Coronavirus Drives Stocks Down for 6th Day.
BAD NEWS FOR CANNABIS STOCKS with losses in the 19% range while S&P Index down 6% in the same period
The virus, which has now spread to 47 countries, has put pressure on businesses and supply chains around the world, which shouldn't bother cannabis companies.
So, why the sharp sell-off?
Over-valuable capitalization with limited sponsorship.
The kiss of death for misplaced investments that enter the public arena without am effective BUSINESS MODEL. Most companies in the cannabis space don't have a workable operational plan and operate on the premise that the business will grow on its own momemdum. Indeed, that argument alone raise billions of dollars, and now created billion of molars in losses. Not an idle state meet --- change the financial pages and witness the carnage.
Public companies without an effective Business Models should be immediately liquidated. Look at our pages for investment candidates. Don't ask a broker, because his losses are greater than yours.
.. if your powder is dry.
NOW IS THE OPPORTUNITY TO INVESTIGATE SUPERIOR BUSINESS MODELS IN THE CANNABIS SPACE, BUT DON'T BUY UNLESS YOU GET A BUY SIGNAL FROM GREENMARK 101 algorithm.
Cannabis has attracted significant attention from investors, manufacturers, and researchers. Despite the plant being illegal under federal law as a Schedule I drug, the U.S. legal marijuana industry was estimated at $10.4 billion in 2018 with 250,000 jobs devoted to the handling of plants. A total of 33 states have legalized marijuana for medical use, 10 of which allow adults to legally use the drug for recreational use. Indeed, that number may continue to rise, as more people are accepting the idea of legalizing marijuana across the United States. This article looks at some of the uses of marijuana as well as the overall market for the drug.
KEY TAKEAWAYS
More than half of Americans believe marijuana use should be legalized.
The drug is already legal in 33 states, with 10 allowing adults to legally use it for recreational purposes.
Shifts in political policy are also changing as we find out more about the uses of marijuana for medicinal purposes.
Although it is still a controlled substance under federal government guidelines, the FDA continues to evaluate changes to marketing and export rules.
Changing Attitudes Toward Cannabis
Remember "Reefer Madness"—the film from the 1930s that was produced to teach parents and their children about the threat of marijuana? The film was originally intended to educate audiences, but has now become a cult classic and a piece of satire. Just like the attitude about the film has changed, so too are people's feelings about marijuana itself. This is especially true as we learn more about the drug and the apparent benefits that come with using it for medical purposes. Once considered an illicit substance, it is still deemed a controlled drug under federal government guidelines. But the stigma is being shed at a breathtaking speed, and it appears marijuana is on its way to the mainstream. Marijuana is still considered a controlled substance under federal government guidelines.
62% of Americans believe the use of marijuana should be legalized. This is double what it was in 2000—31%—and five-time what it was in 1969—12%. Adults aged 50 to 64 report marijuana use has doubled in the past decade to 9% and use among adults 65 and older has increased seven times during the same period to nearly 3%. The U.S. marijuana industry will generate $17.5 billion in tax revenue by 2030.
Marijuana companies raised $13.8 billion in funding in 2018 and $21.95 in 2019. Six times the amount raised in 2017. We can expect this trend to continue, but important to the U.S. industry is also banking reform. Big banks are currently afraid of money laundering charges they may face if they work with these businesses. Besides the difficulty of getting capital, this means tremendous risks and inconvenience for companies operating in cash. The American Bankers' Association has been pushing for more legal clarity and bridging of the gap between federal and state law, and we could see banks warm up to cannabis if bills like the SAFE Banking Act are passed.
More states may legalize marijuana, too, including New York, New Jersey, Illinois, and Connecticut. U.S. Attorney General William Barr, announced he will not go after marijuana companies operating in states where the plant is legal. He also said the current discrepancy between state and federal law is "untenable" and needs to be fixed. He supports a federal law that prohibits marijuana everywhere.
CBD More than Three Letters
Marijuana has been used as a medicine in different cultures for thousands of years. The federal law banning it in the U.S., the Marihuana Tax Act, was passed in 1937. There is now growing acceptance of the plant as a legitimate option for patients who suffer from medical problems like chronic pain or seizures in modern-day America. This is mostly thanks to cannabidiol or CBD—a natural compound found in cannabis plants that is non-psychoactive. This means it doesn't make the consumer high. CBD is sold as an ingredient in oils, oral sprays, creams, pills, or edibles like gummies and lollipops. Purveyors claim CBD can provide relief from pain, combat anxiety, and depression. It's even been linked to helping people living with cancer.
