Political controversy pushed American investor dollars into Canada, but now, the situation is reversing!
When former real-estate mogul Donald Trump won the Presidency of the United States, Wall Street panicked, and for understandable reasons.
Prior to election day, a consensus among leading economists stated that a Trump administration would “tank the markets.” In contrast, volatility indices ticked down when rival Hillary Clinton appeared to lead the polls. This suggested that traders saw a Clinton-led White House providing a calming effect to the broader markets.
The opposite could be said about Trump, and when he did pull off the shock victory, the equities futures market plummeted. While the net negative impact stayed limited overall, one consequence of “The Donald’s” electoral win was a “great rotation” out of the U.S. and into foreign markets.
With more than a year in, President Trump has surprised several onlookers with his diplomatic approach towards certain hot-button issues. One of those is cannabis and its classification as a Schedule I drug.
As current trends stand, marijuana is becoming favorable again. This may likely spark a rotation back into the US of A!
Investors Realize Trump’s Bark is Sometimes Louder Than His Bite
It’s no surprise that President Trump ran on a populist and some would argue nationalistic ticket. What was a surprise was that he actually won on issues that most perceived were limited in scope and present relevancy.
The evidence is clear. Between the fourth quarter of 2016 and the first quarter of 2017, volume in the U.S. benchmark SPDR S&P 500 ETF Trust (NYSEARCA:SPY) declined by a massively negative margin of nearly 15%.
In the same timeframe, the main Canada-based ETF, iShares MSCI Canada Index (ETF) (NYSEARCA:EWC), witnessed a 5.6% profit. In the previous three years comparing Q4 and Q1, the EWC’s average profitability was a pitiful 3.85% loss. Moreover, the Canada Index’s volume increased by a robust 6.61%.
Of course, nothing in the markets stays constant. Recently, U.S. Attorney General Jeff Sessions stated that prosecutors won’t bother with “small marijuana cases.” That implies the Trump administration is backing off from its draconian law and order dogma.
And more recently, and also more bullishly, one of Congress’s leading proponents of marijuana law reform — Congressman Dana Rohrabacher (R-CA), a key Trump ally — announced he will soon be filing new legislation in line with the President’s pledge to support changing federal cannabis laws.
Essentially, investors are now more likely to switch back towards American cannabis companies due to their newly favorable policies.
MariMed helps navigate cannabis-related companies away from the sector’s pitfalls and towards plenty of green – the revenue and profitability kind! But unlike other firms, MRMD offers an unprecedented, broad-ranging approach. Ranging from legal services, to human resource management, to a full layout and design of a cultivation facility—and most importantly owning the real estate and associated assets– there’s no challenge that MariMed can’t resolve. What we like most about MRMD’s facilities model is that they get a percentage of sales from the cultivation/ production/ dispensing operator; huge margins in that type of revenue.
On top of earning from the cannabis real estate assets of their operators/ lessors, they also license their branded consumer products KalmFusion.com and BettysEddies.com to these folks. The products are loved by consumers and MRMD receives 15%-20% of the gross sales as a licensing fee; again, huge margins.
But what is perhaps most impressive about this cannabis firm is its shares’ technical stability. Contrary to most publicly-traded cannabis/ marijuana companies, MariMed’s executive leadership approach investor dollars as a strict responsibility.
You won’t find MariMed making headlines for all the wrong reasons, and a result, we see incredible stability in MRMD stock relative to industry standards. As a prime example, MRMD gained nearly 2% on March 19, 2018, a day when the broader markets saw red due to political concerns.
If you’re looking for a reliable name in this exciting, but volatility prone sector, stop your search and consider MRMD stock!
Aleafia Health Inc.
While we’re likely to see a significant rotation into American cannabis companies, Aleafia Health Inc. (TSXV: ALEF, OTC: CAMDF) represents one of the few compelling Canadian plays in the purely medical marijuana sector.
Recently merging with Canabo Medical, Aleafia shares trade at a very attractive valuation. Unlike its peers, ALEF has a zero-debt balance sheet. Moreover, they’re the only vertically-integrated marijuana company in Canada, leveraging an extensive network of clinics with cultivation licenses. On top of that, Aleafia maintains the largest medical cannabis database in the country, which is highly demanded by industry professionals. Not only are they one of the revenue producing Canadian Companies, but they finished Q4 cash flow positive.
With massive expansion plans underway, ALEF is particularly enticing because, as a recently-minted security, it hasn’t received much speculation. Therefore, this is a chance to advantage a rising cannabis firm near the ground floor!
Innovative Industrial Properties, Inc.
It’s hard to believe that with all the public and political controversies, it was back in 1996 that California became the first state to legalize medical-use cannabis. Unfortunately, the road to progress is rarely easy or straightforward. On the flipside, California’s landmark decision helped pave the way for personal and health liberties.
Today, 29 states and the District of Columbia have authorized medicinal cannabis. Sensing the need for fostering this development, Innovative Industrial Properties, Inc. (NYSE:IIPR) is a cannabis-centric real estate firm, with a twist. Rather than owning cannabis businesses, IIPR acquires land and building used by licensed, medical-cannabis producers. The properties are then leased back to the producers under long-term, net lease agreements.
Admittedly, IIPR stock traded sideways as the markets assessed the new Trump administration. But as soon as it became clear that the White House will likely adopt a sane approach to marijuana, shares soared.
With favorable marijuana posturing from Sessions, you may expect IIPR to continue its bullish momentum!
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