Jimmy Mengel has pitched pot stocks several times before, but now he’s upped the ante and is launching a marijuana-only newsletter service called The Marijuana Manifesto… which is probably as good a sign of a market top as we could hope for, but we’ll see.
In launching this service, which he’s selling for about $2,000 a year, he’s promising great riches starting with the impending legalization of marijuana in Canada… and he’s hinting at three specific stocks that he calls “Green Rush” plays.
So… what’s the deal? Well, he starts with that April 20 assertion:
“On April 20, leading government officials are set to make an explosive announcement.
“A legal move that will singlehandedly…
“Unleash a $150 BILLION untapped market…
“And send three tiny pot stocks surging for historic 1,000% gains or higher, virtually overnight.
“Forbes writes this one event ‘will make investors extremely wealthy.’
“Troy Dayton, CEO of the hedge fund ArcView Group, says ‘new millionaires and potential billionaires are about to be made.’
“And in anticipation of this fast-approaching event…
“Government Insiders Are Moving Their Money Into Cannabis… And Seeing Bigger Profits Than Their Salaries”
And yes, that April 20 date refers to Canada… so this is what’s really enticing folks to subscribe to Mengel’s service:
“On April 20, The Doors to the $200 Billion Pot Market Will Be Blown Off The Hinges…
“On that Thursday, the Canadian Parliament will convene for its first spring session…
“Prime Minister Justin Trudeau will walk to the podium… calmly approach the mic…
“And in one fell swoop he’ll declare the end of marijuana prohibition throughout Canada.
“Sparking a 17,400% sales surge that will mint all-new millionaires.
“Within 24 hours…
“200 marijuana stores will open
“$2 million in taxes will be generated
“And certain well-positioned pot stocks will explode for 1,000% gains or higher virtually overnight.”
All this based on the estimate that the Canadian cannabis market could grow from the current $126 million in sales to $22 billion over the next three or four years. Which, of course, would be a lot of growth.
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And yes, the liberal government in Canada will almost certainly introduce new marijuana legislation fairly early in the legislative session this year — April 20 is, of course, the annual cannabis “holiday” inspired by the “420” codeword popularized by the weed counterculture in California in the 1970s. Canada did announce to the UN that it intended to pursue changing its marijuana laws on April 20 of 2016, but there’s certainly no guarantee that the legislation will be either introduced or voted on on April 20 this year.
It’s certainly big news both in Canada and in the cannabis community — and among marijuana investors, who have the same verve and vigor of rare earth metals and 3D printing investors from a decade ago, and rather more than the stevia investors of three years ago. There’s a relatively sober article here on the likely timeline for changes to the Canadian law (summary: it is likely to change, but it’s not clear whether it will be regulatory or legislative and it will probably include lots of details that could easily take a year or more to go “live”).
So what are the stocks that Mengel thinks can bring huge profits your way? Let’s check the clues…
“Green Rush Play #1: “Canada’s $5.5 Billion Marijuana Monopoly”
“If there’s one play I recommend you own for Canada’s imminent legalization, this is it.
“It’s the undisputed monopoly of their legal pot market, yet I doubt most investors have ever heard of it.
“The Financial Post calls it ‘Canada’s first cannabis unicorn.’ And it has a $1 billion valuation, yet still trades for cheap.
“In fact, I consider it the single best marijuana opportunity in all of North America.”
OK, some of you will already know the name of this one — need a few more clues? Here’s a little bit:
“It’s Canada’s first licensed cannabis distributor and manufacturer
“Its revenue surged 453% in just 12 months, even with the Canada cannabis market still very limited…
“It’s the first marijuana producer to be listed on a major stock exchange
“And it controls one-quarter of the Canada cannabis market, with potential to only get bigger.
“Right now, the company’s revenues are tiny — a mere $12 million.”
The “$5.5 billion giant” part of the spiel comes from doing simple math — they say that Canada’s pot market will grow to $22 billion, and that this company currently has roughly a quarter of the market, so naturally in 2020 it will have a quarter of that market… that’s $5.5 billion.
That’s some very precise logic for an imprecise world — and even on that front the numbers don’t quite match up, since they say the stock has a $12 million revenue number out of the current $126 million Canadian cannabis market, which is about 10%, not 25%.
