Cabot Cannabis Investor Issue: March 26, 2025

The cannabis sector remains unloved as investors abandon hope that President Donald Trump will come through on his campaign promise to reschedule the drug.

Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).

I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.

Meanwhile, cannabis companies remain in hunker-down mode, containing expenses and capital spending to try to survive under the weight of debt that is coming due over the next two years.

Beyond rescheduling and balance sheet challenges, though, there are actually several positive trends that are getting ignored.

* There’s money to be made lending to “mom and pop” cannabis operators

For years I have favored cannabis lenders with insider buying in our Cabot Cannabis Insider portfolio. It now holds: Advanced Flower Capital (AFCG), Chicago Atlantic Real Estate Finance (REFI) and Chicago Atlantic BDC (LIEN). They pay yields in the 12% to 14.6% range. You get “paid to wait” for reform to happen. The shares of these companies will also go up if rescheduling progresses, but probably not as much as plant-touching cannabis names.

Let’s take a closer look at Chicago Atlantic, for example. It has over $400 million in loans outstanding to around 30 smaller companies paying a 17% average yield to maturity. In the fourth quarter, the company deployed $90 million in cash from capital it raised from mutual funds. Chicago Atlantic doesn’t like to lend to the bigger multistate operators. Instead, it lends money to small, private cannabis companies that want to buy some dispensaries or add on to their cultivation capacity.

“The focus for us is less on the giant operators but instead on the idiosyncratic operators in idiosyncratic markets,” says Chicago Atlantic managing partner Peter Sack. “Cannabis is still a place where the market is still extremely fragmented even though a few public operators continue to get most of the press. Even in light of underperforming stocks, we are finding attractive risk-adjusted return in the space,” said Sack in a recent interview with the Dales Report. The company secures loans against assets like real estate or cannabis sale licenses.

* Wholesale prices are firming up

Markets hurt by wholesale price compression are showing signs of improvement. In the past three months, wholesale prices firmed up in Oregon, Colorado, Arizona, Nevada, Pennsylvania, Maine, Delaware and Illinois. “That’s extremely encouraging,” said Sack. “Some of the legacy markets are starting to reverse some of the trends that have soured commentary on the space.”

Meanwhile, cannabis prices are rising in Canada. The price of cannabis with 25%-30% THC concentration increased 6.8% in February to $1.57 a gram, from $1.47 the month before. That was the highest price since August 2022, when this category of cannabis flower traded at $1.62 per gram. Higher-potency flower is increasingly popular among users.

The average price for all dried flower climbed 1.5% from January to $1.38 per gram. The average price was up 7.9% in January.

I expect this trend will persist, fueled by competition from medical cannabis exporters and a rebound in retail sales. Canadian cannabis exports soared to nearly 13,000 kilograms per month in the final four months of 2024, compared to an average of 7,700 kilograms earlier in the year. Retail sales rebounded in the last four months of 2024, reaching a record in December.

* Hemp-based drinks are increasingly popular

Even if lawmakers eventually crush this trend, it is important because the hemp-based product mini-craze nudges THC into the mainstream. That will help build consumer and voter support for cannabis reform, including rescheduling.

Three fourths of young adults age 18-24 say they substitute cannabis for alcohol at least once a week, according to a Bloomberg Intelligence survey. The report found that 65% of consumers 25-34 make the switch, as do 42% of those 45-54.

The report attributes the trend in part to rapid expansion of the availability of hemp-based THC drinks, which are legally available under federal law in mainstream liquor stores. Trulieve (TCNNF) and Curaleaf (CURLF) have recently launched hemp-based THC beverages. Cannabis-based THC drinks (as opposed to hemp-based) are limited to state-legal cannabis dispensaries.

“I am enthusiastic about the hemp beverage market because it increases the sales pie,” says Sack. “The people buying in liquor stores and convenience stores are people not going into dispensaries to purchase drinks.”

Edible Brands, known for its fruity Edible Arrangements, is expanding into hemp-derived edibles, like gummies, drinks and supplements. The products can be purchased for delivery from Edibles.com.

