Hello everyone and Happy Weed Weekend.
I hope you are all staying warm on this “Weed Stock Winter” Saturday. It is snowing down like crazy at my house, so I figured it was the perfect time to talk about what is heating up in the portfolio: Cannabis Stocks.
As you know, these names have been running hard recently as President Trump moves forward with the reclassification of cannabis from Schedule 1 to Schedule 3.
This is a massive deal for the industry.
Whether you realize it or not, these companies have been starved of capital because they cannot get normal banking. Major banks like Chase, Wells Fargo, and Bank of America don’t want the liability of touching federally illegal money. Reclassification opens the door for banking, unlocks research potential, and puts the industry on the pyramid for eventual federal legalization.
It won’t happen overnight, but this is a huge step. And in the market, we follow the golden rule: Buy the news, sell the event.
Right now, we are buying the news.
The Receipts: The August Prediction
I didn’t just jump on this yesterday. We have been stalking this trade for months.
Back on August 11th, I put out a blog post and video specifically regarding Trump’s potential rescheduling announcement. We looked at the ETF $MSOS and identified the major resistance at $5.53.
The hype died down after that initial pump, and the price pulled back perfectly into my signature setup.
Cannabis Stocks Surge on Trump's Rescheduling Announcement
Original Week Stock Post and MSOS Overview
The Psychology of the Trade (And the Haters)
On November 17th, with prices beaten down, I tweeted that I was starting to “load the boat” around the $3.00 level.
I got absolutely roasted for this.
One guy replied, “What a dumb tweet. You’re buying before it drops another 30%.” Another said, “This must be a joke. You’ll be liquidated at a dollar.”
This is your lesson, guys. When the crowd is that ultra-bearish—when people are mocking you for buying support—the bottom is probably in. If I didn’t have conviction in my process, those comments might have shaken me out. Instead, I used them as a signal.
The Trade Plan: MSOS, TLRY, & CGC
Here is exactly how we are playing this rotation.
1. The ETF Play: AdvisorShares Pure US Cannabis ($MSOS)
We bought this on the way down, loading up around the $3.00 area. My average is right around $3.86.
Current Status: We are already seeing a massive move.
The Plan: I am looking for this to run up toward the $7.00 - $7.50 area. That is where I will look to take a significant trim (likely half) to double my money. After that, I’ll leave the rest as a “free ride” to see if we get a full legalization pump down the road.
2. Tilray Brands ($TLRY)
I alerted this one right at the close recently.
The Setup: Bought the close before the pop.
The Plan: Similar to MSOS, I am looking for a 100% return. Once we get that double, I will take half the position off the table. At that point, it’s a free trade. I can sit on it forever, and I can’t lose a penny.
3. Canopy Growth ($CGC)
I didn’t tweet this one, but I bought it in the after-hours session right before it launched.
Entry: $1.21 (We caught the absolute bottom area here).
Target: My first trim target is up at $2.70.
Potential Return: If we hit that target, that is roughly a 120%+ return on the first leg. This level has been tested before, and I see no reason why we shouldn’t revisit it.
The Bottom Line
This sector is pumping, and it is a perfect example of playing the long game. We identified the catalyst in August, waited for the setup in November, ignored the noise, and now we are reaping the rewards.
I hope you guys were able to take advantage of this with me.
Enjoy the snow, touch some grass (or snow), and recharge your batteries. I will see you all on Sunday for the Weekend Review to get us prepped for next week.
Until next time—trade smart, stay prepared, and together we will conquer these markets!
Ryan Bailey
VICI Trading Solutions
