Todd Harrison Profile picture
Sep 6, 2018 β€’ 12 tweets β€’ 5 min read Twitter logo Read on Twitter
THREAD: The #cannabis market

Been managing πŸ’°30 years. $MS, the buy side, etc. etc. Seen lots of volatility; the Asian contagion / Russian ruble, Y2K, financial crisis. Big two-sided swings lots of wealth and plenty of false hope. Which brings me to the cannabis market...
2/ The #cannabis evolution is part-prohibition repeal in that there is existing end-demand that is moving into a taxable realm. It's also part-Y2K in that stocks will be valued on potential rather than what's tangible, especially as more people understand the #truth...
3/ And the #truth is that #cannabis and #hemp are *ingredients* for a wide array of end-products and use-cases ranging from beverages to tobacco to CPG, food, clothing and what is really going to rock everyone's world: #medicine.

Yes that's right, #cannabis is good for you...
4/ #cannabis has had a bad rap ever since the gov't banned "marijuana" in 1937 (despite the AMA actively prescribing cannabis for a host of indications) and perpetuated 'Reefer Madness' to protect the interests of the powerful; folks like William Randolph Hearst and the DuPonts.
5/ I shared the backstory b/c these artificial impediment to the natural cycle created all sorts of arbitrage opportunities.

Time (vs. policy).
Price (pre-institutions buying πŸ‡ΊπŸ‡ΈπŸ‡¦πŸ‡Ί).
Perception (getting high v. getting well).
Liquidity (vs. P/E).

Not everyone sees this...
6/ But a lot of people do. The health ministers of πŸ‡ΊπŸ‡ΈπŸ‡¨πŸ‡¦came out the morning Jeff Sessions pulled the Cole Memorandum and said they wanted to "dominate the global cannabis market." Their health ministers. So it's out there. More science here πŸ‘‡…
7/ Which brings me back to the market where I will repeat something I've shared the last few weeks and every time I do it feels like an out-of-body experience b/c if I ever read something like this on Twitter I would πŸ™„. But it's the truth, do the math: there's not enough stock.
8/ Current #cannabis mkt is est. up to $275B (UN; mostly flower). Look out 10 yrs w all the end-products and use-cases (+ #hemp). $1T? $2T? There's *maybe* $40B of public securities; let's double to incl. PE and round up to $100B.

If mkt prices in future=> not enough stock.
9/ Now with THAT said, this is a frontier market and it is extremely dangerous on the frontier. There will be many more PETS.COMS than there will be Amazons--
and even $AMZN had a 94% draw-down before it's climb to the moon. Plus, lots of hucksters claiming to be experts...
10/ The scientists who understand the most will be the first to tell u how much there is to learn. The medical community (which informs the stock market) never studied the science b/c #cannabis was / is schedule I. So this all still has to go thru the clinical process...
11/ We've spent the last few years watching the market sniff this out and know it hasn't priced in 'efficacy' b/c our biotech holdings would be going bananas--and they're not. At least not yet. So we're in an interesting point of the curve; somewhere b/w denial and migration..
12/ Here's the rub; this is a *process* of price discovery and a hairy one at that. The BI Cannabis Global Index is still 45% from Jan highs despite +24% the last three wks. Time / price will sort the winners / losers so be smart and educate yourself πŸ‘‡

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