“We’re making it easier than ever for consumers to access premium, vetted products with the convenience they expect today,” said Edible Brands CEO Somia Farid Silber in announcing the new THC-based product line. The company also said it’s going to launch brick-and-mortar stores starting with a flagship outlet in Atlanta. DoorDash a few months ago started offering delivery of hemp-derived THC and CBD products, including gummies and beverages.

A challenge to watch here is that several states are pushing back by moving to ban hemp-derived THC products, or heavily regulate them. California already bans hemp-derived THC products. Texas, Florida and Georgia, among others are considering outright bans or tough restrictions. Hemp-derived THC is legal at the federal level under the Farm Bill, but many legislators are looking to roll that back.

* Analysts expect decent sales growth in 2026

Analyst estimates (which are based on guidance from companies) show an expected 4.5% increase in sales in 2026 compared to this year. Analysts are pricing in legalization of recreational use in Pennsylvania, among other sources of growth in Ohio, Minnesota and Maryland markets, for example.

* Pennsylvania rec-use legalization seems to be on track

Speaking of Pennsylvania, a key date to watch here is the June 30 annual state budget approval deadline. By some estimates, rec-use legalization would bring in $500 million a year in tax revenue.

Governor Josh Shapiro (D) loves to point out that Pennsylvania currently loses a lot of that revenue to surrounding states, which have already legalized recreational use. He proposes legalizing rec-use cannabis as of July 1, and starting sales in January 2026. He estimates rec-use sales would generate $1.3 billion in tax revenue in the first five years of sales.

In a recent radio interview, Rep. Dan Frankel (D), who chairs the House Health Committee, said he’s optimistic that rec-use legalization could be approved as early as this summer. He called legalization “inevitable” because Pennsylvania is “bleeding out revenue” to bordering states like Ohio, New York, New Jersey and Maryland which have all legalized rec-use sales.

Surveys show that about 70% of voters in the state support the reform, including a majority of Republicans.

Meanwhile, many other markets are expanding. The Ohio market continues to grow. Missouri remains a strong market. Minnesota is in the process of launching recreational use sales. And New York remains a developing market.

What to Do Now

Cannabis investors remain uncertain about when reform like rescheduling will happen. It is not possible to predict this with any accuracy. So, patience is required. It makes sense to make the wait easier with a “get paid to wait” strategy, which emphasizes cannabis sector lenders that pay rich yields. They will still post some capital appreciation if reform progresses.

Our Cabot Cannabis Insider portfolio now has three of these. They are: Advanced Flower Capital (AFCG), Chicago Atlantic Real Estate Finance (REFI) and Chicago Atlantic BDC (LIEN). They pay yields of 14.6%, 12.2% and 12%, respectively.

In dividend investing, yields like these are often considered “too high” and a sign they cannot last. At least as of the most recent updates, it does not appear these dividends will be cut. All have recently affirmed their dividend payouts.

Otherwise, continue to hold or average down in our main portfolio names. The best time to buy stocks is when they are widely hated, but plausible catalysts lie on the horizon. That is clearly the case with cannabis stocks now. But this is also the hardest time to buy stocks. That resistance may also be a signal to buy. As a general rule, some of your best stock purchase decisions will be the ones that are the hardest to make.

Consider taking both trading positions and multiyear positions in portfolio names now, or averaging down. I am personally averaging down in the current weakness.

Portfolio names are: Ayr Wellness (AYRWF), Cresco Labs (CRLBF), Curaleaf (CURLF), Cronos (CRON), AdvisorShares Pure U.S. Cannabis (MSOS), AdvisorShares MSOS 2X Daily (MSOX), ETFMG Alternative Harvest (MJ), Green Thumb (GTBIF), Organigram (OGI), Tilray Brands (TLRY), Trulieve (TCNNF) and Verano (VRNOF). For simplicity, consider getting exposure via MSOS or the leveraged version, MSOX.

Cannabis News from Around the World

Part of my core thesis for being bullish on cannabis stocks is that there continues to be tremendous cultural momentum toward cannabis reform around the world. I’m convinced institutional investors will not ignore cannabis stocks forever.

