#25 - Big Predictions for 2020 Cannabis Investing

In this episode we make some predictions for what is to come in 2020 for cannabis investing. In this episode: 1. "The Great Divide" - Winners & Losers Emerge - Mentality will shift: sector will stop moving as one and winners will emerge - Shifting from ETF mentality to stock picking (from passive to active) - Example: Trulieve should separate from the pack given their isolation in Florida and strong financial performance - Losers will lose HARD while winners will distinguish themselves 2. Predicting Sales for Canada in 2020 - The $3B sales bet...under or over? - Major catalyst for 2020 sales with Cannabis 2.0 and Ontario store increases - Will be a slow rollout for both, so the ramp will be gradual - Many unknowns still to be seen (like how Beverages sell) - Still a short list of winners in Canada who will be in a better position in 2021 3. The US & Canada - The Separation Begins - US will begin to outperform Canada  - Illinois and Michigan will prove to be very strong markets with a strong ramp in 2020 but will really shine in 2021 - Data and results will drive investors to invest in the US in 2020 - 280E Taxation remains the biggest issue US operators will face - Big States which may go Rec: Pennsylvania, New York, New Jersey, Arizona (I mentioned Florida but their initiative is now dead) - New Jersey seems the most likely and represents a very lucrative market ("Florida 2.0") - Mexico story looks promising, Europe story is less attractive  - CORRECTION: MediPharm did NOT get their EU GMP certification yet, they got their Australian GMP 4. Rough Patch Ahead - Be Careful! - Capital crunch has turned into a capital crisis - very difficult to raise funds - Very few companies have gone under despite being very close to it - Circle the Drain Financing: Desperate companies will take crappy deals to try to save the ship - Some companies will turn it around, others won't - Bankruptcies will cause a domino effect and pull many others down with it - Ramp up of sales in Canada will be slow and won't be fully realized until H2 2021 - The general cannabis market will get punished as this occurs - There is no bottom for crappy companies! Some will go to zero! Especially those low on cash and burning fast - The companies who survive will come out stronger and better positioned 5. M&A From Unlikely Sources - Companies will look to merge to survive...but cash is king! - Potential for non-cannabis companies with cash on balance sheet combining with struggling cannabis companies 6. Up & Downs Continue - Things will not go straight up or down. Volatility will continue - FOMO is dead. Be patient, be picky and take profits! - No federal legalization in US in 2020 but 2-3 major states to go rec QUESTION: What are your predictions? Email us!