But, to be fair, that $12 million number stopped being accurate about a year ago — here Mengel is teasing Canopy Growth, which moved up to the main Toronto exchange and now has the ticker WEED (the US OTC ticker is still TWMJF). This is a conglomerate that primarily includes the big Tweed marijuana brand in Canada, as well as several established medical marijuana growing and selling operations.
It’s generally appealing because it has some brand power, and because Canada seems likely to be a regulated environment for cannabis, with some sort of control over the amount that can be produced and sold, and that favors the established players. That doesn’t mean the financials make sense — this is still a growth story that’s based on a regulatory regime and a consumer demand picture and marketplace that we don’t really know much about yet, so there’s lots of guessing to be done.
Currently, most of the guessing is on the optimistic side, which is why this is referred to as the first “unicorn” in Canadian marijuana even though that term doesn’t really apply here (“unicorn” is the now not-so-appropriate term that is used to refer to venture capital-funded companies that reach a billion-dollar valuation, because such things were so rare as to be mythical… but there are dozens of them now, in these days of easier access to startup capital, and, as you might have noticed, Canopy Growth is no longer venture-funded and has been public for a while, it was a $100 million company when it IPO’d last Summer).
So this has certainly been one of the big winners of the medical marijuana business in Canada so far, and it may well have a powerful brand name if and when recreational marijuana becomes a very large business North of the Border, and it also just bought one of its larger competitors (Mettrum).
But right now, of course, the financials are ridiculous — as they are for essentially all marijuana companies. WEED trades at about 40X trailing sales, and will require substantial capital investment to grow ten times more marijuana than they’re growing today (it’s a regulated agricultural product, so it has some economies of scale — but not the way that a software company is easily scaleable), so they’ll presumably keep selling a lot of shares to raise capital for that growth.
In their favor, they are more or less profitable — the new growing capacity and their acquisitions are capitalized, and the major asset (their marijuana plants) goes through the somewhat confusing cycle of “change in fair value of biological assets” like farm products do, but under those accounting procedures they did report a small net profit for the last nine months of last year and a relatively small (compared to their market cap) cash burn of about $30 million. You can see their latest financials here if you’re curious.
I’m not particularly interested in owning this stock, but that’s because I can’t get a handle on valuations or long-term potential for any of the marijuana stocks and because I don’t have a good understanding of the market, or who or why would have a competitive edge in the end in what is fundamentally an agricultural commodity that has very uncertain pricing as it moves further toward full recreational legality in more place — that doesn’t mean they mightn’t be good trades, as many of them have been in the past, but it means the sector worries me enough that I haven’t ever dipped my toe in. I’ve missed out on some windfall gains that many traders in the sector have enjoyed, but I don’t have to sleep with one eye open wondering which of these stocks will be the next to fall 80%.
If I were going to dip my toe into the sector, I expect I’d find an established and brand-owning company like Canopy to be the most sensible first purchase– you just have to have clear in your head that there’s no rational reason to be confident that the price should be at $6 or $12, either one is a wild premium to the current business operations so you’re just making guesses about the future. That’s true of many stocks, and it doesn’t mean it won’t work out… just know that sentiment can turn, and don’t talk yourself into believing the fundamental argument for these kinds of stocks.
There’s no fundamental argument you can make rationally for Tesla (TSLA) stock either, for example, I’m not just picking in marijuana. That doesn’t mean people aren’t making money on Tesla, it just means that you should giggle a little when people try to justify a Tesla investment by talking about gross margins and sales and 2025 earnings estimates — sometimes a story is enough to drive even a $40 billion automaker, so the notion that it can easily drive a $1 billion weedgrower is not so shocking.
So… there’s one growth idea for you. And yes, you can feel free to pile on and chide me for missing out on the marijuana stocks — that happens pretty much every time I write about these kinds of stocks, and I wish all the pot investors the best… I just can’t wrap my head around the financials and think about these stocks as long-term investments, and I know that I’m no more informed on their trading potential than thousands of other folks, so I see no particular edge for myself and I stay away. It’s OK to wait for pitches that are in your strike zone.
But I got off on a tangent talking about the sector again… what are the other stocks Mengel is excited about?
“Green Rush Play #2: CEO Behind OxyContin Bucks Big Pharma to Sell a More Effective Painkiller: Medical Marijuana….
