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Exploring the U.S Cannabis Portfolio Barbell

Note: CB1 Capital advises $MSOS*, which is the only pure NYSE-listed U.S cannabis ETF. What does that mean? We share our research and perspectives, help educate investors on the opportunity and working with them on emerging philanthropic efforts. If you would like to learn more about them, please click the symbol above.

I field lots of questions about U.S cannabis, which isn’t a shocker given how much I talk about it. I’ve been studying the space ten years or so, which is to say I’ve got the bumps and bruises one would expect after navigating a frontier market. I was early in spying the looming migration but this, right here, right now, is what I was waiting for.

We fingered the FANGification of U.S Cannabis some time ago, pointing to Green Thumb ($GTBIF), Curaleaf ($CURLF), Trulieve ($TCNNF) and Cresco ($CRLBF) as the four horsemen of this first phase. They’re not alone— TerrAscend ($TRSSF), Columbia Care* ($CCHWF) and AYR ($AYRWF) are in the hunt— but you get the idea.

As we navigate the back of the MSO totem pole, we find another slew of operators, many of whom were “left for dead” after the 92% decline in global cannabis from January 2018 through March, 2020. This includes 4Front* ($FFNTF), Jushi ($JUSHF), Harvest ($HRVSF) C21* ($CXXIF) and the like; some real gems in there IMO.

While there are different strokes for different folks— everyone has a unique time horizon and risk profile— one strategy to consider is to barbell U.S cannabis, with the FANG on one side and the forgotten on the other. There is more risk on the backside, naturally, but perhaps more beta as well, for those who choose wisely.

There’s also more supply coming- Verano, GAGE, Ascend- which will allow active investors the ability to upgrade portfolios in real-time as the space evolves. My point, and why I’m trying to shine a light rather than sling stock picks, is this: if you’re reading this, you’re still way early to this asset class / secular bull IMO.

Please remember though, just bc we’re bullish doesn’t mean 1. we’re right 2. it’ll be linear and 3. the market behaves. Stocks go up and stocks go down in a normal world, and maybe even in an abnormal world. But as more liquidity enters the space, as we expect, volatility will subside; bc that’s how that works.

Anyway, I fielded some questions on portfolio strategy so wanted to spit this out for those looking to learn. BTW, $MSOS* updates their portfolio daily, so you can explore one adaptation of this approach in real-time, if that’s your bag.

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