Editors’ Note: This is the transcript version of the podcast. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below if you need any clarification. We hope you enjoy!
Jason Spatafora aka Wolf of Weed Street has been investing in cannabis stocks since 2013.
- With Safe Banking dead, are Cannabis stocks dead?
- How does Jason leverage risk when investing
- What catalyst is he looking for that would make the stocks explode?
- Comparing Investments thesis Blue Chip stocks vs. Cannabis
About Jason Spatafora :
Jason Spatafora has greatly impacted the cannabis sector through his alter ego Wolf of Weed Street. He holds one of the biggest audiences in the cannabis sector through his Twitter (@wolfofweedst) and his website, marijuanastocks.com.
marijuanastocks.com.
#Cannabis #Investing # CannabisInvesting
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[00:00:00]Bryan Fields: What’s up guys? Welcome back to an episode of The Dime. I’m Brian Fields with me, as always, as Ke Finney. And this week we’ve got a very special guest, Jason Spata for Wolf of Weed Street. Jason, thanks for taking the time. How you doing today?
[00:00:13]Kellan Finney: I’m doing great. How are you guys? I’m
[00:00:15]Bryan Fields: doing well, ke. How are you doing?
[00:00:17]Kellan Finney: I’m doing really good. Really excited to talk to Jason. Really excited to learn about the intricacies associated with, uh, cannabis trading. How are you, Brian?
[00:00:25]Bryan Fields: I’m doing well, Jason? Uh, we have a east coast, west coast battle. So for the record, your location please? I’m on the East Coast. There it is. K i I don’t know how many straight east coast we’ve had, but at a certain point I think we’ve got it.
[00:00:38] So Jason, our listeners, and on from about you, can you give a little background about.
[00:00:42]Jason Spatafora: Um, yeah, sure. Um, uh, I am an Aquarius, um, two children Star, star
[00:00:49]Kellan Finney: Wars fan. . I’m a Star Wars,
[00:00:52]Jason Spatafora: uh, fan. No, I mean, you know, like, I started investing. Investing, okay. Cuz there’s always this misconception that I’m a [00:01:00] trader. I started investing in, um, 2013, um, was gravitating towards things that like.
[00:01:07] That I thought the world would need. My first investment was, uh, a desalinization company. Um, and then I moved to like distressed banks that needed to be propped up by, you know, um, the EU basically. And I just started to just kind of get my feet wet and, um, you know, I started out small. And I was, you know, it was like good returns.
[00:01:32] And, um, one day I was at home and I, I heard, uh, Eric Holder and he was talking about, um, he was talking about. Uh, cannabis and how the DOJ wasn’t gonna go after states. Um, and I was like, are pot stocks a thing? And so like, I, so I, I went to, you know, the Google machine and I typed in pot stocks and it brought me to this website called marijuana stocks.com.
[00:01:59] And there was like [00:02:00] 10 companies listed. And I was like, oh, well this one says it’s a payment processor. So I bought it and I’d never bought a penny stock before in my life. It was like, um, 5 cents. And then like two days later it was like seven, uh, like seven and a half cents. And I was like, oh. I was like, this thing’s up 50%.
[00:02:18] I was like, this is amazing. And then two days after that, it was down 50%. So I was like, how did I just lose 150? Um, so I started to dig
[00:02:27]Kellan Finney: into
[00:02:28]Jason Spatafora: it. Um, and you know, I, it, the, the volatility kind of attracted me, right? And, um, you know, I knew Colorado, uh, was gonna go legal. Um, and I was just kind of thinking, all right, you know, there’s gonna be all these animal spirits.
[00:02:43] It’s weed, it’s a new industry. Um, let’s see what happens. I start doing that and. You know, every other week I would just add to the position, add to the position, and I was doing what you probably shouldn’t do, which was putting all your eggs in one basket. [00:03:00] Um, and I was buying this stock at like 4 cents.
[00:03:03] Colorado went legal, everything just started booming. And, um, you know, from there, um, like finding information on cannabis online was like nonexistent. So, You know, with the little digging that I was doing, I’m like, man, there’s so much crap out here. I need to, like, I, I don’t want it blowing back on me. So I, you know, I created the Wolf of Weed Street, um, Twitter account, and I would use people, um, online.
[00:03:35] I’d be like, Hey, does anybody live in Colorado Springs? And somebody would be like, yeah. Like, Hey, can you go see if this is a PO Box or a real company? I’ll send you a hundred bucks on PayPal. Right. And so I was using like Twitter as like boots on the ground and then identifying companies. And then, um, you know, uh, then the market just started ripping.