“Big Pharma execs are flooding to medical marijuana.
“And they’re rushing to one tiny Canada pot play in particular.
“The CEO and founder has successfully overseen 11 painkillers to market, including several versions of OxyContin.
“So he knows a profitable thing when he sees it.”
That should be pretty easy to find, then, not many marijuana companies are run by former big Pharma execs. Other clues?
“The firm operates a state-of-the-art 23,500-square-foot facility that was licensed by the Canadian government last year….
“Just in November, this company IPO’d for over $2 a share.
“That makes it the single biggest marijuana IPO yet.
“But it looks like the very beginning of a historic growth story.
“When you consider that the pain market alone is over half-a-billion dollars…
“This company is much like buying Pfizer, Merck, or Bristol Myers-Squib when they first went public in 1942.”
This is the relatively young company (OK, most marijuana companies are not yet old enough for kindergarten… but still, this is a newby) Emblem (EMC on the Venture exchange in Canada, EMMBF OTC in the US). It is both a medical marijuana supplier with ambitions of scaling up to be in competition with Canopy and the other large players, and a medical marijuana product developer that’s trying to create precision-dosing products for marijuana and cannabis oil.
The market cap is somewhere in the $120 million range, but they’ve been doing fast and furious financings so I’m not sure that’s precisely accurate… and other than that, and the fact that there are some early funders and insiders with substantial stakes, I don’t know much about them. There’s a strongly positive SeekingAlpha blog about them that came out around the time of the IPO and includes quite a bit of data if you’d like to use that to get up to speed. The price spiked up to $3 on the first day of trading in Canada, and reached $4.50 briefly in the first month or so, but is now back down to the $2 neighborhood as, it appears, enthusiasm has been slightly diminished by follow-on financings. Don’t know much else about them, they are essentially “pre-revenue” still, but but they do have real facilities and are trying to grow production.
And one more?
“Green Rush Play #3: “Canada’s Ultimate Cannabis VC Firm”
“Gains Potential: 4,000%
“…. it’s a group of Manhattan VC investors who bucked Wall Street and moved to the remote wilderness of Canada.
“Their mission?
“Get in on the world’s $200 billion legal cannabis market while it’s still early.”
OK, so this is presumably some kind of “roll up” company that’s acquiring other companies in the cannabis space. More clues?
“The handful of licensed firms will be the real winners when cannabis becomes 100% legal in April.
“And here’s the thing…
“This venture capital group has scooped up SEVEN of these licensed firms.
“That’s 20% of Canada’s hottest marijuana assets — all bought at fire-sale prices…
“And they did it by aiming at these undervalued firms… BEFORE 100% legalization takes place.
“They bought one firm for $6 million, even though its assets were valued at $65 million.
“That’s an instant 1,000% return.
“One of their latest acquisitions includes what’s perhaps Canada’s best cannabis asset.”
Other clues about the investment?
“The company still trades for $1, with room for immediate 10-fold returns ahead.”
There are a couple US-focused firms that are essentially publicly-traded venture capital funders in marijuana that I’m aware of, iAnthus Capital and CannaRoyalty, but if we’re talking Canada this is most likely PharmaCan Holdings, which recently renamed itself the Cronos Group (MJN on the Venture exchange in Canada, PRMCF OTC in the US)… the shares were down near $1 earlier this year, at least in US terms, but are now at about C$2.74.
Like most of the marijuana companies, they just did another financing, so they have plenty of cash, and they’ve continued to invest in their portfolio — they do have a stake in seven different licensed marijuana growers in Canada, though some of those stakes are very small (they do have 100% control of a couple of them as well).
And that’s about all I know about those guys, and my day is coming rapidly to a close… so I’ll leave you to it. Interested in those marijuana plays, all of which were teensy penny stocks and microcaps a year ago but are now far larger? You already know I’m missing this marijuana train personally, so let us know what you think with a comment below — favorites, flops, or forecasts welcome.
P.S. If you’re one of the early subscribers to The Marijuana Manifesto, please click here to let other readers know what you think of the newsletter — your opinion helps make us all a little wiser. Thank you!
