U.S. Investing

CANNABIS CORNER: Solving the Last Mile Problem

We’ve talked about how the smart money in cannabis has swung from the cultivators at the literal ground level toward the retail customer where companies can actually add value and create efficiencies.

After all, the agricultural product is just a commodity, subject to the basic economic laws of supply and demand. Too much plant matter on the market pushes wholesale prices down until demand can catch up.

And with too many big farmers aggressively pumping out plant product, I’ve been predicting a shakeout on that end of the industry for years now. But their pain masks relatively robust conditions on the retail side.

Consumers stuck at home are more eager than ever to indulge in order to dull the boredom and anxiety of the pandemic. U.S. sales are up 40% from last year, approaching what could become a $20 billion run rate.

And because those consumers are stuck at home, the dispensaries have needed to hustle just as hard as restaurants and groceries to build out their delivery capabilities. Those who figured it out say their customers are never going back to the old system.

But emergency delivery systems become a drag when they become permanent. That’s why companies like Drop Technologies in Austin, Texas are changing the world.

Drop doesn’t run the delivery network. They don’t pay the drivers or handle the cash. They aren’t “the Uber of cannabis.” They simply built the software that allows online ordering and driver routing.

Dispensaries love it. This is the future. And while Drop isn’t public yet, retail investors can learn more about the company via its Crowd Funding site. I’ll let IPO Edge subscribers know my thoughts soon.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).