[00:03:59] And I [00:04:00] got a call from a friend and he was like, sell all your pot stocks. Now at this point, like my $8,000 investment was like 55,000 and. And I’m just like, this is the greatest thing in the world. And my, my buddy calls me and he is like, Hey, I heard you were doing really well. I talked to uc. Uc is our other friend.
[00:04:22] He’s like, sell all your pot stocks right now. And I was like, why? He’s like, these things are about to get crushed. I’m like, what are you talking about, man? I was like, he’s like, they’re scam companies. And I’m like, no, they’re not. I’m like, I’m, you know, mine sells like lights and like pipes and irrigation and.
[00:04:41] He’s like, I’m looking at shorts, building up. He, and I’m like, okay. He’s like, I got a Bloomberg terminal. I was like, what’s a Bloomberg terminal? So . So I was like, I get off the phone with him and I was like, this guy’s an idiot. And while I’m on the phone with him, my account’s just going, keeps going up and.[00:05:00]
[00:05:01] I was like, you know what? Let me just tweet out his warning, right? So I tweet out the warning and then I kid you, not like 30 minutes later, an article on Bloomberg came out about these things and the entire market dropped 60% into the close. So my, my 55 when I started, when I was on the phone with him, um, by the end of the conversation was like 70.
[00:05:28] To give you an idea how crazy it was, and at close it was 29. And I was just like, oh my God, what happened? I was like, I just so much money, you know? And I was getting ready to get married in like two months and I was like, well, you did tweet the warning, right? So now, because I’ve been looking at these things so hard, I had a pretty good idea of, you know, what would bounce.
[00:05:53] Um, and then I just kind of started calling it out. And then from there, um, you know, these things just got [00:06:00] hyper-inflated. Um, and then I would look for comparable companies that nobody had ever heard of. Um, and you know, I found one that was like a half a penny. in the next three months, it went up 10000%, you know, and the, the moves were wild.
[00:06:14] Um, like thousand percent moves in in like two weeks a month were not unheard of. Um, so it was like a real wild time. And then, you know, I got married, um, and I was going on my honeymoon and I was just holding like, A massive amount of pot stocks, like almost seven figures worth of pot stocks like penny stocks.
[00:06:39] And I was like, time difference is 17 hours. I’m like, I, I need to start getting out. I could always come back in and while I was on. In Thailand, Thailand or Cambodia. The market tanked, like blew up. And after that I’m like, man, you know, you really need to learn about, you know, [00:07:00] just the markets in general.
[00:07:01] Like you just got, this was a gift and your simulation, this was an amazing gift. Um, and then I started to go back and look and I was like, man, you know, this time of year. Um, in the O T C, everything drops off a cliff. And then from there I like formulated this odds of March thesis and, you know, going into the next year, um, and the year after that.
[00:07:27] And the year after that, by February, March, like I was. 80 to a hundred percent out, and then I’d wait for the summer. If I still liked the idea, I would get back in. Um, and that’s how I would grow my, my size. So like, to give you an idea, I did this with Aurora in 2016. I bought 20,000 shares of Aurora, like 89 cents.
[00:07:53] And. Then, uh, and this was the summer of 16, and then that Constellation Brands announcement came out [00:08:00] and the thing jumped to like three something. And so I, I sell it at three bucks and I was like, oh my God. I was like, this is, this is nuts. And I’d play the market the rest of the year and I was playing like natural gas and like oil ETFs.
[00:08:14] And then in the summer, aurora’s back at a. It was actually like a dollar three, like 98 cents. So I was like, um, let me put it back in. So I put it back in, and then it goes from a dollar to 10, you know, into, um, 2017. And then same thing, well taking it off, take it off the next, you know, the next year it goes from 10 to five.
[00:08:38] I don’t put all of it back on cuz I bought some other stuff, but you kind of get the point. And you know, that strategy has just saved me, um, tons and tons of money. Um, You know, and then like little tricks, like if anything hits an all time high in February, I sell it, you know, which is exactly what happened with all the MSOs, [00:09:00] um, in 2021.
[00:09:02] You know, like you, you take out your principle, um, take out the profit and then go from there. I mean, my wife and I have, um, Uh, an investing company and we have an operating agreement. And the operating agreement spells out in black and white. Like when, when we sell and when we redeploy. And it’s like a year and a day.
