Beyond the Bong
New Pot Stock Index Launches
American cannabis just hit another milestone.
And this might be the most surprising one yet…
And apparently we have an appetite for two things: weed and tacos!
A Case of the Munchies
Americans are buying pre-rolls as much as they’re buying Quesaritos and Beefy Fritos Burritos.
U.S. marijuana sales are currently neck and neck with the annual revenue of Taco Bell!
America’s favorite Mexican restaurant’s parent company, Yum Brands (NYSE: YUM), has long been one of my “munchie” plays on cannabis legalization.
In 2019, shares are performing admirably, up more than 16.5%.
Although, that’s only half of what my other two favorite munchie plays have gained this year.
Mondelēz International (Nasdaq: MDLZ) – the world’s largest snack food company and owner of Oreo and Chips Ahoy – as well as General Mills (NYSE: GIS) – the distributor of Totino’s Pizza Rolls – are each up more than 30% year to date.
So, despite May’s marijuana massacre – where 35 pot stocks lost 10% or more – the outlook is strong.
And sales continued to impress.
In fact, we have our monthly barometer from Planet 13 Holdings (OTC: PLNHF).
The Nevada cannabis company that operates the largest dispensary in the world just released customer traffic numbers for May. Its flagship SuperStore hit several milestones.
First, it averaged nearly 2,100 customers per day with an average purchase of $90.63.
Second, Planet 13 saw more than 100,000 total visitors for the month.
And, if you recall my CannaBiz Now! episode on the A-list surge in cannabis, the company’s exclusive Tyson Ranch (the brand founded by former heavyweight boxer Mike Tyson) is now the fifth-best-selling flower and fourth-best-selling pre-roll in Nevada.
Of course, booming sales and soaring traffic numbers are nothing new for Mary Jane.
But as the sector continues to become more mainstream, investors are being offered new ways to track cannabis companies…
Pot Stock Index Debut
During last month’s tumultuous stretch, we witnessed the launch of two new marijuana exchange-traded funds (ETFs).
Now OTC Markets Group (OTC: OTCM) is throwing its hat into the ring as well.
Keep in mind, this isn’t just a random offering. Roughly 56 pot stocks trade on the group’s OTCQX exchange. And 30 of these will be folded into the newly formed OTCQX Cannabis Index.
Want to know if your pot stock made the cut?
(Of course you do!)
Here’s the starting lineup…
Eagle-eyed investors will notice that this is a diverse index.
It isn’t just Canadian- or U.S.-based like many others.
It’s got CBD makers, Canadian licensed producers, American multistate operators and even some international plays.
The High Five
Below are this week’s High Five, where – each Monday – I cover the five pot stocks I believe will make major moves – up or down – in the week ahead.
1) Neptune Wellness Solutions (Nasdaq: NEPT) is making headlines! On Friday, the company announced a three-year, 125,000-kilogram extraction and purification deal with Tilray (Nasdaq: TLRY).
This sent shares soaring.
But the big moves might be far from over. On Wednesday, after the closing bell, Neptune Wellness will report fourth quarter earnings. It’s the only pot stock scheduled to report earnings this week.
2) Plus Products (OTC: PLPRF) began trading on the OTCQX last Thursday. The California edibles and gummy manufacturer upgraded from the OTCQB venture market. So it now joins more than 175 other companies that cross-trade shares in Canada and the U.S. on the exchange.
Plus Products will also acquire California extracts company Emerald Bay Wellness. This is a good match as Emerald Bay is already one of the largest suppliers of cannabis oil to Plus.
3) Scotts Miracle-Gro (NYSE: SMG) revised its full-year guidance last week. Its Hawthorne Gardening Company segment is expected to see sales grow between 75% and 80%. And it expects companywide sales to improve 13% to 14%.
The company said it continues to see strong growth in California, as well as in new markets such as Florida and Michigan.
Scotts shares set a new 52-week high on Friday. And we are entering the U.S. garden and planting season.
4) MedMen Enterprises (OTC: MMNFF) shares are perking back up after recently hitting new 52-week lows. And that’s because the company is shedding some of the negative headlines that have dogged shares.
An investor lawsuit – which the company saw as flawed – was voluntarily dismissed.
Then the company announced it was expanding into Long Beach by acquiring One Love Beach Club. This currently has a run rate of $6 million.
And to top off a positive week, MedMen was awarded one of six dispensary and delivery licenses in Pasadena. That brings MedMen’s total licenses in the state to 14, with 13 operational dispensaries.
5) Harborside (CSE: HBOR) is one of the oldest and largest cannabis retailers in the world. It operates two major California dispensaries in Oakland and San Jose. And it received one of the first medical cannabis licenses in the U.S.
In May, it did a reverse takeover of Lineage Grow Company, adding two dispensaries in Oregon.
Today, shares began trading on the CSE under the ticker “HBOR.”
As always, let’s compare our High Five with the industry’s benchmark…
As we all know, May was full of… dismay.
But the clouds are starting to clear.
Over the past month, the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) has slipped more than 6%.
And this week’s High Five have fallen on either side of this barometer…
Neptune Wellness is far and away the winner. The Tilray deal triggered a big pop.
Scotts Miracle-Gro has quietly chugged along and is up more than 50% year to date.
Meanwhile, Plus Products and MedMen have lagged the marijuana ETF over the past month. But they’re sparking back to life.
All in all, it was another week of milestones for cannabis. Even the Secure and Fair Enforcement (SAFE) Banking Act quietly snaked its way closer to a House floor vote. Already, nearly half of the House of Representatives is co-sponsoring the bill. And last week it was added to the body’s Union Calendar for a vote.
And I’m not expecting the news cycle to slow down anytime soon.
The race for the White House has already began. And the 2020 U.S. presidential election will be here sooner than we think.
That means months of mudslinging, name-calling and debates.
I have no doubt that legalization will be one of the key issues talked about. That’s going to push and pull on shares.
But we’re hunkered down for the long haul.
If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section below.
Here’s to high returns,
P.S. Last week, I was once again on Boss FM’s Secrets to Good Health & Happiness in Today’s World with Marc Courtenay. Check it out here!
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