00:00 Allie

Cannabis stocks have been on a tear in recent months rallying as industry friendly headlines continue to roll out of Washington.

00:07 Allie

The latest came Sunday when President Trump took to Truth Social to tout the benefits of CBD for seniors. And back in August, the Wall Street Journal reporting he was considering reclassifying marijuana as a schedule three drug.

00:19 Allie

Joining me now with his playbook for investing in cannabis stocks, Dan Ahrens, portfolio manager of the Advisor Shares Pure US Cannabis ETF.

00:29 Allie

Dan, thanks for being here. We’re seeing cannabis stocks double over the past three months all on this hope of federal reform.

00:39 Allie

But we’ve heard this story before, right? A lot a lot of talk, not necessarily a lot of follow through. So what makes it different this time?

00:50 Dan Ahrens

Sure. Um, a lot of uh cannabis investors have had a hard time the last five years.

00:58 Dan Ahrens

Um, when Biden was uh first getting elected, uh cannabis stocks went up a lot because democratic uh politicians had promised a lot of cannabis reform, much like we had seen in Canada a few years earlier and cannabis stocks went up an awful lot.

01:14 Dan Ahrens

Now, it’s been a long, painful wait.

01:19 Dan Ahrens

But um, a lot of good messaging coming out of the Trump White House and Trump himself.

01:27 Dan Ahrens

Um we’re hearing a lot of good things that they are finally going to follow through with a rescheduling. Right now, cannabis is called a schedule one drug in the United States on the DEA list, and they’re talking about officially rescheduling it to schedule three, and that would be a move between the HHS and the DEA.

01:47 Dan Ahrens

Um, but we might get a executive order from Trump asking for it. Now, that doesn’t put everything in place. We need Congress and we need the DOJ, but uh Trump can ask for it via a executive order.

02:05 Dan Ahrens

A lot of messaging that it seems like they can’t really turn back on now. But many investors are still cautious after they have been burned so many times in the last four years with politicians rather empty promises.

02:22 Allie

Yeah, and I remember 2018, 2019 being at Yahoo Finance and that’s all we talked about was cannabis stocks. And then we saw this steady years-long decline. I mean, you attributed it a lot to the lack of reform.

02:37 Allie

You know, how much do these names rely on that? I mean, are there other reasons to be invested in cannabis stocks?

02:47 Dan Ahrens

Well, there’s a big disconnect in the United States over investing in uh cannabis stocks. And even at the uh start of the uh episode here, Ally, um Yahoo Finance put up the um the tickers and the symbols for Aurora and Tilray and Canopy.

03:01 Dan Ahrens

And those are all Canadian companies. They cannot have any THC cannabis business on the south side of the border. They have to keep that business in Canada, yet they are able to list on major exchanges in the United States like um the Nasdaq or the NYSE.

03:22 Dan Ahrens

So our fund, uh ticker symbol MSOS uh specializes in US multi-state operators.

03:33 Dan Ahrens

Now, these companies are doing billions of business in the United States in states where they have medical cannabis dispensaries or almost half the states in the United States now have adult use. But they’re operating contrary to federal law officially, they have uh state approvals.

03:55 Dan Ahrens

And they are unable to list on the major exchanges in the United States. They are unable to do um banking or custody with uh the major wirehouses and federal banks. They trade OTC in the United States.

04:15 Dan Ahrens

Now, our fund is the largest cannabis fund in the world and it’s a vehicle that’s listed on the New York Stock Exchange. Um it is a place where people can get all those US companies in one trade and it’s available through an awful lot of brokerages, but still not all because of this crazy US federal law disconnect that we need to get this rescheduling.

04:36 Dan Ahrens

And our opinion is that rescheduling will then begin a domino effect where these companies could be custodied at banks, could um have, you know, a safe banking bill, hopefully, have passed through Congress, um and be able to list on major exchanges, custody, and that opens them up to a great deal more institutional investment.

05:07 Dan Ahrens

Um we have the start of a movement to regain some of the losses of the last five years over the last few months just on rumor and conjecture and messaging.

05:19 Dan Ahrens

We’re waiting on an official announcement out of the White House anytime now.

05:22 Allie

And Dan, we only have about a minute here, but walk us through some of your top picks, the ones that are best positioned if we do see reform come through.

05:33 Dan Ahrens

Certainly. Our top holding is Curaleaf, and that is a company that operates in a number of states, also in Europe, also has some hemp beverages. Um another one is uh Trulieve, right behind that.

05:48 Dan Ahrens

Real dominant force in the medical market in Florida, which is a huge market. also operates a number of other states. Um a couple others in our top five holdings are Cresco Labs, another multistate operator, and Verano, yet another multi-state operator.

06:06 Dan Ahrens

And again, these are quite different and a quite different opportunity than investing in those companies like Tilray, Canopy, and Aurora and so on in Canada.

06:18 Allie

All right, those US multi-state operators. That’s what’s on your radar. Dan, thank you so much. Uh hopefully we’ll be talking a lot more about cannabis stocks with this recent price. Appreciate it.