Cannabis stocks — you’re about to live in a GOLD RUSH
Since the Canadian government will announce its plan for legalized recreational cannabis tomorrow, thought I’d share a few thoughts on this potentially massive money-making opportunity.
I started trading cannabis stocks on August 1, 2016 … if you see a company mentioned in the news I’ve probably bought & sold it.
While I have zero financial background or training, I am a pattern recognition machine and therefore excellent predictor, and that’s how I succeeded. By end of December I’d made enough to cover my bills into early 2018.
Here’s what I’ve learned that maybe you’ll find helpful.
DISCLAIMER: there are no stock tips or buy suggestions here… do your homework and don’t take anyone’s word for anything.
Follow your gut!
*** WHAT’S HAPPENING? ***
Canada is emerging as the world leader in cannabis production, sale and regulation.
Tomorrow, the Canadian government will announce its intentions on legalizing marijuana for recreational use.
*** WHAT IF THE LAW DOESN’T PASS? ***
As IF the government doesn’t want the tax revenue. Some conservative estimates say it’ll become a 5 billion dollar industry by 2019.
*** WHO DO I BUY STOCK FROM? ***
From an LP, a Licensed Producer — a government licence that permits a company to grow cannabis on a large scale, then sell it to doctor-approved patients.
Currently, there are about 35 Canadian LPs who can legally sell cannabis to medical patients. The majority of these are located in Ontario.
However, not all LPs are are publicly traded. Of those that are, many are still considered “penny stocks”, but several LPs have graduated to trading on the TSX. See attached photo for some publicly traded LPs.
Interestingly, know who’s founding and running these LPs? Former Ottawa tech and software moguls, and emigrants from big pharma. This is big business… just to _apply_ for an LP licence can cost $1,000,000.
Here’s a link to Health Canada’s list of approved LPs.
*** HOW TO INVEST? ***
Most banks offer an app for your phone that you can trade yourself, or, get a broker to help you.
(Not sure if things have changed, but I had to sign a letter with the bank back in August, “yes, I understand these stocks are super volatile and risky…”)
Don’t limit the investing to just LPs… this brand-new industry will create many companies to profit from!
Like the one that creates an app to order the weed, the company that makes the disposable vaporizer or the tamper-proof container it arrives in…. there’ll be specialized marketing firms, companies that do quality testing, lights and vertical farming equipment… it’ll be endless.
*** THINGS TO NOTE DURING YOUR RESEARCH ***
A few points to consider while researching which LP to invest in:
- how many patients do they currently serve
- do they have a positive EBITDA
- make sure the LP is licensed to sell extracts (oils, etc)
- what’s the production cost of 1 gram
- do they sell internationally
- what size is their growing facility (sq/ft)
- what’s the LPs legal output (kg/year)
- what’s the company’s defining niche… grown by sunlight? Purely organic?
*** SEEMS GREAT, WHAT’S THE CATCH? ***
Risk and stress.
Risk — this is a very volatile industry, somewhat falsely inflated by hope and speculation. This is gambling!
Stress — trading stocks is a cold game of non-attachment, calm and zero emotions. I have these characteristics in abundance but it still got to me, some days overwhelmingly.
It’s almost like a parasite embedded in my brain… it constantly pops up… “what’s it at now?”… check the stock app like an addict… scroll the news, scroll social media feeds searching for a clue, calculator app always open “what if I do this?”… pouring over company prospectus’ at night… phone constantly in hand … sure I achieved a 19% return day trading, but the price was it consumed me, and I’ll bet it will you, too.
*** LET’S DO SOME MATH ***
If you’re looking to become retire-right-now-rich from this game, I’d recommend adjusting your expectations — it takes a LOT of initial capital to do that.
Instead, aim to pay for a vacation, maybe modify your car or buy a new bedroom set.
Because for example:
LP FakeName1 trades at $2.00/share
You invest $10,000, giving you 5,000 shares
Stock increases to $4.00, you’ve doubled your money
Problem is, many of the less risky LP stocks are trading much higher…
LP FakeName2 trades at $9.00/share
You invest the same $10,000, giving you 1,111 shares
To double your money the stock has to hit $18/share… which could take months, if ever.
*** CONCLUSION ***
I’ll leave you with a classic stock market cliche:
Bulls make money, bears make money, pigs make nothing.
Good luck, and let me know how you make out!