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Citron Research’s Andrew Left, one of the most prominent short-sellers on Wall Street, is bearish on Canadian cannabis producers such as Tilray Inc, despite big gains last week, as he expects them to be overtaken by U.S. rivals once recreational marijuana is legalized in the United States, he told the Reuters Global Investment Outlook Summit in New York on Monday.

“When U.S. LPs (companies) go public in the next few years it will make these Canadian companies laughable,” he said. “The cannabis trade is a perfect trade because the cannabis trade is a nonbranded, no-moat megatrend.”

Left, who said that he is launching a new hedge fund that will in part focus on the cannabis industry, said that he has been short Tilray since the company traded at $70. The stock was near $108 in midday trading on Monday.

Tilray’s shares more than doubled in September in the run-up to Canada’s legalization of marijuana on Oct. 17. Investors buying the stock have been hoping the company will get a share of the potentially massive American market if marijuana is federally legalized.

Recreational marijuana is currently legal in 10 states and many now see federal U.S. legalization as inevitable within the next five years.

Shares of Tilray jumped nearly 31 per cent on Friday after U.S. Attorney General Jeff Sessions resigned. Sessions, an opponent of marijuana’s legalization, had given prosecutors a green light to aggressively enforce federal laws against the drug in states where it has been decriminalized.

Should marijuana become federally legal, U.S. producers and brands will be the most likely to thrive in the domestic market, Left said. California, where recreational marijuana became legal under state law in January, will constitute a cannabis market at least five times as large as Canada itself, Left said.

“There will be winners. I understand why people are excited about it,” he said, noting that Canopy Growth Corp became “the global leader financially” in the industry after Corona beer maker Constellation Brands Inc invested more than $4-billion in the company. Left said he has no position in Canopy.

Left said that Tilray’s stock is also benefiting from the relatively small number of shares available until its lock-up expiration ends on Jan. 15, 2019, which is 180 days after the company went public in July.

“What happens the day the lock-up expires and the float doubles? What happens to the stock then?” Left asked.

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