Cannabis Investors, Fake It Till You Make It (Podcast Transcript)

About Summary

Julian Lin catches us up on recent earnings volatility, valuations and how investors should be looking at the cannabis industry.

Why he’s a big fan of Verano but not a fan of the Cresco/Columbia Care merger.

IIPR, NewLake Capital and why cannabis REITs are highly compelling.

Editors’ Note: This is the transcript version of the podcast we posted last Wednesday. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast embedded below, if you need any clarification. Enjoy!

Listen on the go! Subscribe to The Cannabis Investing Podcast on Apple Podcasts , Spotify , and Stitcher . Rena Sherbill: Hi, again, everybody. Welcome back to the show. It’s great to have you listening with us. Super happy to bring you today’s episode. Following up on 4:20 a great cannabis investing talk with one of our favorites Julian Lin, who writes for Seeking Alpha who runs two marketplace services there which are subscription services.

One very applicable is the Cannabis Growth Portfolio and the other is called Best of Breed , Julian’s high conviction ideas spanning different sectors aside from cannabis. We talked about earnings and the growth deceleration that we’ve seen. We talk about the Cresco ( OTCQX:CRLBF )/Columbia Care ( OTCQX:CCHWF ) deal and consolidation in the sector.

We talk about cannabis REITs. A great take on cannabis REITs from Julian we talk in particular about NYSE: IIPR , one of the most popular cannabis REITs. And NewLake Capital ( OTCQX:NLCP ) one of the newer entrants into the space. We talked with NewLake Capital on CEO Interviews as well. So, if you want some background on that stock, it’s a great talk on CEO Interviews, the show we have on Seeking Alpha.

I hope you enjoy the talk with Julian today. As always, it’s great to have him on talking cannabis. Hope you enjoy it. Julian, welcome back to the cannabis investing podcast, it’s always great to talk to you always great to get your thoughts. So, thanks for coming back on the show.

Julian Lin: Yes, it’s always great to be on.

RS : It’s always great to have you and it’s especially great to have you on now with people are looking at earnings, people are looking at delayed legislation, people are looking at investors feeling the brunt of this bear market in the sector. And wondering if there’s light at the end of the tunnel or when that light is going to appear.

So, I’d love to get your thoughts just like initially, your kind of take on recent earnings, and maybe the sector in general, where your thoughts are right now?

JL : Absolutely, I think, definitely when you hear about the notion that investor sentiment follows the stock price, I think the cannabis sector shows us very clearly. Right now, the stocks keep going lower and lower, I mean, they were cheap, cheap at the highs, and then how they just keep getting cheaper.

And at these points, you start to see how investors are reacting to earnings results or reaction to delayed legislation. I think those reactions are largely driven by the stock price action. From earnings, what we’ve seen from a lot of the companies is a lot of a big slowdown in growth. Except for a couple of companies, which had a lot of assets that were just coming online, or they had some easy comparable in their previous quarters or for example, Trulieve had acquired harvest.

So, obviously their growth numbers are going to look much better, because they’re kind of lapping numbers where they didn’t have harvests. Most companies if you didn’t have anything special like that, saw their growth slow or even saw their growth decline sequentially from the third quarter to the fourth quarter.

And that could be given where stock prices are they’re really low, you start seeing growth decline, you start wondering. I mean, it’s only human, you start wondering, oh, maybe the stocks are supposed to have declined, maybe I was wrong, maybe this growth story is over. I think it’s important to try to avoid letting the stock sentiments or avoid letting the stock price drive your sentiment or drive your evaluation of the fair values.

It’s important to remember that these kinds of earnings volatility is extremely normal. And in fact, they should be expected. Because so I mean, we just got to sit back and think high level of how the cannabis […]

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