Barron.com: Why Not To Invest In Marijuana Stocks (At Least Until The Smoke Clears)

Read this inside look at the marijuana industry’s biggest players — including numbers from one of the two legally licensed cannabis retailers right here in Iowa:

You’d Have to Be High to Buy American Marijuana Stocks | Barrons.com

Excerpts from the article include:

Besides iAnthus, the main multistate U.S. operators include Curaleaf Holdings (CURA.Canada), Acreage Holdings (ACRG.U.Canada), Green Thumb Industries (GTII.Canada), MedMen Enterprises (MMEN.Canada), Harvest Health & Recreation (HARV.Canada), and Trulieve Cannabis (TRUL.Canada).

Only two of the multistate contenders have turned a profit: Harvest Health earned $4 million in the first nine months of 2018, on revenue of $30 million, while Trulieve made $32 million on $67 million in the same stretch, in its lucrative home base of Florida. The rest run millions of dollars in annual negative free cash flow.

Further down the page…

With profits so scarce, cannabis companies tend to emphasize how many licenses they’ve acquired. By that measure, Acreage has the biggest potential footprint so far, with 79 retail licenses in 19 states. Close behind are Harvest, with 86 licenses in 12 states, and Chicago-based Green Thumb, with 83 in 10 states. Curaleaf has licenses for 61 in 13 states.

Some companies brag about the large populations in states where they’ve established their toeholds. Acreage claims that its shops potentially will be serving 176 million Americans, while Curaleaf claims an “addressable population” of 146 million.

The advisory board of New York–based Acreage features former Speaker of the U.S. House of Representatives John Boehner, and former Massachusetts Governor and potential presidential candidate Bill Weld—both Republicans—and a former Tory prime minister of Canada, Brian Mulroney. “They’ve learned how to navigate complex bureaucracies,” says Acreage President George Allen. “They are very valuable in helping us get problems solved.”

While American pot sellers are eager to open a lot of shops, they’d rather do so in states that limit retail licenses. Curaleaf CEO Joe Lusardi has no interest in Oregon, for example, where wide-open licensing has resulted in abundant product supply and falling prices. “The market there is collapsing,” he says. “It’s hard to find people making money in Oregon.”

Rather than bid in a dozen states, Trulieve has focused on Florida’s medical-marijuana market. It now has 24 locations and won a state trial court ruling this month that held Florida’s cap on dispensaries to be unconstitutional.

And the final part of the article, which should be sent to any Pothead Pete’s:

With a collective market cap of $14 billion, and scarce evidence that they can turn a profit, these Canadian-listed American pot dealers are hard to recommend beyond a small, broad bet.

And more Canadian-listed companies will surely jump into the fray. “Anyone can take something public in Canada,” says iAnthus CEO Ford. “If you smoked a joint, they’ll bring you public and you’ll probably get a good valuation for a time.”

When the prohibition of alcohol ended in America, the booze business was no doubt as chaotic and exciting. But if you’re thinking of experimenting with U.S. pot stocks, it’s better to wait for some of the smoke to clear.

So, after reading Barron’s article on why not to yet buy pot stocks…share the article and don’t take economic advice from this fella. (You’re welcome).