While I remain cautious on the sector, I believe that some of the names could continue to rally. My recent segment on Fox Business was strangely titled "Expert: Marijuana Stocks Not A Good Investment," and this certainly didn't match the commentary I shared. I think that the disconnect was that I think the sector, for the most part, is not ready for "investment." Instead, it is a trader's paradise, at least for now. This was the reason Fox Business reached out to me, as they had seen my views shared in a New York Post article a week ago with that same theme. My view, then, is that many of the high-fliers have significant risk of another correction and would expect the index to decline, but 2014 won't be a repeat of the fizzle the sector experienced last year.
I had the good fortune to visit the ground zero of the rapidly evolving legal cannabis market two weeks ago when I visited Colorado. It is very difficult to walk away from something as profoundly exciting as what's going on there and not project how this will play out over the next 3-5 years. I have heard this from several other investment professionals who have made the trip recently as well. With Washington State's implementation later this year and more legalization likely ahead, the 'green rush' is in full force. Please realize that the vast majority of the transformation is happening at start-ups and small companies, but there are some opportunities for public companies as well. Further, I expect that the vast gulf between public and private valuations will lead to the better companies serving as consolidators. As an example, mCig (OTCQB:MCIG) announced the acquisition of Vapolution in late January. Additionally, the public companies with access to capital, like GrowLife (OTCQB:PHOT), which announced a JV last year with a private investment group and detailed its first GIFT transaction this past week, have the potential to participate in the sector's growth......a not-so-subtle shout-out to PHOT shareholders, who will be voting on February 7th to increase the A/S from 1 billion to 3 billion.....
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