The Third Cannabis Wave is Picking Up Steam

The third wave of the cannabis stock bubble is here, and this one will be the biggest. After two previous bull market runs that saw Canadian companies dominate in terms of market cap and trading volume, this time, it’s America’s turn.

It is essential to understand the unexpected convergence of circumstances that have emerged to catalyze this next leg up.

First and foremost, the victory of the Democratic slate in November last year shone a long-awaited ray of hope on the prospects for a federal cannabis regulation that is a prerequisite for interstate cannabis commerce.

The second significant development came with the upset in Georgia of the formerly Republican-controlled Senate, handing all three branches of government to a democratic administration.

To say this is the perfect storm is no understatement. The stars are now aligned, and the first peeps out of Biden administration suggest there will be action on his commitment to decriminalize cannabis at the federal level and support initiatives to see cannabis become a pharmacological rising star.

Companies are already on a tear, and few notable ones are still flying under the radar or have yet to become public.

One that I bought into while it was the largest cannabis SPAC in history merged with Jay-Z’s The Parent Company and is now gearing up for a NASDAQ listing, which will likely occur this year.

The Parent Company is currently trading in Canada on the NEO under the symbol GRAM.U and in the US under the ticker GRAMF.

Jay-Z’s involvement is likely the signal that celebrities will be looking to align their brands with cannabis more aggressively with the Biden administration’s rollout of a federal strategy.

The company is the umbrella for Caliva, a California retailer with over 1 million customers and 200 dispensaries across the state, according to Michael Auerback, who put the SPAC together specifically for the cannabis business.

Jay-Z also rolled (pun intended) his Monogram premium cannabis brand into the company, which raised $570 million prior to the merger.

The stock has been relatively quiet so far, but fireworks can be expected as the year progresses.

Another cannabis SPAC that has risen by over 50% since we covered it back in December is Clever Leaves Holdings (NASDAQ: CLVR), a multinational cannabis operation with production facilities in Colombia and Portugal and import business into Germany as well as a Nutriceutical (non-cannabinoid) operation in Phoenix. 

CEO Kyle Detwiler was my guest on their second day of trading on NASDAQ, and the stock is trading above $15 at the time of writing. He says he considers Clever Leaves to now be one of the world’s largest medical cannabis suppliers in the world. Watch that full interview here: Biggest Cannabis SPAC Deal of 2020

And not be left behind in the third wave Canopy Growth Corp (NASDAQ: CGC) founder and former CEO Bruce Linton is getting ready to launch Gage Cannabis on the public markets imminently, which will bring Bruce back to the global cannabis (and Midas Letter) stage in a big big way.

Gage Cannabis, based in Toronto but operating in the State of Michigan primarily, reported sales of just under $2 million for 2019 and raised $50 million in our most successful Regulation A financing ever for a cannabis company, at $1.75 a share.

 We will have Bruce on for an interview shortly.

Those are the three premium new cannabis plays I like the best. I’m a shareholder in The Parent Company and will likely be a shareholder in Gage Cannabis once publicly traded. The Reg A offering sold out before we could get a foot in the door.

There are going to be more duds in the cannabis space than you can shake a stick at, and so now, in this 3rd wave more than ever, it’s crucial to have an insider’s view of what’s going on in the space.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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