The administration continues to send very mixed messages about cannabis. While I do believe that they will leave it as a “States Rights” issue, there is also a real possibility that they could take some kind of punitive action at anytime. It’s well known that Attorney General Sessions is a vehement opponent of cannabis use in any form. I’m sticking to the sidelines for a while to see where things go.
From cnbc-
http://www.cnbc.com/2017/03/14/donald-trump-and-jeff-sessions-anti-legal-pot-industry.html
In an unprecedented vote… 200-76… a new law called C-45 is set to fully legalize marijuana at the Federal Level!!
Ron, Are you speaking of this vote?
POLITICS 11/28/2017 09:56 EST | Updated 11/28/2017 10:00 EST
Bill C-45, Liberal Marijuana Legalization Plan, Clears House Of Commons By Vote Of 200-82
Just 1 Conservative voted for the legislation.
http://www.huffingtonpost.ca/2017/11/28/bill-c-45-liberal-marijuana-legalization-bill-clears-house-of-commons-by-vote-of-200-82_a_23290247/
I took the liberty, (hope you do not mind) of posting your previous enty to the 420 Investors thread: https://www.stockgumshoe.com/2016/03/microblog-420-investors/comment-page-7/#comment-4974891 #Best2YOU!
#C-45 on 20180215 >
http://www.parl.ca/LegisInfo/BillDetails.aspx?billId=8886269
On February 15, 2018, the Senate adopted the following motion:
That, notwithstanding any provisions of the Rules, usual practice or previous order, in relation to Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts:
1. without affecting the progress of any proceedings relating to Bill C-45:
1.1. the Standing Senate Committee on Legal and Constitutional Affairs be authorized to study the subject matter of those elements contained in Parts 1, 2, 8, 9 and 14 of the bill;
1.2. the Standing Senate Committee on Aboriginal Peoples be authorized to study the subject matter of the bill insofar as it relates to the Indigenous peoples of Canada;
1.3. the Standing Senate Committee on Foreign Affairs and International Trade be authorized to study the subject matter of the bill insofar as it relates to the Canada’s international obligations;
1.4. the Standing Senate Committee on National Security and Defence be authorized to study the subject matter of the bill insofar as it related to Canada’s borders; and
1.5. each of the above committees submit its report to the Senate pursuant to this order no later than May 1, 2018; and
2. if Bill C-45 is read a second time, it be referred to the Standing Senate Committee on Social Affairs, Science and Technology, in which case that committee be authorized to take any reports tabled under point 1 of this order into consideration during its study of the bill….
THIS STOCK GOT A MONSTER BOOST FROM THE CROW’S NEST PRE PUBLIC OFFERING AND ACTS LIKE A WET NOODLE. THERE IS CREDIBILITY HERE BUT I THINK THERE IS TOO MUCH PROMOTER STOCK COMING OUT HERE – DOWN 50 CENTS IN THE LAST FEW DAYS !
what stock?
Still think Aphria is best in the sector, first to profitability, growing rapidly, strong management, greenhouse instead of warehouse, lower costs, etc. TURV is also an interesting play, growing cannabis in greenhouses in Colorado.
TURV is going nowhere. I’ve had it for 3 months. No volume and has gone down from the .365 I bought in at to .35 now. Wish I hadn’t bought so many. Because of lack of volume, impossible to sell, even at the bid.
Which brokerage firm do you use to buy stocks under a dollar? Thanks, S
Back in July the TD Waterhouse Bull Bear Report (free newsletter identifying stocks about to pop up or down) featured Canopy then C$3.14 and predicting a pop to about C$5. Bought a small speculative position and watched it rise to over C$7 in November — when I bought some more (fighting my usual fear of buying stuff that had more than doubled). By late November it hit over C$12 and I sold three quarters of my holdings. Turned out to be good timing (pure luck) and the charts since haven’t convinced me to buy any more. Still think it’s too speculative to be considered for rational investing.
Yes, Travis, you got all three right. I own TWMJF and PRMCF but find EMMBF interesting. I’m watching it since I read the Jimmy pump. He say “Pain” is a $635 billion industry and I hope Marijuana can replace the opiates. When Emblem stops dropping I will buy. Most pot stocks are still going down because of the White House news and then Canada saying it would be summer and not spring that they legalize. I seen a interview of Canadian prime minister saying how they can’t decriminalize because that won’t take the drug lords down. They need to Legalize it to control it and keep it out of kids hands.
