Tuesday is a Failed Turnaround


U.S. equities experienced another day of elevated price fluctuations, as the Dow Jones failed to hold onto a 230 point gain. Oil continues its free fall, returning to levels last seen during the depths of the financial crisis. In response, we are seeing a potentially unstable flight to safety. For example, foreign central banks and investors purchased a net $284 billion of Treasury debt over the first nine months of 2014 vs. $83.2B in the same period in 2013. Global markets are trying to re-calibrate to the current environment. The S&P 500 closed lower by 0.84% to 1,973.

Weakness continued in cannabis stocks today. This sector has failed to post a decent positive day for weeks. MJIC Marijuana Index and Benzinga 420 Marijuana Index declined by 3.6% and 2.7%, respectively.

Daily Positive: Bedrocan (TSXV: BED.V) announced its quarterly report today. It has generated over $1 million in revenue so far this year. This is solely through importing bulk medical cannabis supplied by Bedrocan BV from the Dutch Ministry of Health. Bedrocan has a 52,000 square foot facility slated to come online early next year, which should meaningfully add to their operations. Unfortunately, the current market dynamics are not supporting companies making real progress.

Daily Negative: We may have to create a “Pump of the Month” award as Nhale (OTCBB: NHLE) is back at it again today. It claims it “could” generate more than $30 million in revenue in 2015 from deals that haven’t even been closed. This is coming from a company that generates no revenues, has $50k in total assets, and $973k in total liabilities.

On a positive note, over the weekend, we visited The Emerald Cup. The line to gain entry snaked around the street and there was a massive amount of excitement in the air. As investors, it is heartening to see the sheer masses who are drawn to this industry. The market is ready to be fully above ground. It was great to see the myriad of brands and offerings present and to see the way that the space is truly growing. For more detail and pictures of the crowds, you can check out our blog.


The discussion above is provided for informational purposes only and does not constitute an offer of, or solicitation for, any investment services or products offered by the author. The author is not making any investment recommendations and the opinions above do not constitute investment advice. Reference to above indices [and companies] is based on information provided by sources the author believes to be credible. Investing in the cannabis industry, as with other industries, presents certain risks including the risk of loss on an investment.

Morgan is a Founding Partner and Managing Director of Poseidon Asset Management. He is the Chief Investor of their Cannabis Focused Fund. Morgan previously worked for a privately owned Registered Investment Adviser and earlier was at UBS Financial Services focusing on wealth management. Morgan believes in the potential of the cannabis industry and likes having an active involvement as it develops. You can follow him on Twitter @PoseidonAsset.

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