We see evidence of this powerful cultural momentum in the changes in laws to legalize cannabis, big tobacco investments in the space, robust cannabis sales growth in states that legalize, increased cultural acceptance in the form of relaxed drug testing standards in sports leagues and the workplace, and poll results that show a growing majority of people support legalization regardless of age and party affiliation.

These trends tell us cannabis stocks are a strong contrarian buy that will turn very profitable for patient investors with a medium-term horizon. The sector is so volatile, it is easy to get shaken out of names by heightened emotional reaction to drawdowns. So, it is important to catalogue evidence of this cultural momentum. That is the purpose of this section of Cabot Cannabis Investor.

U.S. News

* Missouri continues to post strong cannabis sales growth. February sales of $116.23 million were up 6.2% compared to the year before. Sales growth remained robust even though bad weather forced many dispensaries to close for part of the month.

* Decriminalization of cannabis in Atlanta was associated with a reduction in violent crime. The 20% reduction might have happened because police were able to redirect resources to preventing violent crime. The findings were summarized in a paper published by Florida State University economics professor Brian Meehan. The city decriminalized possession in 2017.

* Medical cannabis sales in Kentucky should begin sometime this year. Cresco Labs (CRLBF) will run a large cultivation facility in the state. Medical cannabis was legalized at the start of this year.

* A majority of Utah voters support recreational-use cannabis legalization, according to a recent survey. It found that 52% of voters would support a ballot initiative to legalize rec-use cannabis, and 38% would oppose it. Support was highest among Democrats at 76% followed by independents at 61% and Republicans at 41%. The survey was paid for by Keep Utah Medical, and conducted by Noble Predictive Insights. Medical use is legal in the state.

* The average retail price for an ounce of rec-use cannabis in Michigan fell to $65.21 in February, down about 30% compared with $91.94 in February 2024. “Growers are really struggling right now to recoup the cost of cultivation,” said Robin Schneider, executive director of the Michigan Cannabis Industry Association. “Essentially, they can’t sell it for what it costs to grow it. So I’m anticipating we’re going to see a lot more businesses fail this year. There’s so much product in the system that prices may continue to fall.” Total sales of rec-use cannabis in Michigan fell to $241 million in February, down from $259 million in the same month a year ago.

* Lawmakers in Hawaii are advancing a medical cannabis bill that would allow doctors to recommend cannabis for any condition whatsoever. Currently, doctors can only recommend cannabis for conditions listed under state law. The medical cannabis measure, called HB 302, was recently approved by the state’s Senate Committee on Health and Human Services and the Committee on Commerce and Consumer Protection. It has passed in the House of Representatives. Hawaii approved medical use in 2000.

* Maryland’s Senate has passed a bill that would protect fire and rescue workers from being penalized for testing positive for off-duty use of medical cannabis. A similar bill has not yet been voted on in the state’s House of Representatives.

* A majority of Americans think regular alcohol use is more harmful than regular cannabis use, according to a survey. The survey conducted by YouGov found 58% of participants said alcohol is more dangerous than cannabis. Despite the perceived risks, 27% of respondents said they prefer alcohol to cannabis, 11% said they prefer cannabis, and 52% said they use neither. Another recent survey by the National Institute on Drug Abuse (NIDA) in December found that young adults are three times more likely to use cannabis than alcohol on a daily or near-daily basis.

International News

* France is one step closer to legalizing cannabis. The country recently sent the European Commission (EC) two proposed laws to legalize medical use. If the EC and other member states go along, the laws would then need a final sign off by a French health agency before getting presidential approval to go into effect. The process will take several months, at least.

* Most U.K. doctors would prescribe cannabis to manage chronic pain if this indication got the green light from the National Health Service, according to a recent survey. The poll, which found that 84% of doctors would prescribe cannabis for pain, was funded by a medical cannabis clinic called Alternaleaf. The survey found that 78% of doctors thinks opioids are prescribed too often. The U.K. legalized medical cannabis in 2018.

