MSOS - High Conviction Play; Likely to Break Ascending Triangle
MSOS - High Conviction Play; Likely to Break Ascending Triangle
Another High Conviction Play - The Cannabis Sector
On the chart for
MSOS
, the Pure US Cannabis ETF, this is another ascending channel, that was having its leg down and touched the trend line on Friday and bounced off of it. There were fake reports coming out on Friday and my twitter feed was depressed, so this is probably fairly close to a bottom sign indicator. The safe thing to do is wait for the breakout, but I’ve done my due diligence and I’m confident where this goes, and think this is a decent entry, even if it drops a little from here in the short term. There are many other individual cannabis stocks whose charts look more bullish to me, but this ETF is obviously still fine. However, my largest position as of now is spot on
AYRWF
with a basis of $2.6, so I’m down right now. Anything else in this sector, I’m not looking spot, I’m looking call options with November 15th expiration. I currently only have MSOS $9, $10, and $12 call options with November 15th expiration, but I will be looking to add a little to my position with some Canadian companies.
There are many ways to play this. There are some individual stocks that I like, but they are on the OTC market and don’t offer options. I believe call options with Nov 15 expirations are a great bet here cause the expiration date runs through the election, so this captures the entire fundamental reason for the play. All the charts look bullish as fuck, so we are aligned and are all systems go. The Canadian stocks shouldn’t benefit as much as the US stocks, but that is where the institutions are, since they are on the Nasdaq, and they do have some catalysts and bullish charts themselves, maybe even more bullish looking, so I will be making plays on both US and Canadian Cannabis companies. I could be wrong, but I think it would be hard to go wrong picking any of the top companies. Probably the most simple way of doing it just doing the MJ ETF which is close to a 50/50 split on US/Canadian companies. It’s chart appears be forming a double bottom that again, I’m confident we will break out of with everything coming over the next 7 months.
Regarding the fundamental analysis, there is smoke that the DEA is going to reclassify cannabis from a Schedule I to a Schedule III drug either in April or in August. This would drop cannabis from being in the same schedule as heroin to now being in the same schedule as Tylenol with codeine, testosterone, etc. With pressure from the Biden administration, the HHS recommended the DEA to reclassify it and the world is now waiting on the DEA to announce it. It seems pretty obvious this going to happen and it seems pretty obvious this going to happen and has to come soon, because they have a 60 day period for comments and then they have a 60 day legislative period in order to make it irreversible, so that really runs right into November.
Currently, these cannabis companies aren’t allowed to deduct operating expenses from their calculation of taxable income. As a result, they are paying something like 70% on taxes. If this reclassification occurs, they’ll only pay normal tax rates going forward. Some companies have said fuck it, we’re not waiting on the government any longer, have stopped paying this “280e tax”, and are amending multiple years worth of their tax returns for refunds and are expecting massive refunds. They are banding together here and forcing the government's hand. The top US market cap company in this industry, Curaleaf, would save 150 million in taxes. This is massive. The Biden administration is apparently trying to slow play all this out time wise with elections coming up to use Cannabis as a way to get the young votes. President Biden Needs Cannabis To Win In 2024. Here’s Why..
On top of this, the SAFER Banking Act has made it through the Senate and seems to have a solid chance of being passed. Until now, most cannabis businesses don’t have great access to banks, lenders, insurers, etc. Only about 10% of banks and 5% of credit unions provide cannabis related businesses with accounts. Customers primarily use cash and in some cases debit cards at the moment, as none of the credit card companies will accept payments. Statistics show dispensaries accepting debit cards made more per day than cash only, what more with credit cards… Gaining access to banks, loans, the credit card system, etc is obviously huge. This keeps stalling and stalling but I’m still confident it gets passed for now, but I’m not as confident as I am in the rescheduling.
I need to confirm this because I’m seeing conflicting information, but many are saying if this reclassification occurs, it would lead to these companies being able to up-list to the NYSE and Nasdaq, maybe in 2025. Currently, most of these stocks are traded only on the OTC market, because both the NYSE and Nasdaq do not allow cannabis stocks on their exchange because it’s still an illegal schedule I substance. Up-listing to these exchanges would give these companies more visibility, credibility, and liquidity. This reclassification would also allow more institutional money to flow in. This market is kinda how BTC was before the ETFs opened up. There is an opportunity to get in before the majority of the big guys. Whether it’s now or in a few years, it’s not hard to envision this happening at some point.
