You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.

Friends,

What a tough month so far for the cannabis sector! While it is not as bad as last November was, the Global Cannabis Stock Index has dropped 16% so far this month, and, at 5.74, it is now down 16.6% year-to-date. I have been very cautious at 420 Investor with my model portfolio, which is down 2.6% in 2025 so far, and I have been cautious here too.

The market soared higher in August after President Trump said that he was looking into rescheduling cannabis. It has been more than three months, and there has not been any action. If cannabis is rescheduled to Schedule III, it would wipe out 280E taxation. I called for this loudly in late 2022 in a newsletter here about the most important things for cannabis stocks.

I warned in the newsletter after Labor Day that several cannabis stocks were at risk of falling substantially, and many have. I shared the Q3 returns for the 23 stocks that were in the Global Cannabis Stock Index at the time. The index now has 28 names, as we detailed at the end of September, with two stocks being removed and seven being added. In that early September newsletter, I called out 8 stocks as being highly concerning to me. Here is how they have performed since then:

While they are not all down, as Village Farms has continued to soar, the other seven are down at least 12.3%. The eight stocks I warned readers about have dropped an average of 18.6%. The Global Cannabis Stock Index has declined 17.9%,, and the MSOS ETF has plunged 35.1%.. It is now down 21.5% year-to-date, and remains a very big risk to what it invests in. In fact, there was a redemption yesterday, with the outstanding shares reduced by 0.7%. The number of shares, at 187.21 million, is still up 43.4% year-to-date, with most of the increase coming in Q3.

Here is the complete list of Global Cannabis Stock Index members and their change during Q4 so far:

The 28 stocks have declined on average by 25.3%, which is how much the index has declined because it was equal weighted, and the median decline has been 28.3%.  MSOS is down 37.6% in Q4 so far. The eight stocks about which I warned in early September have one that is up, Village Farms, but the other seven have all declined by more than the index. I have written negative articles at Seeking Alpha about several of them, including RYM, SNDL and TLRY recently.

In my model portfolio at 420 Investor, I currently hold four stocks that are down more than 30% in Q4 and have added to positions in each of them this week. As it relates to the eight stocks I called out, I am no longer so negative on one of them (Canopy Growth, which I upgraded in an article published today at Seeking Alpha). The cannabis sector has been very volatile, but it appears to be in a bear market still despite the huge rally from the lows.

Cannabis stocks are crashing, but for good reason from my perspective for many of them. The overall industry faces challenges, and there has been no progress to the two potential catalysts that I called out here three years ago of 280E taxation elimination and also major exchanges beginning to list American cannabis operators. Investors may make money investing in the industry if 280E taxation goes away, and there remain other opportunities for companies outside the MSO space. Still, investing in cannabis is quite risky.

Sincerely,

Alan

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:

Exclusives

Illinois Cannabis Data Change Suggests Much Lower Sales

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Exclusive article by Alan Brochstein, CFA

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email