In the latest The latest information on the marijuana market, I will cover:
- Questions about purchasing cannabis stock options.
- Why taxes can hinder the federal legalization of cannabis.
Gym I emailed me the following:
I enjoy Matt’s achievements in the cannabis market and am happy to join the community as a premium member. I would like to hear Matt’s thoughts on cannabis stock options. thank you.
Thank you for your question, Jim. Please keep an eye out.My team will reach out to send you some Money & Market swag.
Cannabis stock options
There are two main types of options available for renewal.
- Call Options — Grants the right to buy shares at a given price in the future.
- Put Options — Grants the right to sell shares at a given price in the future.
The advantage of buying call or put options is that you limit your losses to what you pay for. Call options have unlimited maximum gain, while put options have limited maximum gain.
Call options are a bullish view of the underlying asset, while put options are bearish.
Call option buyers look for stock prices above the strike price of the option.
Buyers of put options make sure that the stock price is below the strike price.
Of course, that’s not all, but it’s a wide range of strokes.
I recorded the episode of Ask Adam anything With our Chief Investment Strategist, Adam Odel, on how to make money with options. (You can check that video here.. )
In that video, Adam brought up a number you need to know before buying an option: Implied volatility..
This is annual volatility Investor Expect from stock. That is a factor in the price of options.
Before purchasing an option contract, you need to compare the implied volatility with past volatility (or actual volatility).
If past volatility is higher than implied volatility, the option is cheaper.
Above you can see the options chart of GrowGeneration Corp. (Nasdaq: GRWG), One of the cannabis watchlist inventory. The option expires on January 21, 2022.
You can see that each option has different implied volatility. Compare it with the past volatility of 84.7% and find a low-priced option contract to buy.
Well, there’s a little more than that, but this gives you a starting point.
As for the cannabis options I think you should buy, it all depends on whether you are bearish or bullish on cannabis stocks. Then, of course, you need to determine how bullish or bearish you are.
I don’t recommend the cannabis watchlist option, but I’d love to see it. If you have any stocks that you would like us to find out about option contracts, please email us at: Feedback @ moneyandmarkets.com..
Keep in mind, however, that option games are not as easy as buying and selling stocks.
Jim, once again thank you for your question and our participation Members-only program On youtube.
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Tax and cannabis industry
Now, about the legalization of cannabis.
Death and Taxes: The only thing guaranteed in life.
Taxes have a completely different meaning to the cannabis industry.
Because the federal government is illegal, cannabis companies are taxed under the provisions of the United States Code and cannot deduct many of the standard operating costs.
Most cannabis companies pay about 60% tax, according to New Frontier Data, a cannabis data research firm. Compare this to the standard US business tax rate of 21.5%.
As you can see from this graph, these high taxes are passed on to consumers who pay as much as 37% in states such as California and Washington.
Cannabis buyers don’t seem to care about tax increases as cannabis sales continue to grow nationwide.
Under the proposed Cannabis Management and Opportunity Act, cannabis is essentially a legitimate business and companies are not subject to the same taxes currently under the United States Code.
But that may be little reassuring for a US cannabis company
Under the proposed bill in the US Senate, businesses will pay federal sales tax.
Excise tax is levied on transactions between producers and processors, and between producers and retailers (according to New Frontier Data).
You can see the suggestions in the chart above.
If the bill is passed in its current form and it is unlikely that it will pass, the excise tax will be 10%.
That’s up to 15%, then 20%. From the fourth year onwards, the excise tax will reach a 25% cap on the typical US selling price per ounce of THC.
New Frontier Data has discovered that the cannabis industry will face higher taxes under proposed legislation than it does today.
Big picture: Cannabis tax
Companies pay high state taxes — one of the selling points of legalization. Imposing a high wholesale sales tax has no benefit to the cannabis business.
Not only can it make things difficult for small cannabis operators, but it can also hinder potential investment and innovation.
The wording of the proposed law is clever, suggesting that cannabis companies will see “tax credits.” Companies with sales of less than $ 20 million receive a 50% tax credit, while companies with sales of more than $ 20 million receive a deduction for the first $ 20 million in sales.
However, to obtain the credit, the company must pay the full amount until the credit is applied. In some cases, it may be one year after the tax is filed.
Companies pass on higher taxes to consumers in the form of higher retail prices.
This presents a bigger problem as the statutory market faces headwinds from the illicit market. Higher retail prices for legal cannabis can drive some buyers into a cheaper, illegal market.
This proposed tax system also treats all cannabis companies the same. However, many cannabis operators operate under a structure called vertical integration, acquiring or establishing their own suppliers, distributors, retailers, and more. This proposed tax system deprives the model of the cost-effective benefits.
In terms of what this means for cannabis investors, we are very early in the legislative process — the bill has not yet won a subcommittee hearing.
If the bill is passed, I don’t think it will be in its current form. We will keep an eye on whether the Senate is tax compliant.
Before signing off, please note the following: The next live chat on YouTube is scheduled for Thursday, September 9th, at 4pm EST.
You can visit YouTube to ask questions about cannabis inventories and the wider cannabis market, as well as potential legalization.
We provide members with exclusive content, including:
- Interview with a cannabis insider.
- Blog posts, stock analysis, company breakdown.
- Other content related to the cannabis watchlist.
- In our monthly live chat with me, we talk about cannabis inventory, the cannabis sector and more.
I have also announced another tool that can help point the right direction in investing in cannabis stocks.
Just click “Join” Our youtube page To find out what you can access by participating.
If you have cannabis in stock that you would like me to see, please send an email to: Feedback @ moneyandmarkets.com..
Where to find us
This week I’ll go into more detail Bull & Bear Podcasts and us Money & Market Stay tuned last week.
Don’t forget to check us Ask Adam anything In the video series, Chief Investment Strategist Adam Odel and ours Investing with Charles In the series, expert Charles Sizemore and I will discuss the trends you have written.
Also you can follow me Twitter (@InvestWithMattC), Offers more insights into the cannabis market as well.
Remember, you can email me with my team Feedback @ moneyandmarkets.com — Or leave a comment on YouTube. We love to hear from you!
Safe transaction,
Matt Clark, CMSA®
Survey analyst, Money & Market
Matt Clark is a research analyst Money & Market.. He is a Certified Capital Markets & Securities Analyst at the Corporate Finance Institute and In search of alpha..Before joining Money & Market, He has been a journalist and editor for 25 years, responsible for college sports, business and politics.
Do Taxes Punish Cannabis Companies? (Legalization Update) Source link Do Taxes Punish Cannabis Companies? (Legalization Update)