New Year, No Fear | Seeking Alpha

This will be a short one.

New years are a time for reflection, especially those that follow tough years filled with challenging lessons. When we learn those lessons (or do our fallible best to heed those lessons), well that’s growth. It’s not just investors that need to learn those lessons, it’s companies and analysts and yes, even podcast hosts. There’s always been a lot of Hopium in the cannabis sector and all endeavors that involve large sums of money and federal illegality are going to have ripe conditions for corruption to bloom. No doubt Hopium and corruption (or its close relative, greed) are thriving in these volatile days.

The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

– Warren Buffett

I remember at the height of Covid an image going around that really resonated with me (I’ve seen it many places and never seen a source for it, if you know who created this please let us know so we can acknowledge them):

While it’s a different time than 2020, we are still (many would say justifiably so) consumed by fear, uncertainty, and surprise at how off the rails it all seems to be going.

It’s times like this – when markets are down, inflation is high, and war seems never-ending – that investing, and life in general, can be difficult to navigate. With this space and podcast, it is my hope to be part of the Learning and Growth zones and not get stuck in the Fear Zone.

One of my favorite things about Seeking Alpha are the comment streams. We have an incredible team behind the scenes making sure things don’t get too nasty and an incredible community of investors that for the most part enhance the conversation around an article’s analysis.

I greatly appreciate 99% of the comments I see and have gained a lot from the more thoughtful ones. On this past week’s episode, I took note of knoxmarlow’s comment that discussed what they’d like to see more of on the podcast:

#1. Capital allocation broadly. Which names have the most leverage and risk? For highly leveraged names, what are maturity profiles and cost of debt? Does any name have a real issue with a potential liquidity crunch down the road? Note that the games with tax payables need to be taken into account.

Moving past debt, are there names generating operating cash flow? What does management plan to do? Any names that have the potential to do accretive share repurchases? Or are they all still obsessed with building fiefdoms (not necessarily aligned with shareholders)?

#2. Operating metrics. Which operators are the most effective and efficient? We know, for example, that AYR have been masters of excuses and justified the consensus view that they are investment bankers that suck on the operational side of things. Talk about gross margins and net margins and who is best positioned to compete in a world of increased competition and lower gross and net margins.

Message received! Keep the thoughtful comments coming (and if you have a nugget of thoughtfulness wrapped in surliness, please just include the thoughtful nugget and discard the wrapping). You don’t have to be a spiritual cliche to want to be the change you want to see. So let’s all be that continual change – better and stronger and more educated, thoughtful and helpful.

Some housekeeping notes: Psychedelic Sundays return this Sunday – it’s a really terrific episode with Alexander Carchidi. The following week we have another great episode with Stephen Tobin. I think both episodes are essential for psychedelic investors, especially those wanting deeper and more actionable insight on the top 4 psychedelic stocks.

As for this week in cannabis? For brevity’s sake, a few things worth noting:

• “The most critical deliverable in ’23 will be capital preservation and improvement in cash flow generation, even if it is at the expense of growth.” – Needham analyst Matt McGinley

• Georgia, Alabama, Mississippi, and Louisiana: A Second Shot at Southern State Cannabis Profitability

Factoring it all in, it’s unlikely the four states together can match Florida’s 2021 revenue of $1.7 billion (per Brightfield Group) as medical-only states.

• BDSA believes Florida (which is gearing up for an adult-use ballot initiative in 2024) will be the biggest contributor to sales growth nationally through 2026, with $2.7 billion in projected medical sales next year.

• The Parent Company (OTCQX:GRAMF) established a Revised Strategic Agreement with Roc Nation, SC Branding and affiliates. Roc Nation Founder Shawn “Jay-Z” Carter said:

Collectively, we have agreed to restructure our partnership in order to afford The Parent Company the best opportunity to execute a longstanding and successful strategy. We are excited for the continued growth of The Parent Company and our future together in the cannabis industry.

• In 2022, BDSA Market Forecast estimates that the illicit market will make up roughly 55% of total cannabis dollar sales across U.S. markets with active adult-use or medical sales.

• 2022 saw a record number of scientific papers published about cannabis. NORML Deputy Director Paul Armentano said:

Despite claims by some that marijuana has yet to be subject to adequate scientific scrutiny, scientists’ interest in studying cannabis has increased exponentially in recent years, as has our understanding of the plant, its active constituents, their mechanisms of action, and their effects on both the user and upon society.

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