In today’s Marijuana Market Update, I discuss three topics:
1. A massive medical marijuana trend that will create investing opportunities..
2. Mailbag: Analysis of TPCO Holding Corp. (OTC: GRAMF).
3. Key earnings for our Cannabis Watchlist stocks.
Medical Cannabis Investing Trend
In a report that New Frontier Data published on May 2, about trends in medical marijuana investing and more, I read that 41% of users consume medical cannabis.
That’s 11% higher than adult use.
Medical users also spend more. About 30% report spending over $100 per purchase, compared to 22% of recreational users.
As you can see in the chart above, 46% of medical users smoke products, compared to 59% of recreational users. They also consume more vape, concentrate and other products.
In addition, 42% of those surveyed identify as medical users, a 7% increase from 2018.
It’s clear that the market continues to grow with the help of states legalizing medical use.
Two takeaways for cannabis producers:
• Medical users seem to be more open to consuming in different ways.
• Because medical consumers use and spend more, this is a massive part of the market.
Medical cannabis investing will be lucrative.
TCPO Holding Corp. Stock
Our reader Sergio emailed our team:
Evening. Love your content, and thank you for all the info you present on YouTube and the newsletter.
I am curious about GRAMF. Good? Bad? Short play? Long play? Should I even waste my time? Don’t hold back any punches.
Thanks, Sergio!
TPCO Holding Corp. (OTC: GRAMF) is a California-based retail cannabis company.
Its 17 brands include whole flower, pre-rolls, vape cartridges, gummies, chocolates and beverages.
The company’s old name is Subversive Capital Acquisition Corp.
Note: Don’t confuse it with Subversive Capital LLC, a special purpose acquisition company (SPAC) that acquired Israeli cannabis producer InterCure LLC in January 2021.
Financially, there is little to know about the company since it only started in 2019.
However, I found some revenue projections for this year and next:
• 2021: $313 million.
• 2022: $560 million.
An interesting note about its net income…
As you can see in the chart above, the company lost money the past two years, and it looks set to do the same this year.
The company projects a positive net income of $28 million in 2022, but that sounds lofty to me.
Its stock price movement tells another story:
GRAMF Stock: Sept. 2020 to Present
The stock traded around $10 per share in 2020.
It popped in mid-January to around $13 per share, but a sharp drop to under $8 followed. That’s around where it trades today.
Takeaway: It looks to me as if the company will continue to struggle to make money.
It’s in a competitive market in California that’s getting more saturated. It might make money at some point, but that doesn’t make it a company to invest in now.
I won’t be comfortable with this stock until I see sustained upward momentum in its price. Until then, it’s a pass for me.
Cannabis Watchlist Update
Now for the news surrounding our Money & Markets Cannabis Watchlist…
Gains as of May 4, 2021.
• High Tide Inc. (OTC: HITIF) — This cannabis company recently entered into an agreement to buy 80% of Wisconsin-based Fab Nutrition LLC for $20.6 million. The deal comes with a three-year option for High Tide to buy the remaining 20% of the company. Fab sells hemp-derived CBD products across the U.S. The company’s average order value was around $92 in 2020. Overall, this is a good fit as High Tide continues to make inroads on the U.S. market.
• GrowGeneration Corp. (Nasdaq: GRWG) — The company recently announced a new partnership with actor Jim Belushi’s Oregon farm to outfit his newest greenhouse. The company also announced it was entering the Mississippi medical cannabis market after the state-approved medical use in November 2020.
• Turning Point Brands Inc. (NYSE: TPB) — The company announced earnings last week. It reported year-over-year increases in net sales (18.7%), gross profit (28.6%), net income and adjusted earnings (57.4%).
Where to Find Us
Coming up this week, we’ll have more on The Bull & The Bear podcast and our Money & Markets Week Ahead, so stay tuned.
Don’t forget to check out our Ask Adam Anything video series, where we ask your questions to Chief Investment Strategist Adam O’Dell.
Green Zone Fortunes co-editor Charles Sizemore also has a weekly series called Investing With Charles, where he breaks down dividend investing each week.
Remember, you can email my team and me at feedback@moneyandmarkets.com — or leave a comment on YouTube. We love to hear from you!
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