There are almost no current institutional investors, in this now 3-5 year old investable sector. Therefore, it’s impossible for any of this to be priced in. The big boys aren’t even legally allowed to invest, until this reclassification and Safer Banking Act law passing occurs. From a John Boehner 2019 clip “With traditional investments, only 17.5% of the money comes from the little fish like you and me, mike, the other 82.5% come from the big players, the major investment firms, the hedge funds, pension funds, established corporations. Banking restrictions are preventing almost all of those investment firms and funds from diving head first into Cannabis.” Boehner goes on to say, “they’re dying to get in. I’m helping some of these bigger fish get ready to invest. There’s hundred of billions of dollars sitting on the sideline. I was on the board of a major tobacco company, Reynolds. You think big tobacco is staying on sidelines? Now, I’ve talked to these guys, they’re not gonna sit this one out, and they have the dollars to acquire whoever they want.” There is going to be a ton of M&A over the next few years and over this decade in this industry.
From another Boris Jordan interview 2 weeks ago: “Yesterday, I was in New York and I had a meeting, it was the second meeting with one of the largest fund managers in the world. You know a trillion plus fund manager and it was an education process. First we had a zoom a month ago with their tobacco and alcohol analyst and they listened to what we had to say about the industry and everything and then they called us back and said hey can you come into our NY office and we want to have a much wider group listen to you, cause they’ve got offices around the world. We spent 1.5 hours educating them on the industry and on Curaleaf. These investors, it’s early stage right, they haven’t been covering the sector. People like Blackrock and Fidelity were in the sector very early on but were forced out of it, so they also need a new education because it’s been a good 4 years since they’ve been in the sector. Most of the analysts have dropped out and stopped covering because there was nothing to invest in. The reason I can get in there now though is not only because of the potential rescheduling, SAFE Banking, but because curaleaf did the work to uplist to the TSX. I think we’re at the beginning of a new wave of much larger scale investment into the sector. ”
Along with Minnesota and Delaware, Ohio just legalized recreationally in 2023. Adult use will go online there in June right in time for summer. I believe it’s going to be a monster hit in the state of Ohio for 2024, as all of the neighboring station Indiana, Kentucky, West Virginia, Pennsylvania are not yet legal, so they will get lots of traffic across the borders. They’re expecting 1-1.5B in recreational sales out the gates in Ohio, with it projected to double in 2 years after that. There are still 26 states yet to legalize recreationally. Wisconsin seems likely for at least medical legalization in 2024. Florida, Pennsylvania, and South Dakota seem like the most likely candidates passing recreational use in 2024. Pennsylvania might be a slight dog, but they have a bill on the table, and their governor wants it legalized because he’s ""sick and tired of losing to friggin' Ohio”” They are feeling pressure watching all their neighboring states have this added tax revenue coming in that they are missing out on. It’s gonna happen sooner or later. Florida is the monster here and they’ll be able to vote for it on the ballot. They need 60%. Also, Germany just went legal on Friday and their market is comparable to Ohio. Top US company Curaleaf currently has a 23% share in Germany, which they won’t hold, but should still be a major player. Cannabis legalization is growing not only in the US, but all over the world.
There are a number of potential positive catalysts (and speculation) mentioned here and this sector seems primed for a multi year pump, if some or all of this comes to fruition, in my opinion. According to Boris Jordan, “I am a firm believer that the key message to investors in this business is that these companies are getting stronger every year, growing every year, becoming more efficient every year, and our market caps have only gone down. And that is a massive opportunity. I don’t care how you look at it. I’ve never seen anything like this, except maybe in the 1990s in Russia where you had the massive oil companies and natural resource companies that were trading at a fraction of what Exxon and everybody was trading at and it was all because some bad lawmaking, and it was the wild Wild West, and then one morning everyone wakes up realizes holy shit, we need to own this stuff and everything is up 20x.
Most of these companies are still down 80% from their 2021 All Time Highs. Ticker MSOS is the Pure Cannabis ETF comprised of only US companies and it is down 84% from its ATH, but is also up 8% from the lows just 7 months ago. A little bit of this has already been priced in, but I believe we are still at near bottom levels, forming a nice base, will trend up, and break out eventually. This feels like the perfect time to hop on. I remember kinda following this market when Canada legalized back in 2018-2020 for the peak mania of it and it was wild. The current market is now down and beaten up. If the dominos start falling as expected, these companies are going way higher. With prices down 80% from 2021 highs, the chart looking great, and with all these potential catalysts, I think the downside from here is limited.
This could be a monumental moment in Cannabis history. Like Bitcoin. Like Sports betting. The trajectory of this sector over the next decade seems obvious to me. These companies are growing state by state, just like with sports betting and there’s still massive room left for growth. It seems to me we could be in the 1st inning of a multi year bull run cycle. I’m unsure whether MSOS at $8.78 outperforms the Bitcoin benchmark over the next 2-5 years, but I believe it will significantly outperform the S&P 500 and almost all traditional assets. It’s always possible I’m wrong, but I think the odds are stacked in my favor.
