Charlotte’s Web vs. the Canadians

Most analysts had called Charlotte’s Web the best pure play on hemp. More joined the choir after the Farm Bill legalized hemp in the US. Charlotte’s Web was the closest called a sure thing in cannabis stocks.

Charlotte’s Web was known as the “blue chip of cannabis stocks” until two weeks ago. When suddenly on February 6, Charlotte’s Web stock crashed harder and faster than a monster meteorite slamming into the Chrysler Building.

After all, Charlotte’s Web grows hemp in three states, and the last harvest was ten times bigger than the previous one. Since late December, their chart reflected thier success and the views of analysts. It was nearly always moving up. Just an occasional 5% dip. But now Charlotte’s Web appears to be in trouble.

Charlotte's Web

Charlotte’s Web Faces Fierce Competition in the Hemp Industry

This Charlotte’s Web chart shows the past three months. Note the smooth, steady climb with only a few small pullbacks. Today that steady uphill climb looks like as treacherous a scaling Mount Everest, since the Canadians rolled across the border.

All it took was for Canopy Growth to announce it has a license to grow hemp in New York state. People took a while to realize the implication — that Canopy’s big money could develop more hemp farms, and bigger hemp farms, in the US.

Charlotte’s Web vs. Canopy and Tilray

If Canopy’s news wasn’t bad enough for Charlotte’s Web, today Tilray announced it was acquiring Manitoba Harvest. That’s the  world’s biggest largest hemp food manufacturer. With tons of hemp-based consumer products sold in over 16,000 stores at major retailers across the U.S. and Canada. Now that’s a lotta shelf space.

I Got Out While the Gittin’ was Good

I sold off my shares for a modest profit when it plunged from $17 to $15 in one day. But I was planning to get back in next month. Because I thought prices would drop even more when the lockup on insiders selling their shares would end. And I thought it was a sure thing.

Now I am so glad that I waited. Like as in no limit poker, investing in cannabis stocks is a waiting game. Patience is the key. Wait for a great hand and a chance to go all in. As Tom McEvoy, winner of the World Series of Poker described no limit, “Hours of boredom followed by moments of sheer terror.” 

Investing in cannabis stocks can be like that. Like it was for me when trading in the stock that makes up 38% of my portfolio was halted twice in the past week. (Fortunately, I had a bottle of Old Smuggler scotch standing by for such an emergency.)

I sold off my shares for a modest profit when it plunged from $17 to $15 in one day. But I was planning to get back in next month. Because I thought prices would drop even more when the lockup on insiders selling their shares would end. And I thought it was a sure thing.

Charlotte's Web

It’s like Playing No Limit Poker

Now I am so glad that I waited. Like as in no limit poker, investing in cannabis stocks is a waiting game. Patience is the key. Wait for a great hand and a chance to go all in. As Tom McEvoy, winner of the World Series of Poker described no limit, “Hours of boredom followed by moments of sheer terror.” 

Investing in cannabis stocks can be like that. Like it was for me when trading in the stock that makes up 38% of my portfolio was halted twice in the past week. (Fortunately, I had a bottle of Old Smuggler scotch standing by for such an emergency.)

No Sure Thing in Anything

I am not saying don’t buy Charlotte’s Web stock, or anything else. (Such as buy stock in Trulieve or Cresco Labs, for example. I would never do that.) All I am saying is that there is no sure thing in cannabis stocks. Just like in other stock market sectors. And in no limit poker, unless you have the ultimate nuts.

Until the next monster meteor crashes into the cannabis stock market, follow my news links in my Facebook group, Cannabis Stocks. And sign up for an email alert of my latest blog post here.

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