On Tuesday morning I suggested traders might want to take some profits in positions accumulated the week before, because of a possible dearth of catalysts on the near-term horizon. I also suggested maintaining long-term exposure to the group.
Within a few hours of publishing that alert, we learned that presidential candidate Donald Trump will be issuing a more detailed statement on his cannabis policy within a week. I believe the policy statement will be constructive on cannabis, and serve as a catalyst. He made the comments in an interview with podcaster Lex Fridman. The interview was released Tuesday afternoon.
What to Do Now
When facts change, you have to change your thesis. I’m reversing my suggestion to take trading profits on positions purchased in the severe weakness last week, assuming that, like me, you bought.
Given the probably bullish Trump cannabis policy statement on the near-term horizon, I believe it makes sense to have full exposure to the cannabis sector, whatever that means in your overall portfolio. (I can’t advise you individually on position size because I am not a financial advisor, and I know nothing about relevant personal factors like your risk appetite, overall wealth level, number of dependents, age and overall portfolio construction, to name a few.)
Here is why I think Trump’s upcoming cannabis policy statement will be bullish for the group. Trump made several positive comments about cannabis in the Fridman interview released Tuesday. Trump described medical cannabis as “absolutely amazing.” He said he expects the Florida rec-use referendum will pass and it will be “very good” for the state.
Before that in a recent social media post, he suggested he supports the Florida referendum to legalize recreational use, and cannabis reform in general.
Thus, I’m concluding Trump’s upcoming statement on his cannabis policy will have bullish overtones for the sector. This will likely spark another rally.
It’s also worth pointing out that conservative commentator Roger Stone posted on X Tuesday that he supports the Florida rec-use referendum, known as Amendment 3. This matters because it could sway conservative voters, who appear more reluctant than Democrats to support the change.
Big picture, it seems that cannabis is picking up momentum as a presidential election campaign issue. It’s possible this could result in bullish comments on cannabis reform from Vice President Kamala Harris, and her running mate Tim Walz.
Gaining a higher profile in the presidential campaign would be positive for the group. It would also not be surprising, given that the majority of voters in the country support cannabis reform. Democrats have tactically used cannabis reform as a wedge issue, and now Trump is fighting back with conciliatory policy statements.
Consider owning any of our portfolio names. 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.
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