And now the burning question of the day: Do zombies get high?
It’s hard to say, as your average dead person walking tends to be rather antisocial and has a nasty preference for human flesh.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰
Maybe some weed might mellow them out, but then you’ve got to worry when the munchies set in.
Human beings — the breathing kind — have been using cannabis since at least the third millennium BC for fiber, rope and medicine and for religious and recreational purposes.
Henry VIII encouraged hemp cultivation, particularly for the English navy, and Napoleon Bonaparte’s troops turned to hashish during the invasion of Egypt when they couldn’t get any alcohol.
So, yeah, people like the stuff, but investors who have put money into cannabis stocks might be feeling as if they’re dealing with zombies given the sector’s virtually lifeless behavior.
Trulieve recently reported quarterly earnings and beat expectations.
Trulieve Cannabis
Hedge fund manager: Most pot stocks walking dead
Doug Kass took some time to review the investing pitfalls of marijuana in his appropriately titled TheStreet Pro column, “Picking the Cannabis Winners in an Industry Full of the Walking Dead.”
“The cannabis industry now consists of only a handful or two of private and public companies that are healthy and who reside in the land of the living,” he said.
“Unfortunately, most of the other public equities are among the walking dead, with their very existence dependent upon their ability to refinance large debt loads.”
More Health Care:
Major bankrupt healthcare provider closes 2 hospitalsHealth insurance giant confirms largest data breach of 2025Potential Medicaid cuts could have ‘profound effects’ on health
By now, the veteran hedge fund manager noted, most people acknowledge that the pie-in-the-sky intermediate-term promise and projections for the total addressable cannabis market were dramatically overstated. And “the subsequent optimism surrounding rapidly forecast individual company sales, cash flow and profits has been largely unfulfilled,” he argued.
Cannabis investors also faced near-term pressures as the state markets that opened in the past few years delivered somewhat less initial growth relative to expectations.
“Perhaps more important was that those markets began to experience evidence of maturity far sooner than even the most pessimistic observers expected,” he said.
Florida failed to legalize recreational cannabis
With the November 2024 failure of the key state of Florida to pass adult recreational use and a slower-than-expected rollout in other states, Kass noted, the industry’s demand-supply equilibrium, which was already under pressure, saw oversupply and continued market-share inroads from hemp and unchecked illicit cannabis sales.
When he first got into cannabis investing, Kass hoped that a select group of dominant industry brands would emerge.
“But it became clear to me very early on that state silos — with several states restricting the number of dispensaries — made the promise of brand dominance and economies of scale (e.g., Burger King and McDonald’s (MCD) ) unlikely,” he said.
Related: Veteran stock trader has surprising Nvidia take ahead of earnings
President Donald Trump’s second nominee to head the U.S. Drug Enforcement Administration told a Senate committee that reviewing the agency’s administrative process to reclassify marijuana will be “one of my first priorities” if he was confirmed.
But while testifying before the U.S. Senate Committee on the Judiciary, potential DEA administrator Terrance Cole was noncommittal about whether he supported the proposed rescheduling, saying he needed to understand where the process stands, MJBizDaily reported.
“I’m not familiar exactly where we are, but I know the process has been delayed numerous times, and it’s time to move forward,” Cole told Sen. Alex Padilla (D-California) during the confirmation hearing.
Kass names favorite cannabis companies
Kass said that while AdvisorShares Pure US Cannabis ETF (MSOS) , the industry’s largest ETF, traded actively and the shares were readily and easily tradeable, “it took me years to conclude that I would rather invest in individual cannabis stocks rather than MSOS.”
“MSOS has clearly become the tail that wags the cannabis dog,” he said.
The Pennsylvania state house proposed a bill to legalize adult use of cannabis but only in stores run by Pennsylvania’s Liquor Control Board.
“While it is very unlikely that the state will ultimately control the sale of cannabis, this can be viewed short term as another negative to MSOSs,” Kass said.
In addition, Florida Gov. Ron DeSantis signed into law a bill making it more challenging to place citizen-led constitutional amendments on the ballot — such as the legalization of adult recreational use of cannabis in Florida.
Related: Scotts Miracle-Gro CEO raises eyebrows with tariff comments
Kass said Trulieve (TCNNF) , TerrAscend (TRSSF) , Green Thumb (GTBIF) and Glass House (GLASF) “are among the cannabis companies that currently merit my attention.”
Trulieve, which is down 58% from a year ago, beat Wall Street’s first-quarter expectations on May 7 and TerrAscend, down 77% from last year, is scheduled to report earnings on May 8.
“While there are other stocks that are investable, their market capitalizations are too small and their liquidity limited,” Kass said.
“Even the best of the cannabis lot will require patience — in such an uncertain operating and legislative backdrop — but there remains consequential upside (and relatively limited downside) over the next several years.”
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
