How I Plan to Become FINANCIALLY FREE With Cannabis Stocks

I’m talking GameStop, AMC, Bed Bath and Beyond. These were all downtrodden stocks that got the sudden spotlight from the internet like Wall Street bets.

Weed stocks have already had two insane pop offs — one in 2019, one in 2021. And I want to have at least a little bit of skin in the game as the rest of 2024 is primed with catalyst after catalyst. Each one has the chance to get the Internet’s attention.

There are three stock tickers that stand out above the rest for me, which I want to get into because all three have different catalysts that could result in them popping off.

On the go? Watch the video HERE.

The marijuana sector just received its largest catalyst event in its history, and yet the markets are still pricing these stocks very cheap, especially when you consider that cannabis will have the spotlight in the 2024 presidential election.

Joe Biden’s Department of Justice has just confirmed that the DEA is moving to reschedule cannabis from a Schedule I drug with the most restrictions to a Schedule III drug.

This has huge implications for cannabusinesses that operate legally in states where recreational and medical use is legal.

Long story short, being Schedule III allows businesses to use more tax deductions, which greatly increases their profits the moment Schedule III comes into effect. In some cases, increasing profits by 2X or 3X. I went over a lot of the details right HERE.

Catalyst 1. Cole Memo 2.0

The first catalyst that I’m waiting to see is the next step in the Schedule III process.

Rescheduling a drug is a long process and it takes many months to complete. In the meantime, there are a lot of legal kind of gray zones as, you know, cannabis is still Schedule I. We know it’s going to be Schedule III but we don’t know what the ruling is going to be when it comes out.

Most of the projections I have seen have this process lasting around 6 months. During this period of time, which is kind of like a legal gray zone, where nothing is officially passed yet, it is anticipated that the Department of Justice will issue a memorandum. 

This memo will clearly spell out how legal cannabis companies in legal cannabis states can operate and how they can expect to interact with the federal government and the state governments.

There are many legal inconsistencies while marijuana is federally illegal and a Schedule I drug. Meanwhile, there are over 20 states that have approved recreational use and more than that, which have approved medical use.

This tweet quotes Oregon State Representative Earl Blumenauer as saying, There is going to be a new Cole memo that will be issued.

When he says Cole memo, he is referring to the memorandum that James Cole, the Deputy Attorney General under ex-president Barack Obama, wrote in 2013 which set the standards for how legal cannabis businesses are supposed to operate.

Unfortunately, Trump went on to repeal the Cole memorandum during his presidency, so we do not have any official guidance at this time. If we were to get a Cole memo 2.0, then that would be a huge catalyst for the whole U.S. cannabis sector.

Two things Cole memo 2.0 will accomplish:

1. More profit for cannabis companies: Tensions are high at federal checkpoints where legal cannabis states border Mexico. Millions of dollars worth of cannabis is being seized wrongfully as shipments cross the border into the legal cannabis states like New Mexico.

2. More access to major banks and potentially uplisting to the major stock exchanges: Both major banks and major stock exchanges are reticent to do business with cannabis companies while these conflicting rules between the federal and the state exist.

Best US Stock Ticker: MSOS

One stock ticker that is guaranteed to benefit from the Cole memorandum 2.0 is ticker MSOS.

On Seeking Alpha, Advisor Shares Pure U. S. Cannabis ETF is an exchange traded fund launched and managed by Advisor Shares Investments, LLC. The fund invests in public equity markets of the United States. It invests directly through derivatives and stocks of companies operating across marijuana and hemp industry sectors.

This ETF has more than 93 different holdings, but it is a little bit concentrated at the top with the biggest holding being Greenthumb Industries at 21.34% followed by Trulieve, Curaleaf, BlackRock Liquidity Treasury, and Verano Holdings.

All of these holdings are perceived to be very risky by the New York Stock Exchange and the NASDAQ, and so they are currently not listed on those higher exchanges.

If we ever did get an uplisting, then you could count on MSOS getting a lot of value. Since these are all U. S. cannabis companies, a Cole memo 2.0 would be guaranteed to benefit every single company on this ETF.

ETFs in general are great because they give me diversity to many companies. Some companies will do really good. Some companies in the ETF will do less good and some will even lose money.

Getting diversification protects me from the individual risk of an individual company. However, there are times when I do want the individual risk because I want access to that individual company’s potential reward.

Sometimes there is a catalyst that’s going to affect one company much more than the other companies in the sector, which leads me to the second catalyst I want to talk about and the second stock ticker.

Catalyst 2. Florida Marijuana Legalization

The next big catalyst that I’m really looking at is the vote to legalize recreational marijuana in Florida. 

The vote will be happening in November of this year. And if this one passes, this will not only be huge for companies that are well established in Florida (hint, hint). 

This will be huge for the whole sector.

Florida’s recreational cannabis market is estimated to be a whopping $5 Billion in annual sales should the vote pass, which would rival California. California is estimated at $423 Million in sales per month, which would end up being just over $5 million in sales per year.

Not only would Florida recreational use strongly benefit the companies that are already positioned in Florida, it would also build momentum towards federal easing of restrictions.

Florida would be the southernmost state to legalize recreational use of marijuana. The more deep red states that turn, the more likely we are for complete federal decriminalization.

But let’s not get ahead of ourselves. 

Which company in Florida is in the best position to benefit from recreational use being legalized?

Best Florida Stock Ticker: TCNNF

I’m keeping my eye on Trulieve.

