You are reading a copy of this week’s edition of the weekly New Cannabis Ventures newsletter, which we have been publishing since October 2015. The newsletter includes a unique preview to help our readers stay ahead of the curve as well as links to the most important of the week. new.
Friends,
Three months ago, just before the introduction of the New Cannabis Ventures Ancillary Cannabis Index, we discussed how investors were starting to appreciate ancillary stocks. Ancillary businesses provide goods and services that enable businesses that grow, process or sell cannabis to operate. We have detailed several attributes that make the sub-sector attractive, including not being subject to 280E, the ability to trade on higher stock exchanges, and the ability to span multiple states compared to companies of cannabis limited by a lack of interstate trade.
Although the index has fallen slightly since we introduced it in late March, down 5.3%, it has outperformed the overall market as measured by the Global Cannabis Stock Index, which fell by 7%. , 8% so far this quarter.
Each quarter, the professionally managed Global Cannabis Stock Index is rebalanced, and we just completed that fiscal year this week, with the rebalancing taking place at the close of business on June 30. For a more in-depth look at upcoming changes to the Global Cannabis Stock Index, we encourage readers of this newsletter to join us at our premium subscription service 420 Investor.
The index will include 44 names, including 13 from the auxiliary sub-sector, making it, along with MSOs, the largest sub-sector, each representing 29.5% of the index. Joining the index will be four relatively new names in this sub-sector, including AFC Gamma, Forian, iPower and WM Technology.
The index has changed significantly over the past year in terms of its composition, which is based on trading volumes and minimum price levels. Here are the weightings at 6/30 compared to a year ago, with the ancillary weighting going from 21.6% to 29.5%:
The increase in the number of ancillary companies, as well as the increase in the number of OSMs and international companies, has come at the expense of Canadian LP and CBD companies. Of the 13 names in the index after it rebalanced, 6 made their debut in trading in the past six months.
We continue to believe that investors have a vested interest in paying attention to the ancillary products sub-sector, especially as it has joined MSOs as the largest part of the index. In addition to the benefits relating to direct operators that we have described above, subsidiary companies allow investors to participate in the growth of the industry without having to select the best operators. From our perspective, the ancillary companies provide liquidity to Canadian LPs with the growth prospects of the US cannabis industry.
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New Cannabis Ventures publishes selected articles as well as exclusive news. Here are some of the most interesting business content from this week:
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Truly,
Alain and Joël
Based in Houston, Alan puts his experience as the founder of the online community to good use. 420 Investor, the first and still the largest publicly traded equity-focused due diligence platform 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 companies, he is responsible for content development and strategic alliances. Prior to focusing on the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as a freelance research analyst after more than two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 on In search of the alpha, where he has 70,000 subscribers, 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 Alain: Twitter | Facebook | LinkedIn | E-mail
