Weed Wars – A Market Cap Valuation via /r/wallstreetbets #stocks #wallstreetbets #investing

We all remember the Pot Stock craze of 2018 in which the hype reached valuations never again seen within the sector. I am here to make the case that the Weed Wars have had their fair price adjustments and, moving forward, the ocean may rise for an epic 10-15X. Roll up and let’s jump in.

Market Valuation – The Comparable

Ok, so for a working framework, I compared the alcohol sector as they seem the natural substitutes and/or complements for each other. As of current, the total market cap for the relevant alcoholic sector is $560 Billion. Below is a chart with the tickers and respective market caps I used.

Sum of Market Caps = $560 Billion

Now, all things considered, if the alcoholic sector is at $560 billion, a reasonable assumption for the Cannabis sector would be about half of that. Drinking has been engrained into human culture ever since our early ape descendants learned how to ferment rice in like 7,000 BC. I personally don’t think weed will ever be as popular, so at maturity we could see the sector reach roughly $280 Billion.

Below is a chart of the relevant Pot Stocks’ tickers and their respective market caps:

Sum of Market Caps = $22 Billion

So, just from this quick back of the napkin valuation, we see the case for a potential upside of roughly 12x for the sector as a whole, when it reaches maturity. -Now you may be wondering when maturity may happen, right? Well I’m not sure when it’ll happen, but I’m sure it’ll be after legalization has occurred.

Legalization – The Savvy Political Chess Move

Legalization is upon us as boomers start to die off, polling increases, and the legalization on-ramp comes into focus. Governors left and right are signing legislation as a political move to gain more support. Everyone wants to be popular and the worldwide youth want it legalized. And you know when this thing is federally legal pot stocks are gonna RUN.

Some charts to elaborate:

19 Recreational, 19 Medical, 13 Illegal

32 states/districts have been decriminalized

I’m not entirely sure who will win the most market share out of these competitors, but I do know that when the tide rises, all of these ships are gonna rise with it. Here is a quick P/S for each company:

https://preview.redd.it/az27iq17uto81.png?width=316&format=png&auto=webp&s=71bbf63e975c50e66bf29975aefea63215ccd046

Just looking at this, it seems that $CURA may be the best move. But as a degenerate I am bagholding…

Positions: 402 shares of $TLRY @ $7.83 per share.

$TLRY has made some recent moves in terms of M&A, and is positioned to be a contender for a large portion of the market share. I’m pretty confident that I’ll make a return on the investment, but it won’t be until after this war has subsided and a politician needs some breathing room.

Let me know what you think.