[00:09:22] If you’re up, you’re, you’re taking, you’re, you know, half of the money out. Um, and then, you know, if you’ve, if you bought anything else, you’re kind of parring your losses. Like you’ll, you’ll tax loss harvest. in 21. I said to my wife, I was like, no, don’t, don’t sell it. I was like, I don’t wanna sell these. I’m like, and to give you an idea, it was like, juror Leaf was like 1250.
[00:09:47] Cresco was like 10. Um, Terra was like eight, seven or eight, and I was like, don’t do it. I was like, I don’t want you to do it. And um, she’s like, I was like, let’s talk about it. You know, [00:10:00] at the end of the day, well, she already put the order in. I had no idea. And I’m like, where’s all this pressure coming from?
[00:10:05] And I’m like, buying in my. Meanwhile she, my wife was selling into me, you know, and I always tell her like, I’m like, you’re the best cannabis investor in the world, cuz you just don’t care. You’re just like, am I profitable? Yes. All right, well, I’m gonna take that. Am I gonna redeploy? Because, you know, there were times where we were like, all right, let’s, you know, redeploy.
[00:10:27] Um, and then, you know, it kind of became clear. , you know, we didn’t really want to just keep trading these things. Um, so, you know, the only way that we would redeploy
[00:10:39]Kellan Finney: was by
[00:10:39]Jason Spatafora: using the spread, you know, meaning, you know, when she sold, uh, pure Leaf at 1250, um, and then all of a sudden pure leaps seven. Right.
[00:10:49] Well, what’s the difference? From the amount of shares she sold, you know, that five, five and a half dollars difference. And then, okay, well what’s half of that? Okay, well, we’ll use half of [00:11:00] that and buy at seven and then, you know, just to kind of keep ourselves protected, but have a zero cost basis on our positions, which had a zero cost basis anyway.
[00:11:11] You know, because we took the principal out at, I mean, I, I think I was the top tick on, on cure leaf at like 1838. In, in February. But yeah, I mean, that’s kind of my story, you know, um, I’ve just kind of seen it all, um, invested in a lot of companies early in Canada, um, helped raise some money. Um, and that was just super speculative and, and I think we were all kind of a little wet behind the ears.
[00:11:37] Um, but just kind of keeping to that like, you know, manage risk, manage risk, take profit, um, you know, we were able to, you know, not get. . Right. So yeah, I think that’s, that’s kind of me in a nutshell.
[00:11:51]Bryan Fields: So kinda expanding on that. Obviously early on in, in cannabis, some of the companies might have been different, right?
[00:11:56] So we’ve seen the origin of some of these MSOs. So take us through those [00:12:00] early days. Did you get to see kind of the birth of the cure leaf when it went from a smaller company, or Tru Leaf or G T I to kind of a, a bigger company is today?
[00:12:07]Jason Spatafora: Um, yeah, you know, So I invested in Harvest before it went public. Um, I think I did Pure Leaf also.
[00:12:18] I’m not sure. Um, and the reason I say I’m not sure is cuz we, you know, uh, it, myself and a couple other people had a group and, and we just kind of put money in and then see what happens. Um, yeah, I mean, you know, we definitely saw like. When, when I remember when Tru leave was coming out, cuz I’m in Florida, so I, I was very well aware of them.
[00:12:45] Um, you know, I, I was a
[00:12:47]Kellan Finney: little bit familiar
[00:12:48]Jason Spatafora: with Green Thumb, um, cure Leaf. You know, I just remember kind of when they came out, when they went public, it was just kind of like everything was just starting to melt down. And that was like the same with [00:13:00] harvest and acreage, um, acreage. , they were doing their, their, uh, their go public at like $20 and they told me I couldn’t do it.
[00:13:12] So, which, you know, I have to thank that person, whoever that, that, that soul is. Um, because I would’ve, like, I would’ve been down 75% by the time, you know, I could have, uh, sold. But yeah, I mean, you know, When I was in, when I was doing, uh, the Canadian things, um, you know, and after I exited in like the rest of my position in like March of 2019, um, I was still so up.
[00:13:41] And you know, if I use kind of like the, the model that I use now, I would’ve bought all of these things in the summer because I, I still kinda like the story, but because of where I, you know, cuz I, I took off, um, like 80% right before C 45 was implemented, [00:14:00] which was October 18th. I even made a calendar when I’d be selling.
[00:14:04] You know, I put it on Twitter and, um, I was so up, like I could buy like five times my position in some of these things and I had to ask, um, a quant to, to give me like, I, I’m like, I, I need data. Like, is this worth getting back into? And, and that was the summer and I was like, there’s no way I can, you know, come into, come into this.
