The Viridian Chart of the Week on 8/27/23 demonstrated that cannabis is more capital-intensive than tobacco, alcohol, pharmaceuticals, or general consumer products. Cannabis measured 1.67x capital/sales. The industry has managed to reduce capital intensity slightly since then, and the group now measures 1.54x capital/sales.
The graph depicts the stock price performance of baskets of stocks in six different cannabis industry subsectors. Each basket consists of the top four or five U.S. companies in each group. The stocks in each basket are equally weighted, and the basket prices are indexed so that August 25, 2023 (the Friday before the HHS announcement) equals 100.
In our January 2024 outlook, we asserted that cannabis equity analysts, having been burned by the need for continual downward revisions in 2023, were undershooting in their 2024 & 2025 estimates. First quarter results are now in for ten major MSOs, and the results lend credence to our claims.
Most cannabis industry observers realize that valuations and valuations multiples for the major MSOs are up Y/O/Y, spurred by the promise of rescheduling.
Florida is often considered one of the most critical states in terms of growing legal cannabis sales. The State is estimated to have approximately $2.6B in 2023 legal sales, representing a per capita consumption of about $118 based on the total population or $145 based on adult population.
The release of the unredacted text of the HHS recommendation has spurred cannabis equity prices upward. The MSOS ETF (NYSE: MSOS) has risen approximately 27% over the last month. But has the pricing strength been accompanied by greater absolute and relative trading volumes?
The first week of 2024 saw significant stock price appreciation for most of the 30 stocks Viridian Capital Advisors credit ranks weekly. As a proxy, the MSOS ETV rose 12.84%, the sharpest uptick since the HHS announcement at the end of August. There was no particular news to account for the uptick except for confirmation from the DEA that they are indeed studying the issue of rescheduling.
This week’s Viridian Chart of the Week looks at the stock prices of the leaders in several cannabis sectors, including Agriculture Technology, Cultivation and Retail, Psychedelics, and Financial Services, relative to their 52-week highs and lows. The chart is arranged in increasing order of trading prices relative to 52-week lows within each sector.