-bettingbillions
Another High Conviction Play - The Cannabis Sector
On the chart for
MSOS
, the Pure US Cannabis ETF, this is another ascending channel, that was having its leg down and touched the trend line on Friday and bounced off of it. There were fake reports coming out on Friday and my twitter feed was depressed, so this is probably fairly close to a bottom sign indicator. The safe thing to do is wait for the breakout, but I’ve done my due diligence and I’m confident where this goes, and think this is a decent entry, even if it drops a little from here in the short term. There are many other individual cannabis stocks whose charts look more bullish to me, but this ETF is obviously still fine. However, my largest position as of now is spot on
AYRWF
with a basis of $2.6, so I’m down right now. Anything else in this sector, I’m not looking spot, I’m looking call options with November 15th expiration. I currently only have MSOS $9, $10, and $12 call options with November 15th expiration, but I will be looking to add a little to my position with some Canadian companies. There are many ways to play this. There are some individual stocks that I like, but they are on the OTC market and don’t offer options. I believe call options with Nov 15 expirations are a great bet here cause the expiration date runs through the election, so this captures the entire fundamental reason for the play. All the charts look bullish as fuck, so we are aligned and are all systems go. The Canadian stocks shouldn’t benefit as much as the US stocks, but that is where the institutions are, since they are on the Nasdaq, and they do have some catalysts and bullish charts themselves, maybe even more bullish looking, so I will be making plays on both US and Canadian Cannabis companies. I could be wrong, but I think it would be hard to go wrong picking any of the top companies. Probably the most simple way of doing it just doing the MJ ETF which is close to a 50/50 split on US/Canadian companies. It’s chart appears be forming a double bottom that again, I’m confident we will break out of with everything coming over the next 7 months.
Regarding the fundamental analysis, there is smoke that the DEA is going to reclassify cannabis from a Schedule I to a Schedule III drug either in April or in August. This would drop cannabis from being in the same schedule as heroin to now being in the same schedule as Tylenol with codeine, testosterone, etc. With pressure from the Biden administration, the HHS recommended the DEA to reclassify it and the world is now waiting on the DEA to announce it. It seems pretty obvious this going to happen and it seems pretty obvious this going to happen and has to come soon, because they have a 60 day period for comments and then they have a 60 day legislative period in order to make it irreversible, so that really runs right into November.
Currently, these cannabis companies aren’t allowed to deduct operating expenses from their calculation of taxable income. As a result, they are paying something like 70% on taxes. If this reclassification occurs, they’ll only pay normal tax rates going forward. Some companies have said fuck it, we’re not waiting on the government any longer, have stopped paying this “280e tax”, and are amending multiple years worth of their tax returns for refunds and are expecting massive refunds. They are banding together here and forcing the government's hand. The top US market cap company in this industry, Curaleaf, would save 150 million in taxes. This is massive. The Biden administration is apparently trying to slow play all this out time wise with elections coming up to use Cannabis as a way to get the young votes. President Biden Needs Cannabis To Win In 2024. Here’s Why..
On top of this, the SAFER Banking Act has made it through the Senate and seems to have a solid chance of being passed. Until now, most cannabis businesses don’t have great access to banks, lenders, insurers, etc. Only about 10% of banks and 5% of credit unions provide cannabis related businesses with accounts. Customers primarily use cash and in some cases debit cards at the moment, as none of the credit card companies will accept payments. Statistics show dispensaries accepting debit cards made more per day than cash only, what more with credit cards… Gaining access to banks, loans, the credit card system, etc is obviously huge. This keeps stalling and stalling but I’m still confident it gets passed for now, but I’m not as confident as I am in the rescheduling.
I need to confirm this because I’m seeing conflicting information, but many are saying if this reclassification occurs, it would lead to these companies being able to up-list to the NYSE and Nasdaq, maybe in 2025. Currently, most of these stocks are traded only on the OTC market, because both the NYSE and Nasdaq do not allow cannabis stocks on their exchange because it’s still an illegal schedule I substance. Up-listing to these exchanges would give these companies more visibility, credibility, and liquidity. This reclassification would also allow more institutional money to flow in. This market is kinda how BTC was before the ETFs opened up. There is an opportunity to get in before the majority of the big guys. Whether it’s now or in a few years, it’s not hard to envision this happening at some point.
