Dawn of a New Day

We are pleased to share that we successfully launched our long-short Wellness strategy in mid-November 2017. We did so during a mini-frenzy following news that Constellation Brands had taken a stake in Canopy Growth, Inc., one of the Canadian licensed producers. While several portfolio companies had already rallied 50-100% this year prior to our launch, we continue to believe we’re in the early stages of a secular bull market in cannabinoid-wellness.

Our strategy entered December with holdings in twenty-five portfolio companies. They include mid-level cultivators trading at deep discounts to their peers, dispensaries that should benefit from continued U.S. onboarding, overseas biopharmaceutical companies, several extraction technologies, and compliant laboratories & data platforms.

We believe we’re in the nascent stages of M&A as corporate America scrambles to participate in the cannabis space. We expect the first phase to be spirits & tobacco companies looking to supplement cannibalized revenue, followed by biopharmaceutical and healthcare concerns chasing efficacious legitimacy, and ultimately food and drink manufacturers, pet supplement manufacturers, and cosmetic companies. Industrial hemp & farming also should dominate headlines as it ushers in a renaissance for the American farmer.

All of this is good news, of course. Jobs are being created, drug-related crime is down, and much-needed tax revenue is flowing to the States. With recent polls showing a 94% U.S. approval rate for medical marijuana, and following gubernatorial wins in New Jersey and Virginia by candidates stating their support for recreational legalization, we’re seeing increased political support in the U.S. ahead of the 2018 mid-term elections. There is still risk, of course, but we believe the longer the U.S. drags its feet, the more our international exposure will benefit.

We look forward to the day when mainstream America suddenly realizes that cannabis is about getting well, not about getting high, and when they understand that 95% of cannabinoids are non-psychoactive and that our bodies are already hard-wired with a retrograde pathway that could unlock the cure for a host of unmet medical conditions.

We believe that point of recognition will arrive like a clap of thunder and when it does, we’ll be there.

Todd Harrison
Founding Partner & Chief Investment Officer

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todd harrison