By summer it will be vacation time for Parliament here in Canada and everything will be deferred again until fall. Mark my words. Moreover, the government’s point man on pot legalization is MP Bill Blair, former chief of the Toronto Police Service. And just how enthusiastic is he to get the stuff into eager hands here in Canada, do you suppose? Former Top Cop in charge of legalization! Get real.
yes b’ye…
Ever watch “Strange Brew”–just what those hosers need—aye. My money is on Schweitzer-Manduit ( SWM ) who owns 65% of the cigarette paper market. Gotta roll them joints. They also make engineered paper ( self extinguishing ) and have recently acquired other companies for diversification. Own 100 shares and they just paid me an $84.00 dividend—not bad for $40 stock. Waiting for a market correction to load maybe another 900 shares.
Nobody rolls joints these days. It’s all bongs, vaporizers and incredible edibles.
April 20 = 4/20 = 420
heh heh
Thinkolators picks are right on the money
MCIG- + 16.54% today March 21, 2017 Summary of company -mCig, Inc. is a provider of technologies and solutions to the cannabis industry. The company manufactures and markets portable and home vaporizers, extraction related equipment, CBD Rich Hemp Oil-derived products and nutraceuticals based on natural compounds in Cannabis and Hemp plants. It owns the mCig and Vapolution brands. The company operates primarily in Alaska, Colorado, Oregon and Washington. mCig, Inc. is based in Beverly Hills, California.
DOES ANYONE KNOW ABOUT CRYPTOCURRENCY?
Stock Gumshoe recent article “Government Erasing Serial Numbers” and Eifrig’s “Fedcoin” Pitch
What’s Retirement Millionaire pitching as “Blockchain” investments?
By Travis Johnson, Stock Gumshoe, March 6, 2017
i’m using coinbase.com to purchase
Ethereum and Bitcoin
easy fun
and more volatility than
gold, silver & cannabis hahaha
looks better to check more altcoins now such as verge, xrp, DGB. Iota, Eos,,,
I was an early investor in Bitcoin and cover it in my newsletter, along with altcoins like Ethereum, Dash, PIVX, Stratis, etc. goldstockbull.com
yes. it is a hot topic perhaps like marijuana stocks in the financial sector now, wall street.
mCig is actually headquartered in Henderson, Nevada.
This is buying the news. These stocks went up last year on news of being legit Apr20. Might be a bit of a flurry on APR20th so you would have to watch your positions as folks try to make a quick buck.
I’ve been getting little publicity bursts of pot stock enthusiasm from the Bonner folk. None from the Stansberry side. The commodity grows everywhere easily, so you would eventually have to design a monopoly or semi-monopoly to make money. Ergo, brands, as Travis mentions, or something patentable like drugs. That of course makes great sense for Purdue Pharma, as prescriptions of OxyContin (I am told) are down big with insurers, medical boards and regulators all keeping close watch on the pain docs. Purdue’s other products seem to be more generic, i.e. competitive and lower margin, painkillers.
Israelis reportedly working to produce non-intoxicating medical marijuana product.
that would be cbd oil.
TEVA is working on that
I’m not high on any of them.
LOL
New Canadian company IPOing this month with an Israeli on board. They are working with a large ag university to define their pot. Growth potential could be 4 times what other companies produce. Still waiting to hear from their PR people though.
Abcann in next week or two. They supply to Syque and TEVA will distribute the inhaler.
Potential aren’t sales!
New Marijuana ETF today (5Apr2017) HMMJ. It is for medical – not recreational- cannabis. It has Canadian and USA stock. The growers have to have licences to be in the ETF.
What is the US ticker for that new ETF? MMJ?
The US ticker for this fund is HMLSF which stands for Horizons Marijuana Life Sciences Fund. It is based in Toronto and is now available in US and pays a modest 2.2% dividend.
I still think HEMP has the bigger upside potential. They should easily make it to $1. Need to grow somewhere.
To me the ethical issues outweigh the financial ones Travis mentioned. Have been watching this space for a long time and indeed Canopy Growth ticker WEED has been a fairly consistent stock performer. I just can’t convince myself that I want to profit by supporting “stoners” and I question whether any amount of legislation will keep marijuana out of the hands of teenagers.