Trulieve is poised to dominate, projected to generate $1.69 Billion in first year adult use cannabis sales. 

The legalization of adult use cannabis is expected to catalyze unprecedented growth in the market, with projections indicating that Florida could see $4.9 Billion to $6.1 Billion on the upper end, which would surpass California’s annual sales. 

It is estimated that Trulieve has roughly 30% — 40% percent of Florida’s market share, but it is still a very competitive market.

Checking out Trulieve on Seeking Alpha, you can see that the factor grades are very strong in growth, profitability, momentum, and revisions. The only one lacking on this grade scale is the valuation. This is because the price is currently a little bit higher than what the earnings would suggest. This is because people are anticipating a big move in Florida.

Now, if that were to take place, since this isn’t guaranteed by any means, this is a flip of a coin. We don’t know if Florida is going to pass recreational use. It would be a huge catalyst and it would push their earnings up and make their valuation much better, which would result in the stock price who knows how high it could go?

On Seeking Alpha, we can see that Trulieve has really good factor grades: a B+ on growth, A’s on profitability and momentum, and another B in revisions. The only red mark against Trulieve at this time is the valuation. The current earnings do not quite stack up to the stock price, but of course, I think that’s about to change with Florida legalizing recreational use.

Scrolling down a bit further, you can see that the analysts are also on board: 12 strong buy ratings and 3 buy ratings from Wall Street analysts.

Finally, a quick look at Trulieve’s financials. You can see that their revenue is growing at a crazy pace. If you go back to 2018, they had 102 million in total revenue. And now, as of December of 2023, they had $1.1 Billion in revenue. So that’s a 10x gain.

This company is growing like crazy and they are in the best position to benefit from even more sales in Florida.

I’ve got one honorable mention for you.

Second Best Florida Stock Ticker: CURLF

Curaleaf, which is the second largest operator, is also poised to benefit significantly from adult use legalization. 

With 61 dispensing locations, Curaleaf is projected to generate a total of $651 Million in annual sales in the first year alone. They’re also well positioned to gobble up market share in Florida.

However, on the other hand, if you’re not interested in trying to pick the winner, you can go back to the first ticker that I mentioned, which was MSOS. They hold significant positions in both of these companies that I mentioned, and many companies that would benefit from the Florida catalyst in the United States.

That being said, MSOS is actually not my favorite cannabis ETF. There is another that has international exposure that I wanna talk about shortly.

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Catalyst 3. Safer Banking Act

The final catalyst that I am waiting to see is an update on the Safer Banking Act. This bill, if it makes it through the Senate, would solidify the ability of legal cannabis businesses to do business with the major banks in the U. S.

Safer banking will be more difficult and thus less likely to pass than the Cole memo 2.0, but it will be way more sticky.

After the Biden administration leaves office, whether that’s in this election or the one after that, a simple memorandum from the DOJ will be vulnerable, just like the first Cole memo, to being repealed.

A bipartisan bill making its way through the legislative branch will be much more effective at convincing the major banks and the major stock exchanges to do business with cannabis companies.

They have to be confident that the change in the rules will stick for the long term and they can set up long lasting business relationships.

This is where my favorite marijuana ETF comes into play, and it brings more diversity to the table. 

Best Global Stock Ticker: MJ

I’m talking about Ticker MJ. On Seeking Alpha, MJ is Amplify Alternative Harvest ETF. This is an exchange traded fund launched and managed by Amplify Investments LLC. 

The fund invests in public equity markets of global region. It invests in stocks of companies operating across healthcare, pharmaceuticals, biotechnology, and life sciences, pharmaceutical products, legal cultivation of cannabis, including industrial hemp or the legal production, marketing, or distribution of cannabis.

This ETF does have a relatively high expense ratio of 0.78. Normally, I would not go for an ETF with such a high expense ratio for a long term holding. However, this ETF I’ll make an exception. I’m only planning to hold it for a year or two, and I’m expecting big growth in the short term.

MJ has 33 holdings. However, it’s top holding, which makes up roughly 40% is another ETF Amplify US Alternative Harvest. This ETF is similar to MSOS in that it holds several of the US cannabis businesses that are on the lower exchanges. The other large holdings in MJ are global exposure cannabis companies like Canopy Growth and Tilray Brands.

On Seeking Alpha, you can see that Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp based products in Canada, the United States, and Germany. I really like having these other countries exposure. For one, Germany just legalized recreational cannabis, so this is going to be a big catalyst for canopy growth, and I like to have some exposure to that.

Also on Seeking Alpha, Tilray Brands engages in research, cultivation, processing, and distribution of medical cannabis products in Canada, the United States, Europe, Australia, New Zealand, Latin America, and internationally.

So What Now?

Knowing that MJ gets me worldwide exposure, knowing that TrueLeave gets me exposure to Florida, and MSOS gets me that exposure to the U. S. rising tide of cannabis is great.

That’s just step one.

But now it’s time for step two.

What is the best way to invest in these stocks? 

• Do I buy shares? 

• Do I buy options? 

• Do I do some combination of the two?

If I do not have a specific plan to enter a position, as well as a specific plan to exit that position, I cannot expect to take full advantage of these opportunities.

I do not want to be the person that missed the window altogether, and I don’t want to be the person who got in but failed to make the most of it.

Click HERE where I go over my strategy, and I’m targeting a 10x gain on the cannabis stocks.

Catch you on the flip side.