Ross Gerber, Co-Founder and CEO of the Gerber-Kawasaki (GK) ETF, tweeted his conviction about the long-term potential of cannabis multi-state operators (MSOs).
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“Valuations in cannabis MSOs are compelling,” he tweeted, although he believes that the limited inclusion across the U.S. Banking and Capital markets, as well as the gap between state and federal laws, caps the upside for the players.
Most of the Twitterati agreed with Gerber’s view and stated that they are keenly waiting for a federal cannabis law to be passed. A few even quoted their favorite players, namely Canada-headquartered Tilray (TLRY) and Chicago-based Green Thumb Industries (GTBIF).
There are several small private players in the industry who are currently benefiting from the state-run laws. Meanwhile, the industry is undergoing massive expansion and consolidation among the players.
However, very few banking institutions support cannabis businesses due to the different rules that govern different states, coupled with the fear of attracting federal penalties that hamper operations of the business. Nonetheless, the cannabis industry is gaining huge traction, with listed companies posting record-high revenue figures in 2021.
Innovative Industrial Properties (IIPR) is a real estate investment trust (REIT) company that focuses on properties dedicated to the cannabis industry and is the first of its kind to be publicly traded. IIPR has lost 44.6% so far amid the broader market selloff and allegations from short sellers.
MSOS, on the other hand, is the ticker symbol for the AdvisorShares Pure US Cannabis exchange-traded fund (ETF), the first actively managed U.S.-listed ETF with dedicated cannabis exposure focusing exclusively on U.S. companies. Year to date, the MSOS fund has generated negative returns to the tune of 40%.
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