It's true CBD is having its moment. The term CBD gummies was the third-most searched food-related term on Google in the U.S. in 2019. Large companies like Corona owner Constellation Brands (STZ.B) and Marlboro cigarette maker Altria Group (MO) have bought multibillion-dollar stakes in marijuana companies.
Estimates by investment bankers and the other kind "think" the market for CBD derived from hemp will grow from a $390 million-dollar market in 2018, to a $1.3 billion market—or 3.3x—by 2022.
Meanwhile, stock pushers say the hemp CBD market can reach as much as $22 billion by 2022. The number remains out of whack with reality but sells boatload cannabis stocks. Don't buy the noise unless your SHORT THE MARKET. The industry is two steps forward, one step back. Problematic regulations are a challenge to designing a successful Business Model. Too much stock momentum, too much demand and too much potential for this industry not to explode.
The FDA and CBD: NOT A FRIENDLY COMBINATION
Under the current U.S. Food and Drug Administration's (FDA) rules, all drugs containing CBD, a Schedule I substance, require the agency's approval. In June 2018, the agency also approved a CBD, marijuana-derived drug for the first time. GW Pharmaceuticals' (GWPH) Epidiolex was placed in the least restrictive Schedule V of the Controlled Substances Act by the U.S. Drug Enforcement Administration (DEA), which means it has a low potential for abuse. Under federal rules, it is also illegal to market food products or dietary supplements that contain CBD, but the FDA indicated that may change in the future. In a December 2018 press release, it said, "Although such products are generally prohibited to be introduced in interstate commerce, the FDA has authority to issue a regulation allowing the use of a pharmaceutical ingredient in a food or dietary supplement," it said. "We are taking new steps to evaluate whether we should pursue such a process." The statement was published after the Farm Bill legalizing the regulated production of hemp, another source of CBD, was passed.
Sent the wrong signal and completely distorted Business Models. All the public companies betting "on FDA softness" have declined more than 70%. Don't they know something, or have the stock-buying public see better advantages elsewhere? Long term investors expect all CBD to be placed in Schedule V or unscheduled altogether soon. A fool's delight! It's not easy for CBD to be unscheduled altogether because of international treaties the U.S. has signed. And while Epidiolex qualifies for Schedule V, only other FDA-approved marijuana-derived drugs with low levels of THC can expect to join it there.
Where's Big Money Flowing Into?
Technology is shaping the industry. Weed delivery company Eaze has raised $37 million and is reportedly valued at $300 million. It recently announced it is creating a platform to ship CBD products to 41 states. On-demand marijuana and cannabis delivery service Dutchie raised $3 million in 2018 from the venture capital firms. Expect to hear words like machine learning, automation, and blockchain used in relation to marijuana more often as well.
Meanwhile, straight out money into general cannabis plays is getting killed. 2019 new money in these stocks has lost on average 49% - and that's only one year. Our GREENMARK 101 algorithm predicts the event and demonstrated a way of shorts the market on larger-cap plays and indexing. Making money with Northridge News has become a profitable indoor sport.
NOW FOR THE SECRETS OF INVESTING CANNABIS STOCKS.
They're only one secret and it can be founding by reviewing company Business Model based on fundamental analysis.
Fundamental analysis is a method of determining a stock's real or "fair market" value.
Fundamental analysts search for stocks that are currently trading at prices that are higher or lower than their real value.
If the fair market value is higher than the market price, the stock is deemed to be undervalued and a buy recommendation is given.
In contrast, technical analysts ignore the fundamentals in favor of studying the historical price trends of the stock.
The key factor of fundamental analysis requires the identification of real assets for now and in the future. Not what you pay for them or their development costs, but they're worth to generate profits. The Business Model sponsored by most companies in the cannabis space is based on the assumption of what the industry is worth over the long term. Not a way to win respect from investors who want stable earnings per share. The future is well and good for a stable industry with known projection and predictable regulations. The cannabis industry doesn't have those luxuries and depends on noise to attract investors. Most investors don't know what a Business Model is or why it is important.
A business model is a company's plan for making a profit. It identifies the products or services the business will sell, the target market it has identified, and the expenses it anticipates. ... Investors need to review and evaluate the business plans of companies that interest them.
The other ingredient for success investment is --- Earnings per share. A company's profit divided by the number of common stock shares it has outstanding. EPS shows how much money a company makes for each share of its stock.
Locating companies with defined business models are difficult to find. As for cannabis industry is even harder.
Start your search by being an avid reader of our news feeds and that of Greenmark at https://www.fjcannabis.com