As we head into the holidays, it’s particularly important to reflect on the most notable victories (and lessons) that came out of 2019…

2019 was a great year for cannabis consumers and a great year for the best cannabis companies.

That’s worth remembering when thinking about how this was a year of losses for cannabis investors.

Because of voters, can-do regulators, and historic legislation, the number of Americans who can purchase cannabis for adult-use in their home states will increase by one-third between December 1 and January 1.

I’m talking about Illinois and Michigan, of course.

But consumers also won victories with the introduction of new products in Florida, expanded medical programs in Pennsylvania, Maryland, and Oklahoma, and new medical cannabis programs in Georgia and Virginia.

Even consumers in states where adult-use cannabis remains illegal benefitted during 2019.

New Mexico and Hawaii decriminalized cannabis possession, cities across the country continued to treat cannabis use as a ticketed nuisance instead of a crime, and many people who violated outdated cannabis laws have seen or will see their records expunged – giving them a second chance at a job.

Now, it’s time to learn from the experiences of 2019 and shift our focus to a profitable 2020…

Legislative Progress in the U.S.

On the federal level, most of the big action will come next year.

But the implementation of the 2018 Farm Bill has created an entirely new cannabis-related industry – hemp-based CBD.

And for the first time, the United States House of Representatives approved a budget rider explicitly prohibiting the federal government from interfering with state-approved adult-use cannabis laws.

Even the forward progress in 2019 on the bigger legalization acts was record-setting.

In November, the Judiciary Committee of the U.S. House of Representatives approved a bill – the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act) – that would take cannabis off Schedule I of the Controlled Substances Act and effectively legalize cannabis for recreational use in any state that allows it.

Cannabis consumers and companies benefitted from all of that and more as more dispensaries opened in more states, new and innovative branded products found their way to store shelves, and the most well-run cannabis companies moved toward profitability.

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Market Victories (and Lessons)

There were even some victories in the market.

The introduction of Canada 2.0 products on December 16 is set to release an extra $3.9 billion – or even as much as $7.8 billion – into the cannabis market.

Celebrity after celebrity joined in on this rapidly growing multibillion-dollar industry.

And the world of professional sports took the cannabis industry by storm, creating a whole new consumer market for companies to target.

Looking forward to 2020 I expect many of the stock market losses to reverse and then some.

I’ve written before that Amazon.com‘s stock declined by more than 50% three times during its growth. Those who held through that were rewarded for their patience and made incredible returns over time.

Backing up that thought, Jason Zweig recently wrote a great article in the Wall Street Journal that highlights a study from Wilshire Associates.

Wilshire found that of the top ten stocks of the past three decades, four declined by 75% or more at least once. One, Monster Beverage Corp., dropped by 92% at one point!

The point of the study is something I’ve been writing about from time to time – that these kinds of stocks are one of the few areas where individual investors have an edge over the pros.

The study’s client pointed out that it would be “potentially career-ending” for a professional manager to hold volatile stocks like that. The manager would be fired when the stock went down, and the new manager would sell it to impress their new boss.

Individual investors with diversified portfolios, on the other hand, can hold through bad times and get through to the better times ahead. Don’t forget that.

Food for Thought as We Head into 2020

The key is to be able to differentiate between those stocks which have declined for transitory reasons and those that will not come back.

A savvy investor who correctly saw the victory of e-commerce held Amazon. That same investor held Monster if she saw energy drinks flying off the shelves and the Monster brand showing up at X Games.

In cannabis, we know how the story is going to go better than in any other industry in history.

There will be bumps along the way and things will take longer than we expect. But the emergence of cannabis – both THC and CBD – as a major consumer product with a value of over $100 billion is all but certain.

So with that optimistic thought and with our eyes and our portfolios focused on a profitable 2020, I wish you all the blessings of the holiday season.

Take care,

Greg Miller

Executive Director, National Institute for Cannabis Investors


Comments

8 responses to “A Look Back at the Major Cannabis Victories of 2019”

  1. What do you think the beverage companies will do with adding CBD to the drinks/beverages? I’m interested in investing in them, I looked into TINC Co. & BevCann (only about $1.25 stock) it actually is going up. But I want to wait for U.S. market to open up more in them? Should I wait? Thanks.

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