* Legalizing cannabis in Australia would raise $700 million in annual tax revenue, according to a Parliamentary Budget Office (PBO) study. The country’s Greens Party is pushing to legalize cannabis. Australia’s Senate voted down legalization late last year. Members of the country’s Labor, Liberal and National parties all voted against the change. The country allows limited medical use, but otherwise bans cannabis.

Medical News

* Cannabis can be effective as a treatment for post-traumatic stress disorder (PTSD), says a new study. The study said health insurers should cover the cost of cannabis for this indication.

The study, called The Cost Effectiveness of Adjunctive Medical Cannabis Therapy in the Treatment of Moderate Post-Traumatic Stress Disorder, was published in the journal Clinical Drug Investigation.

* Cannabidiol (CBD) may help treat Alzheimer’s disease by reducing inflammation in the brain, according to a recent study. Many researchers believe Alzheimer’s disease may be caused by amyloid-β plaques, but evidence increasingly points to the role of neuroinflammation in disease progression. Cannabidiol in cannabis plants is a phytocannabinoid with anti-inflammatory properties. Cannabidiol influences pathways in the brain that regulate neuroinflammation. The study is called “Rethinking Alzheimer’s: Harnessing Cannabidiol to Modulate IDO and cGAS Pathways for Neuroinflammation Control.” It was published in the journal bioRxiv.

* Illicit market cannabis is contaminated with fungal toxins called Fusarium mycotoxins at levels that exceed safety limits for agricultural products, according to a new study.

The contamination may result in “opportunistic infections in medical cannabis users who are immunocompromised due to health conditions such as cancer and HIV infection,” said Maxwell Leung, an Arizona State University assistant professor who conducted the study.

It’s not clear, however, how much of the toxins survive heat from burning or vaping cannabis flower, said Leung. The research was published in Environmental Health Perspectives.

Portfolio Company News

Cresco Labs (CRLBF)

Cresco Labs sales fell 6% to $724 million in 2024, but the company preserved cash flow by cutting $29 million in overhead. That helped increase EBITDA by $26 million. Operating cash flow advanced $74 million to $132 million.

“Demand for cannabis continues to grow. And while price compression persists, lower prices also make cannabis accessible to more consumers than ever,” said Cresco Labs CEO and co-founder Charles Bachtell in the company’s mid-March earnings call.

Demand was so strong in some markets the company could not keep up. “But we’re rapidly turning on the extra capacity in our facilities to seize the opportunity,” said Bachtell. “By unlocking additional production, we’ll drive volume growth to offset price decline, optimize our footprint and capture greater market share, fueling sustained profitable expansion.”

Cresco retired $40 million of its 2026 notes, fortifying its balance sheet. The company maintained its number one share position in Illinois, Pennsylvania, and Massachusetts.

For the fourth quarter, the company’s $176 million in revenue was flat sequentially. Cresco saw gains in Ohio and Pennsylvania, offsetting continued pricing pressure in Illinois. Retail and wholesale price compression contributed to a decline in adjusted gross margin to 50%, sequentially.

Looking ahead, the company plans to open new stores in Pennsylvania, Florida, and Ohio this year. Cresco sales will also grow because it will build out cultivation in Kentucky, which is launching medical-use sales. But it expects continued margin and sales pressure in the first quarter, citing lower expected Illinois sales and ongoing price compression in general. The company says it will continue to make debt retirement and refinancing a priority. It says it sees strong demand interest from current and potential lenders.

Green Thumb Industries (GTBIF)

Green Thumb recently opened a RISE Dispensaries store in Whitehall, Ohio, its sixth in the state. The Ohio market is in growth mode because the state legalized rec-use sales last year.

Organigram Global (OGI)

Organigram is changing its name to Organigram Global from Organigram Holdings, to reflect its emphasis on expanding into foreign markets in Australia, Germany, the United Kingdom and elsewhere.

Tilray Brands (TLRY)

Tilray recently announced the launch of a new Tilray Craft brand of medical cannabis in Germany called Cannabisblüten THC 25 TAM. The company says it has higher THC and higher terpene content derived from its genetic research programs.

