis portfolio directly.
Cannabis (unrealized gains and all) reached a zenith of percentage allocation in my portfolio in the 2021 run up. I made the decision to scale out of Aphria (to become Tilray) shortly after they announced the merger AND when sales velocity declines hinted at what we have seen over the last eighteen months. That the market soared was a nice happenstance and let me hit my number much earlier than I had thought was possible.
Since that time I have been looking for a reasonable re-entry into cannabis. My problem is that the older I get the less risk I want to take. And right now the regulatory risk to US cannabis is beyond my threshold. Presently, I do not own any cannabis stocks and haven’t since April 2022 when CAOA was moved back to this week.
My present investment decisions are now based on the economic recovery, and coupling that economic recovery with regulatory reform in cannabis I see less risk adjusted return than investing in blue chips.
And don’t get me started on the operational and financial wasteland that Canadian cannabis is. Fixes are not apparent and catalysts are pretty well exhausted. It is extremely frustrating to watch.
Do I think US cannabis is a good economic play? Yes. But drilling down to what will make a company successful in today’s environment is likely going to be massively different with restrictions imposed by eventual (I hope) federal legalization.
TheCannalysts project has been an unbelievable learning experience. In the last 6 years I learned more about accounting treatments than 25 years of commercial lending.
From Molly I learned there is more to what drives the value of an investment than simply it’s operational efficiency. I also learned to grow cannabis from him, which I will not be retiring from.
From Cyto I learned about the make up of the cannabis plant and all the potential it truly holds, which could be massive. And importantly from an investment perspective, how much money it really takes to complete “true science”.
I am not retiring from my other businesses but I am uncomplicating my business life by stepping back from this project and the administration and time commitment.
I am hoping to deploy my cannabis gains to get a condo in Mexico, where myself and my wife can live 5 months of the year during winter. That will take due diligence, which we have been doing for several years, and we are looking at an appropriate time to execute.
TheCannalysts project was a way of getting deep into the cannabis industry, with the subscription revenue allowing me to “advise my book”. From your subscriptions we were able to attend conferences to learn more about the industry, tour production facilities and we were even invited to many conferences as speakers. We poured that knowledge back into the work that has graced this website for the last few years.
However, without a “cannabis book” the time and the effort have become too much at this juncture of my life to justify my further involvement.
I want to thank Molly and Cyto for their knowledge and friendship. Neither of which I will be giving up.
I want to thank Scotty, our great sound engineer, who made us sound so professional.
I want to thank the c-suites and the employees of so many cannabis companies, whom willfully shared their knowledge with us.
And I want to thank you, the subscriber, for allowing me into your world as an audience for my financial analysis, looks into the crystal ball, and for putting up with my rants.
Maybe my stepping back will coincide with a bottom on valuations. We truly do this so folks can make educated investment decisions. But I do caution on the “durability of valuations” until federal legislation AND the accompanying regulations are locked in. (To be clear, this isn’t a “bottom call” as we don’t do that shit.)
If the past 18 months has taught you anything… hopefully it is that carnies exist to make money off of investors, and relying on government actions (or “inactions” if you are hoping state by state will get you to the promised valuation multiples of other industries) requires a ton of patience, fortitude and luck.
Hopefully, over the past six years I was able to teach you how I go about analyzing companies’ operations through financial statements.
My decision to step back was made back in January of this year. My reasoning was simple… unless federal legislation landed by July in a meaningful way… we could be walking in this desert for years. And even since that decision, we were able to produce what I consider to be some of our most important work in the “KISS” series.
Do I think CAOA will pass? Not with the deadlock of present US politics. But CAOA does portend architecture that I believe to be immovable (eg. Excise tax at first sale). As does FAA, SRA and MORE.
Will incremental measures be passed? Well, with the Dems in charge … not without accompanying social equity of a meaningful nature (And no, the HOPE Act is not meaningful). If the Republicans get control of the government again… well, they had their chances in the past administration and how did that work out?
Frankly put… we could be in for a very long tractor pull until federal US legalization.
I do hope Molly & Cyto allow me to pop in once in awhile if I have something interesting to say.
Again, and with all my heart, I thank you for giving me the opportunity and audience.
That’s all I got
Cyto here, Molly and I will be changing how TheCannalysts operates going forward. We do not believe that the two of us can provide the well rounded snapshot of the industry we three have been able to provide over the years. We will be changing over to a free model with advertisements on the website in August. It will be a slow transition over the month, so please bear with us as we make the switch. We will be providing refunds to anyone that requests them through our contact form for the remaining time they have on their subscription. You will still be able to log into your account in August as we make the transition. If anyone’s account run out of time before we flip the website, please e-mail me and I will reactivate your account so you can continue reading content until the switch (firstname.lastname@example.org).
Thank you for your support, we all appreciate our subscribers for allowing us to remain independent. We hope for your continued support as Molly and I keep covering the cannabis industry.