Largest LP/MSO Cannabis Stocks & Conservative “Cannabis” Stocks -9% in January

An Introduction

What’s the Difference Between LPs and MSOs?

The main difference lies in their geographical focus and regulatory environment:

• LPs are cannabis companies based in Canada. They are licensed by Health Canada to produce and sell medical cannabis and operate in a federally legal market, which allows them to access banking services and institutional investors but they are limited to the Canadian market and face strict regulations.
• MSOs are cannabis companies based in the United States. They operate in multiple states where cannabis is legal, either for medical or recreational use. MSOs face a more fragmented regulatory environment, as cannabis laws vary from state to state. They do not have access to federal banking services and institutional investors due to federal prohibition and, as such, have much to gain from country-level reform in the U.S., and are eager to see more welcoming federal laws that will allow their businesses to develop further.

The MunAiMarkets Canadian LP Stocks Portfolio

Below are how the stocks in the MunAiMarkets Canadian LP Stocks Portfolio performed in January, in descending order, and the reasons for the major price changes:

1. Cronos Group (CRON): DOWN 5.9% in January
2. Organigram (OGI): DOWN 6.2% in January
3. Aurora Cannabis (ACB): DOWN 14.1% in January
   • Specifically, ACB declined due to a disappointing Q4 2024 earnings report released on January 14, that reported lower-than-expected revenues and earnings, which led to market concerns about the company’s future growth prospects and ability to meet the increased competition in the cannabis industry.
4. Tilray Brands (TLRY): DOWN 20.3% in January
   • Specifically, TLRY declined due to a disappointing Q4 2024 earnings report released on January 10, that reported lower-than-expected revenues and earnings, which led to market concerns about the company’s future growth prospects and its ability to withstand increased competition in the cannabis industry. 
5.  Canopy Growth (CGC): DOWN 27.4% in January
   • Specifically, CGC declined due to a disappointing earnings report released on January 14 that reported lower-than-expected revenues and earnings, which led to market concerns about the company’s future growth prospects and ability to prosper given the competition in the cannabis industry.

The above 5 constituents have market capitalizations ranging from $200M to $1B (averaging $468M) and trading above $1.00 (averaging $2.02). On average, the 5 constituents were DOWN 15.4% in January.

Go HERE for a live chart (updated minute-by-minute) of each constituent in the portfolio.

The MunAiMarkets American MSO Stocks Portfolio

The hype surrounding the many fledging American cannabis stocks began in earnest in February, 2020,  culminating in a 751% increase 12 months later (as tracked by the 7 largest such stocks in the MunAiMarkets American Cannabis MSOs Portfolio at the time) only to decline 66% by February, 2022 and, believe it or not, a further 66% by February, 2023. The Portfolio increased somewhat by February, 2024, but has gone down even further since then and is now DOWN 91.7% from its peak in February, 2021 and the Portfolio is now trading BELOW what it was when it began its parabolic move back in February, 2021!

American MSO stocks were down 3% in January 2025 due to a combination of factors, such as:.

• the slower-than-expected progress on federal legalization of marijuana. Despite some positive recommendations from the U.S. Department of Health and Human Services to ease restrictions, the lack of concrete legislative action has created uncertainty in the market and
• regulatory hurdles and market volatility at the start of the new year have also contributed to the decline. Investors are cautious, given the unpredictable trading patterns and the ongoing challenges in the cannabis sector.

Below are how the constituents in the MunAiMarkets American Cannabis MSOs Portfolio performed in January, in descending order:

1. Ayr Wellness (AYRWF): UP 26.3% in January
   • Specifically, AYR was up due to a positive earnings report released on January 13 that reported strong revenue growth and improved profitability, which exceeded Wall Street’s expectations.
2. Cresco Labs (CRLBF): UP 13.4% in January
3. Verano Holdings (VRNOF): UP 5.9% in January
4. Trulieve Cannabis (TCNNF): UP 1.1% in January
5. TerrAscend Corporation (TSNDF): DOWN 5.0% in January
6. Green Thumb Industries (GTBIF): DOWN 8.7% in January
7. Curaleaf Holdings (CURLF): DOWN 9.0% in January

The 7 constituents in the MunAiMarkets American MSO Stocks Portfolio have market capitalizations ranging from $57M to $1,650M and trading at $0.50 or above (averaging $2.34). On average, the 7 constituents were DOWN 3.0% in January.

