Thread by @todd_harrison

THREAD: The #cannabis market

Been managing 💰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 🇺🇸🇦🇺).
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 🇺🇸🇨🇦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 👇

cb1cap.com/cbd-research-s…

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 🙄. 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 👇

cb1cap.com