Tinley Beverage Company Inc C.TNY

My thoughts on the next 3-6 months

[Mackdaddy69]

If you don't want to read the whole thing the gist is that I'm rebalancing my cannnabis portfolio to 80% USA and 20% Canadian LP (3 months ago it was 80% Canadian LP and 20% USA)

In the past few weeks we've had to absorb the Molson deal going to HEXO, WEED's Tokyo Joke announcement, Aurora's completion of the super expensive MedReleaf deal, the complete failure of the German RFP process and the Canadian government not being bold enough with its regulatins particularly around branding.  Here's what I think is about to happen and what I am going to do about it:

1.  The Canadian governments regulations right now are sh*t compared to the US markets.  Restrictions on branding and product development and government RFP processes are reducing the attractiveness of Canadian LPs right now relative to their sky high valuations.  The provinces are also negotiating tough with Canadian LPs driving their potential profitability down.
2.  Competition in the Canadian space is about to get more intense and over supply is an issue because international deals are not coming on stream fast enough.  The stalled German RFP process is an example of this.  Canadian companies need to grow quickly outside of Canada to maintain their market caps and this is not happening right now.
3.  Most Canadian LPs have done nothing more than obtain licenses and put out press releases on production platform square footages.  They've not competed for shelf space yet.  They've not really done anything other than sell a very small amount of cannabis to Canadian medical patients in dry bud format and more recently oil.  This means that so far Canadian LPs are not real businesses yet compared to their US peers.  These Canadian companies look more and more like government flunkies the way the Canadian government is running the show.  I for one do not want to own companies that are controlled by the Canadian government and that is what the Canadian government has effectively done.  The net result of this is that Canadian companies are going to be weak compared to their US cousins and not able to compete on an international scale to the same degree.
4.  Most importantly Canada is out of catalysts.  There is nothing more to talk about in terms of great news for Canada.  These LPs now must compete directly for revenue and try and make a profit in Canada based on the lack lustre regulations that have been established for them.  They will have to compete with the black market which should be more robust because of the weak Canadian regulations. There is now more risk of over supply than ever before because of the regulations.  And with no major international deals on the horizon I believe that Canada is out of substantive catalysts.

Based on this I am going to continue to reduce my exposure to Canadian LPs in general and the money is all going to US focussed businesses that are showing growth right now in a market that has far better catalysts ahead of it than what Canada currently has.  Bottom line I think the US is where the juice is these days and I am going to sell my over weight position in APH and get the money into US plays.  I am going to reduce my Canadian holdings to 25% of my portfolio and increase my US holdings to 75%.  This is in sharp contrast to 3 months ago when I had 80% in Canadian LPs and 20% in US companies.  

And my bottom of bottom lines:  It's sad to say, but I think Canadian LPs are going to be like RIM to a degree.  They had the world by the tail for a moment, but the moment is passing quickly and markets that provide more free competition will produce companies that take on the world.  Canada by not being bold enough and letting these companies really compete is going to wind up with middling success in the cannabis space as this all plays out.  I hope I am wrong to a degree and find a reason to invest money back into Canadian LPs, but right now I just do not see enough catalysts or positive developments to keep my money in these companies right now.