If you say anything negative about any of the Canadian cannabis licensed producers (LPs), you’ll get angry responses and be told how they have generated wealth the past few months. That’s popular on social media, but the truth is long-term LPs have destroyed far more wealth than they’ve created while American multi-state-operators (MSOs) have created wealth the past few years.
Thanks to Reddit and other media pumpers, Sundial, Tilray, Aurora, HEXO, and OrganiGram made a few gamblers wealthy the past few months, but that’s like saying the lottery makes people money because a few people make millions. The lottery system provides way more losers than winners, not much different than the Canadian LPs. Thanks to media hype and pumpers on social media, a ton of casual retail investors likely got caught of on FOMO (fear of missing out) and down significantly on their investment
Let’s look at some of the LP darlings that have been pumped and dumped recently and since IPO.
In the past 6 months, Tilray has earned investors a nice 47% return.
Looks great on the surface, but the stock is also down 59% from its high just a few weeks ago. How many investors bough near those highs? The stock traded over $148 in October of 2018, now down 82% from that high. Yes, Tilray made a few people rich recently, including former and current management, but the vast majority of Tilray holders, past and present, have been left holding the bag.
Let’s take Sundial, the company that generates cash flow from printing shares, not selling cannabis – going from less than 200 million to 1.56 billion shares in the last 6 months (and just announced another $1 billion mixed shelf offering). In the last month, Sundial has returned 125%:
Notice the peak of $3.96? The stock is down 63% in just a few weeks and the stock actually traded above $4. Now let’s look at Sundial since IPO:
Sundial is still down 86% since IPO and down 89% since its $13.22 all-time high in September of 2019. Go look at HEXO, Organigram and most of the LPs and the story is the same. Aphria, Village Farms, and Canopy Growth have performed amazing since their IPOs, but Aphria is down 40% and Canopy Growth down 34% from their recent highs a few weeks ago.
Now look at some of the leading American MSOs since IPO:
Not only has it returned 458% since IPO, it has only declined 12% from it’s recent all-time high.
97% return since IPO and only down 9% off it’s recent high.
343% return since IPO and only down 9% off it’s recent high.
Go look at Ayr, Cresco, Jushi, and most MSOs and the story is the same – amazing gains since IPO and not too far from their highs. It’s very obvious to me that you trade most of the Canadian LPs and invest in the best American MSOs. Yes, you will find outliers like MedMen in America and Village Farms in Canada, but the vast majority of leading MSOs have created wealth, while the majority of Canadian LPs have destroyed wealth.