[00:14:32] Um, and I was waiting for the US companies to show, like, consecutive growth before I, I, I, you know, decided to put any money back into it, but, you know, Tru leave, you know, next time you talk to Kim, ask her, ask her the story about true light. Right. So, you know, I got in to Tru leave at like eight and um, [00:15:00] you know, and I was, I was telling some friends, I was like, you gotta see, I was like, this company is, uh, it’s in Florida.
[00:15:06] It’s everywhere. Um, you know, I think that they’re killing it. And they were like, and my friend was like, He was like a serious trader. He’s like, what’s a symbol? I’m like, T R U. Okay. And you know, so I was like, put it out there. And um, and I was talking about, I was like, Hey, you know, true leave, you know, and I like tweeted about true leave right now.
[00:15:31] I’m careful about my tweets. I’m not like, if I buy something, I’m not like selling it like, uh, you know, you always give it time. Um, so I put, I was like, guys, take a look at this company, Tru Leave. And I put the symbol, but I put the symbol for true. Which I didn’t know was a like some crappy, like penny stock.
[00:15:50] It was like a penny. This thing short squeezed and all my friend calls me, he’s like, dude, thank you. So what did you do? I’m like, what are you talking [00:16:00] about? He’s like, I’m up like 500%. And so I had to go back on Twitter, and I’m like, that is, I’m like, no, it’s T rul dot c. I go, if you, you have to call your broker, you know, if you’re in the United States, and get a broker assist to buy it.
[00:16:15] So anyway, that thing starts running up. So people start selling their true light, which they’re up like hundreds of percent, and they just dump it into true leave, you know? But the crazy thing about True light is it kept going for like, It, it went up like 2000%, 3000, something ridiculous, you know? So that’s like the, the, you know how like Kim and I got acquainted.
[00:16:42] It’s a really funny story, but, but yeah, I mean, you know, look, the, you know, it was always the main differences between Canada and the us right? And, and really it came down to population, um, amount of dispensaries and, you know, just kind of the makeup of the people. [00:17:00] So pretty quickly. Um, you know, and I didn’t even really think of this, um, when I was investing in Canada was like, okay, well, you know, What are they producing and then what are they able to sell?
[00:17:14] And when I saw like a graph of what they were able to sell and then what they were ha having to turn into oil, you know, it was like, it was really scary. You know, you kind of look back and you’re like, how did I make any money in this sector? Um, because it really was just hype and momentum. Um, and then of course you have government intervention that just kind of blows up the industry and that’s pretty much what happened in Canada.
[00:17:38] And now we’re kind of seeing the same thing here in the United States. How
[00:17:42]Kellan Finney: much did, uh, federal legalization, like the thought of it affect like the early days, like it does now? Same kind of excitement, let down excitement but down, or was it less
[00:17:51]Jason Spatafora: so? No, it was, yeah, it was definitely, you know, the excitement was always there.
[00:17:57] It was, you know, I remember [00:18:00] when, um, GW Pharma, um, got to like a phase three trial with like, Epidiolex. Yeah. Like that was a big mover for the sector. Um, you know, talking about legalization. It, it was, you know, back then, um, . And if you asked me back then, like I was very public, I was like, I don’t want legalization.
[00:18:20] Um, like I never wanted legalization. You know, it was more important what states were coming online, whether it was Nevada, California, Colorado, Oregon, whatever, and then the bigger states to come because, you know, you always had that momentum, but it was, you always knew that that momentum would fizzle out.
[00:18:42] By the time like February rolled around. Um, and people always, you know, will, will keep firing money at that story. Um, you know, especially in the summer when these things get low. I mean, some people, you know, they dollar cost their, they dollar [00:19:00] cost average themselves to oblivion. Um, but I liked the, the system because it was like, Hey, we’re running.
[00:19:08] We’re going up 50%, a hundred percent, 200, whatever it is. And then I know we’re coming down 50% easy. And, and, and those have been the drawdowns. The drawdowns have been like 50, 60, 70% always. I mean, this drawdowns like brutal because. Of, you know, just the dynamics at hand, you know, where, where is all the liquidity coming from?
[00:19:30] Well, it’s coming from the ET tf, well, the ET TF is in a very good, you know, and I’m talking about M MSOs and I like those guys, right? I love Noah and I like Dan, but it’s supposed to be an actively managed E T F, and they basically made a bunch of pipe bombs. Right, based off of, with the hopes they wouldn’t have, like, they wouldn’t go off, um, because of, uh, you know, what was going on in DC and they’re buying into [00:20:00] this rally a lot, you know, I mean, they spent like 14 million bucks on in three days before we, we, we hit that top on just green thumb.
