Cannabis Corner: Not Everyone Cheers Kamala

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

While the vice-presidential debate failed to make much market impact, I heard a few investors cheer when Kamala Harris once again promised to do what she can to decriminalize marijuana across the United States. 

It wasn’t news. She’s said it before. And it doesn’t change the regulatory environment for the dispensaries or the cultivators that supply them.

But as a ray of relief in a gloomy season, it felt great. The stocks in the group I track are up 21% over the past week and at this point, the bulls have almost endless runway to keep running.

However, I can’t help but notice that some cannabis stocks rallied a lot harder than others. Once again, the pure cultivators feel the weight of their commodity-oriented business model. 

There’s simply too much dried plant matter to harvest, which drives prices down for everyone but consumers who insist on an extremely high-quality experience. 

As a result, while Aurora Cannabis Inc. (NYSE:ACB), for example, rebounded 9% this week, it’s still down a harrowing 48% since the market as a whole peaked on Aug. 31. 

And the year-to-date (YTD) losses get even bigger. Tilray Corp. (NASDAQ:TLRY) has lost 64% of its value over the past nine months. With that in mind, this week’s bounce is a healthy step in the right direction, but we’ll need a lot more than a political sound bite to really turn things around.

Once again, the real thrill is on the business-to-business side, where hydroponic equipment maker GrowGeneration Corp. (NASDAQ:GRWG) has become a Wall Street sensation. The decision to leave farming to others has been a good one.

I’m also pleased to see the buzz spread to private companies like Drop Technology, which has already made friends among my IPO Edge subscribers through its innovative “crowd-funded” market debut.

The IPO Edge portfolio is up big as I write this cannabis column, with two triple-digit-percentage wins accumulating profit and a recent 165% exit still radiating heat. More is on the way.

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