Go HERE for a live chart (updated minute-by-minute) of each constituent in the portfolio.

The MunAiMarkets Conservative “Cannabis” Stocks Portfolio

According to data from a new survey from Gallup 15% of U.S. adults reported that they smoked cannabis in the last week compared to only 11% for cigarettes with 47% of Americans saying that they have tried marijuana in the past year so it is no wonder that 5 of the major tobacco companies have invested heavily in cannabis companies in the past few years.

Below are how the stocks of those 5 companies performed in January, in descending orde, and the cannabis company they are invested in:

1. British American Tobacco (BTI): UP 9.1% in January
   • has a C$346M product development partnership with Organigram Holdings (OGI)
   • Reasons For Price Change:
     1. Analyst Downgrades: Morgan Stanley recently downgraded BTI to an “Underweight” rating, which negatively impacted investor sentiment.
     2. Core Business Challenges: BTI’s core tobacco business continues to face challenges, with declining cigarette sales volumes. This ongoing trend has been a concern for investors.
2. Imperial Brands (IMBBY): UP 4.9% in January
   • has a 19.9% stake in Auxly Cannabis Group (CBWTF)
3. Altria Group (MO): DOWN 0.2 in January
   • has a 45% stake in Cronos Group (CRON)
4. Anheuser-Busch InBev (BUD): DOWN 1.8% in January
   • has a $100 million joint venture with Tilray (TLRY)
5. Constellation Brands (STZ): DOWN 18.2% in January 
   • has a 39% stake in Canopy Growth (CGC)
   • Reasons For Price Change:
     1. Analyst Downgrades: Multiple analysts, including Evercore ISI and Bank of America, downgraded their ratings and price targets for STZ.
     2. Disappointing Financial Results: The company reported weak fourth-quarter results, which fell below Wall Street’s expectations for key metrics such as sales, operating profits, and earnings.
     3. Lowered Earnings Guidance: Management lowered their full-year earnings guidance, which raised concerns among investors.

On average, the 5 constituents were DOWN 9.3% in January.

Go HERE for a live chart (updated minute-by-minute) of each constituent in the portfolio.

Conclusion

With the MSO and LP stocks being down so dramatically in 2024 this article is a good place to start doing your due diligence (i.e. thoroughly check all relevant aspects of the company to ensure that all facts are accurate and that there are no hidden issues) if you would like to speculate on their future performances. Furthermore, should you want to be invested in the cannabis market but can do without the volatility then this article provides some insight into investing in cannabis the conservative way.

The performance of cannabis stocks has been abysmal since they went parabolic peaking in February 2020 only to crash 91% since then (see detail here) so proceed with caution in 2025. This could all change, however, with:

1. the passage of the Secure and Fair Enforcement (SAFE) Banking Act which aims to provide safe harbor to financial institutions that wish to service the cannabis industry. This legislation would allow banks and other financial institutions to provide services to marijuana businesses that are licensed under state law, while also allowing marijuana businesses to take standard IRS tax deductions, and
2. the amendment of the Controlled Substances Act (CSA), which sets out the federal drug policy that regulates the manufacture, importation, possession, use, and distribution of cannabis, from a Schedule 1 drug (drugs with no currently accepted medical use and a high potential for abuse) to a less stringently regulated Schedule III drug (drugs with a moderate to low potential for abuse and accepted medical uses) which would dramatically increase in the usage of  recreational cannabis across the U.S..