Trulieve Cannabis (TCNNF)

Trulieve recently announced that its Onward brand of hemp-based THC drinks is rolling out in Shores Liquor and ABC Fine Wine & Spirits stores in Florida. Trulieve also announced it opened a new store in North Miami Beach, Florida.

Sector Performance

Our Cabot Cannabis Plus Insider Portfolio is doing very well. But our plant-touching Cabot Cannabis Investor portfolio is trailing.

Our Cabot Cannabis Plus Insider Portfolio invests in cannabis-related names that do not touch the plant, where insiders are buying.

It is up 33% since I launched it on March 29, 2023, compared to an 18% gain for the Russell 2000 index and a 37% loss for the New Cannabis Ventures Global Cannabis Stock Index over the same time. Note that my since-inception returns are weighed down by the addition of a new name in February, but the portfolio still outperforms nicely.

The portfolio is well positioned to outperform because investments in AFC Gamma (AFCG), Chicago Atlantic Real Estate Finance (REFI) and Chicago Atlantic BDC (LIEN) pay yields of 14.6%, 12.2% and 12%, respectively. The dividends were recently confirmed even though they look suspiciously high. We will also see capital appreciation in these names if sector catalysts hit.

Because our plant-touching cannabis portfolio is leveraged, it lags in severe sector downturns. That is the case now. Our Cabot Cannabis Investor portfolio cannabis portfolio was down 31.9% this year as of the March 25 close. The decline was worse than the 22% loss for the New Cannabis Ventures Global Cannabis Stock Index.

Our plant-touching portfolio is leveraged because of the large position in AdvisorShares MSOS 2X Daily (MSOX). It is a top-five position. The leverage hurts us when the sector is weak. Likewise, it helps capture more upside as we see progress on rescheduling cannabis, and progress towards approval of recreational use in more large states like Pennsylvania.

When we get a significant sector rally, I will roll back leverage by trimming MSOX in favor of cannabis stocks or the AdvisorShares Pure U.S. Cannabis (MSOS) ETF. If you are a highly active trader, it would make sense to deleverage into rallies in the same manner along the way, and then hope for a pullback to re-lever.

Portfolio

Canna Plus Insider Portfolio

Company Profiles

Ayr Wellness (AYRWF) This is a vertically integrated multistate operator based in Miami. It has over 90 dispensaries. It operates in Florida, Illinois, Massachusetts, Pennsylvania, New Jersey, Nevada, Ohio, and Connecticut. Ayr has 18 grow and production sites, around a dozen national brands, and a proprietary library of over 160 cannabis strains. Like many names in our portfolio, Ayr is strategically positioned in states that look poised to approve recreational-use sales. It has over 60 stores in Florida, for example.

Ayr has built out its brand development strength with the appointment of David Goubert as president and CEO. Goubert previously served as president and chief customer officer at Neiman Marcus Group, and he was at LVMH for 20 years before that.

Ayr is currently launching brands from its national portfolio in New Jersey, including Ayr’s Lost in Translation flower, Kynd flower, Road Tripper flower, STIX pre-rolls, Entourage vapes, Secret Orchard vapes, and Wicked soft lozenges.

Ayr recently reported $71 million in cash and $607 million in net debt. This debt overhang is one reason why Ayr trades at 0.15 times sales. The company is founder-run, which can be a plus in investing. BUY

Cresco Labs (CRLBF) Chicago-based Cresco has the #1 market share position in Illinois, Pennsylvania and Massachusetts. The company has the top-selling branded portfolio of cannabis products in the industry. It has the top of branded flower and branded concentrates, and the third best portfolio of branded vapes.

Cresco offers exposure to many attractive U.S. markets with an emphasis on Illinois. It is also in Pennsylvania, Ohio, New York, Massachusetts, Michigan, Florida, Missouri, and Maryland. Most of those are states that recently expanded into recreational use sales, or are expected to over the next two years.

The company is founder-run, which can be a plus in investing. Cresco Labs has a price to sales ratio of 0.55. BUY

Cronos Group (CRON) Cronos is mainly a foreign operator with exposure to Canada, Germany, Australia and Israel.

