Cannabis stocks have had a rough ride for the last nine months. We initiated our positions when pot stocks were already down 50% to 80% from all-time highs. But prices have fallen further since.
As a result, I’m announcing some important changes to our Cannabis Portfolio.
Sell Aurora Cannabis and Elixinol Global
I recommend members sell their Aurora Cannabis (NYSE: ACB) and Elixinol Global (OTC: ELLXF) holdings. I am no longer confident in either company’s ability to weather a sustained downturn. Aurora is struggling on all fronts. And Aurora founder Terry Booth recently left under a cloud of controversy (read more about the company’s troubles here). Elixinol is facing similar issues, and the company’s U.S. expansion has been a disappointment.
I’m disappointed that these stocks have done so poorly. But I feel it’s best that we cut our losses. It’s possible that these companies will rebound. But I believe they no longer offer an attractive risk-reward proposition.
Hold Canopy Growth, Charlotte’s Web and OrganiGram
I recommend members hold on to their shares of Canopy Growth (NYSE: CGC), Charlotte’s Web (OTC: CWBHF) and OrganiGram (Nasdaq: OGI).
All three are very high-quality companies. And I believe they are well-positioned to emerge from this storm stronger – and with increased market share.
I’m still extremely bullish on the cannabis market. I believe it will revolutionize how we treat pain and dozens of common diseases. On the recreational side, I think it will continue taking market share from alcohol.
But right now, the cannabis industry is going through a difficult adjustment. There’s too much cannabis on the market in many areas – especially Canada. Weaker companies need to either die off or be acquired to restore market balance. This will take time.
While we wait, I will continue to evaluate potential new positions. However, it’s likely that I will wait until we’re in a confirmed uptrend before recommending anything new.