There are almost no current institutional investors, in this now 3-5 year old investable sector. Therefore, it’s impossible for any of this to be priced in. The big boys aren’t even legally allowed to invest, until this reclassification and Safer Banking Act law passing occurs. From a John Boehner 2019 clip “With traditional investments, only 17.5% of the money comes from the little fish like you and me, mike, the other 82.5% come from the big players, the major investment firms, the hedge funds, pension funds, established corporations. Banking restrictions are preventing almost all of those investment firms and funds from diving head first into Cannabis.” Boehner goes on to say, “they’re dying to get in. I’m helping some of these bigger fish get ready to invest. There’s hundred of billions of dollars sitting on the sideline. I was on the board of a major tobacco company, Reynolds. You think big tobacco is staying on sidelines? Now, I’ve talked to these guys, they’re not gonna sit this one out, and they have the dollars to acquire whoever they want.” There is going to be a ton of M&A over the next few years and over this decade in this industry.
From another Boris Jordan interview 2 weeks ago: “Yesterday, I was in New York and I had a meeting, it was the second meeting with one of the largest fund managers in the world. You know a trillion plus fund manager and it was an education process. First we had a zoom a month ago with their tobacco and alcohol analyst and they listened to what we had to say about the industry and everything and then they called us back and said hey can you come into our NY office and we want to have a much wider group listen to you, cause they’ve got offices around the world. We spent 1.5 hours educating them on the industry and on Curaleaf. These investors, it’s early stage right, they haven’t been covering the sector. People like Blackrock and Fidelity were in the sector very early on but were forced out of it, so they also need a new education because it’s been a good 4 years since they’ve been in the sector. Most of the analysts have dropped out and stopped covering because there was nothing to invest in. The reason I can get in there now though is not only because of the potential rescheduling, SAFE Banking, but because curaleaf did the work to uplist to the TSX. I think we’re at the beginning of a new wave of much larger scale investment into the sector. ”
Along with Minnesota and Delaware, Ohio just legalized recreationally in 2023. Adult use will go online there in June right in time for summer. I believe it’s going to be a monster hit in the state of Ohio for 2024, as all of the neighboring station Indiana, Kentucky, West Virginia, Pennsylvania are not yet legal, so they will get lots of traffic across the borders. They’re expecting 1-1.5B in recreational sales out the gates in Ohio, with it projected to double in 2 years after that. There are still 26 states yet to legalize recreationally. Wisconsin seems likely for at least medical legalization in 2024. Florida, Pennsylvania, and South Dakota seem like the most likely candidates passing recreational use in 2024. Pennsylvania might be a slight dog, but they have a bill on the table, and their governor wants it legalized because he’s ""sick and tired of losing to friggin' Ohio”” They are feeling pressure watching all their neighboring states have this added tax revenue coming in that they are missing out on. It’s gonna happen sooner or later. Florida is the monster here and they’ll be able to vote for it on the ballot. They need 60%. Also, Germany just went legal on Friday and their market is comparable to Ohio. Top US company Curaleaf currently has a 23% share in Germany, which they won’t hold, but should still be a major player. Cannabis legalization is growing not only in the US, but all over the world.
There are a number of potential positive catalysts (and speculation) mentioned here and this sector seems primed for a multi year pump, if some or all of this comes to fruition, in my opinion. According to Boris Jordan, “I am a firm believer that the key message to investors in this business is that these companies are getting stronger every year, growing every year, becoming more efficient every year, and our market caps have only gone down. And that is a massive opportunity. I don’t care how you look at it. I’ve never seen anything like this, except maybe in the 1990s in Russia where you had the massive oil companies and natural resource companies that were trading at a fraction of what Exxon and everybody was trading at and it was all because some bad lawmaking, and it was the wild Wild West, and then one morning everyone wakes up realizes holy shit, we need to own this stuff and everything is up 20x.
Most of these companies are still down 80% from their 2021 All Time Highs. Ticker MSOS is the Pure Cannabis ETF comprised of only US companies and it is down 84% from its ATH, but is also up 8% from the lows just 7 months ago. A little bit of this has already been priced in, but I believe we are still at near bottom levels, forming a nice base, will trend up, and break out eventually. This feels like the perfect time to hop on. I remember kinda following this market when Canada legalized back in 2018-2020 for the peak mania of it and it was wild. The current market is now down and beaten up. If the dominos start falling as expected, these companies are going way higher. With prices down 80% from 2021 highs, the chart looking great, and with all these potential catalysts, I think the downside from here is limited.
This could be a monumental moment in Cannabis history. Like Bitcoin. Like Sports betting. The trajectory of this sector over the next decade seems obvious to me. These companies are growing state by state, just like with sports betting and there’s still massive room left for growth. It seems to me we could be in the 1st inning of a multi year bull run cycle. I’m unsure whether MSOS at $8.78 outperforms the Bitcoin benchmark over the next 2-5 years, but I believe it will significantly outperform the S&P 500 and almost all traditional assets. It’s always possible I’m wrong, but I think the odds are stacked in my favor.
-bettingbillions