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The Coming Surge For Cannabis Stocks

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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1098
Topic starter  

I am diligently preparing for what looks to be getting ready to happen: The coming surge.

We are just on the cusp of Cannabis Federal Legalization and it looks like big steps have already happened this week with more to come.  The Nasdaq-traded stocks have moved the most.  The above stock, Clever Leaves CLVR stock is up some 225% in just one day.  That is huge.  That is also a small fraction of the future potential of what is about to happen.

The House of Representatives is voting this week on a cannabis federal legalization bill and that is what is driving price action right now.  As a reminder, Senator Chuck Schumer stated he would introduce the comprehensive bill into the Senate in April.  The timing is coordinated:

https://www.marijuanamoment.net/schumer-plans-to-file-marijuana-legalization-bill-in-april-as-top-house-lawmaker-details-his-own-reform-plan/

Given this, here is how I am going to handle this surge.

First, I have a few smaller positions in some stocks that I think I will be liquidating as soon as we see significant moves higher.  And, very likely, my core holdings, I am going to sell off some 50% of my holdings.  The reason is simple: They will go from significantly undervalued to significantly overvalued in a very short period of time.  Then, after the dust settles on the big surge, I plan on getting back into my core holdings again but, at discounted levels from the big peak. 

My view on a lot of these companies has not fundamentally changed and I want to own these cannabis stocks for a very long period of time, if not over a decade, or so.  But, why not play the market?

The thing is, I watch these things daily and can make moves like this.  However, not everyone has that kind of time & opportunity to watch cannabis stocks as closely as I do.  

Nonetheless, I outlined an expectation for this spring around December stating that I expected cannabis federal legalization to occur in the springtime, about March - April with both houses dropping their respective versions.  That is happening just as I outlined it to do.  But, both the Senate & House versions will be different.  Once the floors of each chamber pass its version, they then send it to the other house for consideration.  But, the differences mean these bills will have to go through a process called reconciliation.  This is when each chamber puts together a version that is exactly identical.  Then, the bill goes to the President for signature, should that part of the process need to occur.  

I expect reconciliation to occur through the summertime.  Likely, the final version gets voted on around August or September.  So, expect a lot of upset people who have no realistic expectation of what the process is to clamber all through the summertime.  Remember, this is an election year.  Congress is going to want to turn to voters and say: See what we did for you?  

Look for these surges to be very choppy over the next several months.  But, ultimately, cannabis stocks will go higher from cannabis federal legalization.


   
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Brad Clarke
 Brad Clarke
(@Brad Clarke)
Active Member
Joined: 8 months ago
Posts: 6
 

Great post DH. I have been trying to come up with a plan myself for this year, just incase the stocks I hold do "skyrocket" I would not hesitate to sell and re-buy later. What goes up does come down. What I am wondering is, when you say these stocks could go to overvalued from where they are, are you suggesting they could go higher then your targets in your videos you post? Example VRNO, HITI, C21 recent targets. 

 

Thanks for the time. 


   
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awesame
(@awesame)
Trusted Member
Joined: 1 year ago
Posts: 35
 

I'm excited, and also have been planning for this moment for months. I've appreciated all that I've learned from you and this investor community along the way.


   
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D. H. Taylor
(@dhtaylor)
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Joined: 2 years ago
Posts: 1098
Topic starter  

@Brad Clarke

Hey Brad...  So, the models I have for price targets are exactly that: Models.  They give us quantitative values for stocks.  But, investing in cannabis stocks, or any stocks, for that matter, is a popularity game.  The chart above shows Google search results over the past five years for "Federal Legalization" (Blue), "Pot Stocks" (Red), and "Cannabis Stocks" (Yellow).  You can see the big spike in search results in February of 2021 when we had that massive surge.  That is "100" as in the peak search results.  Everything else is a percentage of that amount.  

For now, there has been some activity recently in the search for Federal Legalization but, cannabis stocks have not moved much.  That could change in a heartbeat.  Then, cannabis stocks and cannabis investing will surge and people will rush in.  I am curious to see how high up of a spike we could get.

During that time, the model could get blown out from the targets I have put in place.  For the record, I do not have sell orders in.  I will let them roll right along.  If we see price surges well beyond my targets, I am likely to clear everything out across the board.  It may be that we see 200%, 300%, 400% increases, if not more. The CRLV stock move was 220% from its bottom in just 2 days.  So, this is no stretch whatsoever.  

Eventually, these stocks will start to act "normal".  But, I believe we are a long way away from that.  

Also, this process is going to be drawn out.  The House will vote this week.  Maybe the following week the Senate drops its version and it takes a solid month before the floor vote.  Then, reconciliation could take all the way to August/September timeframe.  During that period, I think we see a big surge, then stocks settle back down through the summer, then another celebration.  I will play that accordingly.  

Hope that gives you an idea for a working plan for "expectations management".  


   
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Brad Clarke
 Brad Clarke
(@Brad Clarke)
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Joined: 8 months ago
Posts: 6
 

@dhtaylor A great detailed opinion thank you. Sure will be interesting to watch. Have a great week!


   
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Tracy Schaff
(@tracy)
Eminent Member
Joined: 2 years ago
Posts: 22
 

I have pretty much planned on the exact same strategy.  Beware of the tax man.  

Note, I have it in my head that we will see anywhere from 3-5 times current pricing with the upcoming spike, whenever that may be.  My prediction is we see this spike, then we see a bit of a pullback and ultimately wait until each respective holding makes it to one of the major exchanges and institutional investors pour in.  


   
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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1098
Topic starter  

@tracy Totally agreed.  


   
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Maui wowie
(@shkhawaii-rr-com)
Active Member
Joined: 1 year ago
Posts: 6
 

Hi D,

Do you expect the surge in prices of cannabis stocks on the NASDAQ or both NASDAQ and OTC?  Do you expect NASDAQ surge to be bigger than the OTC surge?


   
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Michael Robinson
 Michael Robinson
(@Michael Robinson)
Active Member
Joined: 1 year ago
Posts: 6
 

Been riding this horse a long time. I am thankful for the rain, i hope this is where the horse runs for the barn and some really good feed happens in the troughs. Thank god for the leather extra thick. The chaps are even with great ware. Therefore i am full of hope for my amazing opportunity. Now the hard part is managing that cash with great respect for greed that destroyed many a budding millionaire. Wisdom to carry on i pray.  for the wise, generous,  constructive community supporter. Of course family and friends tend to follow the money and going slow with caring for family finances can be a challenge of a life's mysteries and pressures. Go, be sure, build a great big portfolio, Finish this fine history making challenge well yall!!!...m

 Know when to hold them while love affairs can be great holding on for the life time  glory of rewards and or the release to gain from another day's  pay out as good news and counts that which is secure in the resting place of some great lessons well learned with much thanksgiving...hey go to work will you, make it a good one...m


   
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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1098
Topic starter  

@shkhawaii-rr-com 

I think what might happen is that since there are lower volumes with the OTC short positions and Canadian positions, these may move more so.  But, I am also not certain on one giant sustained move.  There will be fragments of information over the coming months with the House vote this week, the Senate dropping its version in April, and then the Senate vote likely to take a good 2 months, or so, then reconciliation which likely may not happen until August/September.  So, this could be choppy across the board with a lot of sporadic moves from different stocks.  


   
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