Cronos has respectable brand strength in Canada. It sells gummies, infused pre-rolls and vapes under the Spinach, Blue-Raspberry Watermelon and Tropical Diesel brands. Spinach products command 15.3% market share in the Canadian edibles category, and 19.8% share in gummies, according to Hifyre.

In Israel, Cronos sells dried flower, pre-rolls and cannabis oils in the medical market. The company has a partnership with Cansativa Group which allows Cronos to sell its Peace Naturals brand in Germany, where the cannabis market should grow dramatically over the next several years because of liberalization of restrictions on sales. Cronos has a 10% stake in Cronos Australia, a publicly traded company.

Cronos has $855 million in cash, or about $2.24 per share, against minimal debt of $2.26 million. Some of that cash could be deployed in acquisitions, possibly to expand in the U.S. adult-use market.

Cronos trades at 0.75 times book value. BUY

Curaleaf (CURLF) Massachusetts-based Curaleaf was the industry leader last year. It operates 145 dispensaries and several grow sites in 17 states and its European operations. It has one of the strongest brand portfolios in the U.S. led by Select, the number one selling vape brand in its markets. Here are three factors that support growth.

1. Curaleaf is an R&D powerhouse. A team of scientists is currently developing about 180 products.

2. Like many of the names in our portfolio, Curaleaf is well positioned to benefit from the opening up of rec-use sales in New York, Ohio, Florida, Pennsylvania near term.

3. Curaleaf will benefit from progress on liberalization of cannabis laws in Germany and elsewhere in Europe. It has a majority stake in Germany’s Four 20 Pharma, a licensed producer and distributor of medical cannabis that has more than 15%-20% market share in Germany. Curaleaf International is the largest vertically integrated cannabis company in Europe. It has a lot of room to expand production, and it boasts import and distribution in the U.K., Germany, Italy, Switzerland, and Portugal. Recreational use legalization in Germany is advancing, and it could open the floodgates to further legalization throughout Europe. Curaleaf has a 50% market share in the U.K.

The company is founder-run, which can be a plus in investing. Curaleaf has a price/sales ratio of 1.07. BUY

AdvisorShares Pure U.S. Cannabis ETF (MSOS) This exchange traded fund (ETF) has large exposure to most of our portfolio names so it may seem redundant. However, I want to put it on your radar as a liquid trading vehicle for getting in and out of the group without having to make a lot of individual stock sales, and as way to get exposure to many of our names with one purchase. It also gives us diversification beyond our names, to positions like Jushi Holdings (JUSHF) and Innovative Industrial Properties (IIPR), among others. Consider accumulating this ETF on weakness of 2% or more. BUY

AdvisorShares MSOS 2x Daily ETF (MSOX) This is the leveraged version of the ETF MSOS. It theoretically goes up (and down) by twice as much as MSOS, though the relationship does not always hold exactly. Consider accumulating on weakness of 2%-4% or more. Note that leveraged ETFs suffer from some persistent valuation decay because of the cost of the leverage. BUY

ETFMG Alternative Harvest (MJ) This ETF has outsized foreign exposure, which means it could benefit more than other marijuana exchange traded funds if we see progress on legalization in Germany and Europe. That could happen in the form of draft legislation and decriminalization of recreational use in 2023. “Legalization in Germany could be a tipping point for global expansion,” according to cannabis experts at ETFMG. This would put additional pressure on other European Union members to move forward with legalization. It could also encourage reform of the 1961 U.N. Single Convention on Narcotics which prohibits the cultivation and sale of recreational cannabis. “Such a result would be momentous and would open the doors to a global market,” says ETFMG. Owning this ETF broadens our industry exposure to names outside our portfolio, like Canopy Growth (CGC; WEED.TO), SNDL (SNDL), and GrowGeneration (GRWG), among others. BUY

Green Thumb (GTBIF) Chicago-based Green Thumb is our portfolio’s largest position. It has been the most profitable multistate operator of all the big ones – a sign of good management.