I concede that the marijuana plant MAY have some medicinal benefits, and particularly strains that have a very low levels of THC that produces the HIGH, , and IF pharmaceutical applications can be developed that are effective pain killers that would replace opioid based drugs like Oxycontin that has devastated so many lives it could be a positive thing. That being said, there is a fine line between profiting from products with no redeeming qualities such as cigarettes and alcohol products that are are okay in moderation but often get abused, While I no longer drive personally because of diminished eyesight from diabetes complications, I am not looking forward to more drivers being stoned on marijuana, or any other drug for that matter. The closest I want to come as an ethical investor is possibly the broad range of HEMP based products that are legal produced by a company called Naturally Splendid ticker who have already developed a strong export market for their broad based hemp products,
Hi MM. I agree.
In addition I wonder what lung and other cancer rates will be among users especially since to get maximum affect the smoke is held in the lungs as long as possible. Hey, Doc Gumshoe, how about your thoughts?
Cannabis doesn’t cause cancer
I’m curious if you have similar ethical dilemmas relating to alcohol, tobacco, firearms and virtually every other company and product in existence…
Blave: Reasonable question, but if you are referring to me I pretty well answered the question already if you read it carefully. I draw the distinction between people who abuse a product, not the product itself if it has legitimate uses. Nothing wrong with hunting game animals such as deer where legally allowed, the fact that some unstable people use guns for evil purposes does not make guns bad, in other words guns don’t kill people, people kill people. Lately there seems to be more STABBINGS than gun violence, so would you ban all sharp objects that could be used as a weapon? Likewise, just because some people abuse alcoholic beverages irresponsibly get drunk, and do stupid things would not stop me from investing in a brewery or winery and I was trying to make the same distinction with marijuana. I have no desire to profit from “stoners smoking weed” just to get a high, but IF some marijuana components have medicinal benefits for people with epilepsy that regular chemically concocted drugs are not addressing, or have the potential to alleviate pain without the side effects or addictive qualities of opiad based drugs,this “herb” otherwise called a weed. then I would consider that a legitimate use of marijuana plant sourced components for medical uses. I agree with Travis that it is hard to figure out which companies have a solid financial foundation and I note that even the major established companies like Canopy Growth like any other industry have seen their stock price pull back substantially from their recent highs that all the promotion has produced on speculation.
HMMJ gives good exposure, but these Canadian stocks will do well when legalization occurs in 2018. Announcement to come soon. Stocks to watch are ACBFF, APHQF, EMMBF, ORGMF, PRMCF, SPRWF and the biggest TWMJF.
This link is about hemp oil. I myself am going to ask my doctor about it. Here is link- https://www.leafly.com/news/politics/new-dea-rule-says-cbd-oil-really-truly-no-joke-illegal
Marijuana will probably never be legal. To much money already generated in alcohol tax. Most people would grow the weed or buy it from a friend who has a green thumb. It’s just a weed. They sell all kinds of seed strain’s. Just like making cures for cancer there is to much money in helping with the side effects of cancer. Just read Dr. KSS PhD articles about all the hoops a drug manufacturer goes through. To much money lost if they find cures.
Hindsight. Nevada sales have been huge. Millions in the first week.
State of Colorado has realized over $1 billion per year in additional tax revenue. Many states will find this hard to resist.
I bought some MJ microcaps that Dines had been touting and it was undoubtedly the worst decision I’d ever made with my money. I’d say a good half of these companies (GrowLife, Medbox, and one that actually had a “business address” that was next to an aquarium supply store in my parents’ hometown [no joke]) were just out-and-out scams. I suppose you could liken this to buying mining stocks in 2011, or Nortel in 2000, but I will never touch the sector again — the one time I bought into sheer hype at the absolute peak of a bubble too, argh…
Ironically, the one recommendation that’s ended up being a huge winner (GW Pharmaceuticals) was not touched by me. The biotech/medicinal cannabis companies seem a bit more legit but then come with the usual risks biotechs have regarding approvals and the like. I’m still not confident the jury is back in regarding its legal status either. Definitely tread lightly here if you must here and hopefully all of the hackneyed weed-related puns and double entendres are quickly becoming a thing of the past!