Green Thumb branded cannabis products include &Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles and RYTHM. The company operates a national retail cannabis stores called RISE. Green Thumb has 91 dispensaries across fourteen states. Green Thumb continued to strategically position itself in markets that look poised to expand to recreational uses sales, like Florida and Pennsylvania.

Founder Ben Kovler is chairman and CEO. Research shows that founder-run companies often outperform. Kovler has a 26% stake in the business and holds nearly 59% of voting power. Green Thumb trades at a price to sales ratio of 1.93. BUY

Organigram (OGI) Organigram holds the #2 position among Canadian licensed producers. It also sells high-margin flower in Israel, Australia and Germany. Germany should see robust growth over the next few years as it loosens rules on medical cannabis use. The CEO has alluded to “creative ways” to get into the U.S. cannabis market, but does not offer details.

The company has the #1 market share position in hash globally driven by popular products like Tremblant, Holy Mountain and SHRED. It has the #1 market share position in gummies.

British American Tobacco (BTI) is a big investor in Organigram, an endorsement of its potential. The two companies collaborate to develop cannabis products. The price to sales ratio is 1.1. BUY

Tilray Brands (TLRY) Tilray is a cannabis and consumer packaged goods company with one of the biggest global footprints in the industry. CEO Irwin Simon founded The Hain Celestial Group, a natural food company, which is in the business of brand development. This is a key factor for cannabis companies, too. So, the Hain Celestial experience may bode well for shareholders.

Tilray is a big recreational and medicinal cannabis supplier in Canada. It is ranked #1 there by sales for cannabis flower, oils, concentrates, and THC beverages; #2 in pre-rolls, #4 in vape, and among the top 10 in all other categories. It also offers medical cannabis in 20 countries on five continents through its subsidiaries and agreements with pharma distributors. It has operations in Canada, the United States, Europe, Australia and Latin America. It sells craft beer and CBD products in the United States.

Tilray seems like a good play on expected legalization of recreational use in Europe over the next few years, because it has been making significant investments there. It has a medicinal marijuana distribution network in Germany. It has production facilities in Portugal and Germany, the largest medical cannabis market in Europe.

Tilray sells hemp food products through its Fresh Hemp Foods division, and it has a craft alcohol business called SW Brewing, the tenth-largest craft brewery in the United States. The price to sales ratio is 1.38. BUY

Trulieve (TCNNF) Trulieve has long been the biggest medicinal marijuana vendor in Florida, where it has 50% market share. It has over 190 dispensaries and two thirds are in Florida. Cannabis activists are trying to get recreational use on the Florida ballot in November 2024. A win would be huge for Trulieve. Approval could make Florida the largest legal U.S. cannabis market with 22 million residents and 138 million tourists a year.

Meanwhile, Trulieve has been expanding across the country. It is diversifying its presence into Pennsylvania, Maryland, Georgia, Ohio and Massachusetts, among other states.

The company reports $320 million in cash against $795 million in debt. “U.S. cannabis has significant white space ahead, with many states yet to implement medical or adult-use programs, and the growing appetite for substantive federal reform,” says CEO Kim Rivers. It has a price to sales ratio of 0.98. BUY

Verano (VRNOF) Chicago-based Verano is one of the top five publicly traded multi-state operators in the U.S. by sales. Verano has nearly 140 dispensaries and 14 production facilities in 13 states. One of the most attractive qualities of this company is that it has a big presence in high-growth markets like New Jersey, Illinois, Florida and Connecticut, and states that may soon legalize recreational like Florida and Pennsylvania. The company’s strategy has been to position with medical dispensaries in states most likely to soon go recreational.

The company’s portfolio of brands includes Encore, Avexia, MÜV and its signature Verano line of product. To capitalize on the consumer’s trading down to value brands, Verano moved up the rollout of a new budget line called Savvy last year. It operates dispensary concepts called Zen Leaf and MÜV. It also has a licensing agreement with Mike Tyson’s Tyson 2.0 cannabis company.

The company reports cash of $194 million against debt of $541 million.

Verano is founder-run, which can be a plus in investing. Verano has a price to sales ratio of 0.54. BUY

The next Cabot Cannabis Investor Issue will be published on April 30, 2025.

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