[00:20:12] That position’s worth seven. And that’s across the board, you know, and the whole, oh, well, you know, when people put money into the fund, they expect us to buy. Well, you know, they expect you to be good custodians of that capital. And, and then you get put into a situation where, Shit, we’re not getting it.
[00:20:38] What do we do? And you can only sell your big board stock so much, cuz at some point you’re gonna run out. You’re gonna run outta your IPRs, your grogen, and whatever else you have. And then you’re gonna have to start dipping into the green thumbs. The cure leaves the true leaves. And that’s kind of where we’re at right now.
[00:20:58] You know, you’re gonna start [00:21:00] seeing redemptions and. It’s just a massive, massive bomb. Right. And just nobody, I mean, I’d say 95% of people weren’t prepared and the people that were prepared and could see it coming, um, were just cowards and couldn’t, you know, and couldn’t say it out loud.
[00:21:24]Bryan Fields: Gotta let that, uh, let that marinate real quick. Is that one that’s, that’s pretty powerful stuff you just said right there. I guess staying with that Safe banking obviously is no longer with us. We, we have lost, we have lost the, the safe banking fight, unfortunately. But , the question now is, are cannabis stocks dead?
[00:21:41] Right? We’ve seen the numbers, just disasters, but are, are they left for dead? And is there hope that there’s another catalyst in the
[00:21:47]Kellan Finney: future?
[00:21:50]Jason Spatafora: You know, look, uh, I don’t think, um, I mean,
[00:21:57] If, if you go through my
[00:21:58] Twitter feed in like [00:22:00] 2020, like, uh, I think maybe there’s like one mention of safe banking, right?
[00:22:04] You know, people, we’ve got to get away from this idea that safe banking is the end all, be all of the cannabis industry. Because I can tell you I’ve been making a lot of money in the space, um, and it’s never had safe. Right. So you know, the first thing we need to do, you know, if we want a healthy environment is people have to be better stewards with their capital.
[00:22:27] They can’t dollar cost average all the way up and then all the way down. And then think like, well, at some point, I’m a 5 10 year investor. Well, you know, I remember a lot of dollar cost averaging that happened in Canada too, and those people got destroyed. You know, these are not one you dollar cost average.
[00:22:47] Microsoft, apple, Amazon, you know, those companies are going to be around you do not dollar cost average, um, pot. And I don’t care how much you, you know, like how legit the [00:23:00] company is, there can always be something, um, that that comes. out To, you know, affect it in an adverse way. You never know, who knows, like in five years, the United States can turn into the hand maintenance tale and what are you going to do now?
[00:23:16] Right? I mean, obviously we have bigger problems at that point, but you see my, you know my point, so, are cannabis stocks dead? Yeah, they’re dead. They’re dead for a while, you know? Part of the reason they’re dead, um, besides safe banking is, you know, where on the cusp of like real serious risk in the overall market.
[00:23:41] Whereas, um, you know, I, I had that thread that I put up on like the weekend before we hit that high and I was like, look, it looks like safe banking’s gonna happen, but. It’s still gonna get faded, right? You are still gonna get faded from here because of [00:24:00] everything that’s going on, and there’s not gonna be a deviation from, you know, the, the pot stocks, even if you had safe, okay?
[00:24:10] Because there still has to be custody to get worked out. There’s no language in safe banking for custody. Um, So we were gonna come down anyway. Now do I think we would’ve come down this fast? No. I mean my target was like eight bucks, right? Um, and that’s if we got safe. Now I think that the target’s probably, you know, five or under on you talking MSOs.
[00:24:38] On MSOs, that’s probably the easiest gauge, right? And. Look, I think if you’re coming into this industry cold. Yeah, I mean some, I mean, look, I was looking today and I was like, man, I was like, Veronica’s $2 and 80 cents. And I’m like, oh look, green Thumbs back where I bought it, you know, at eight bucks. [00:25:00] Pure Leaf is, you know, four bucks.
[00:25:03] Um, true leaves, you know, set under seven. I was like, this is, this is crazy. Crazy. But. , you know, I start thinking about it and I’m like, I’m not buying shit. You know, it’s the opportunity cost, right? So, where do I want, where, you know, do I wanna sit? Why would I buy them right now when I still know that there’s still, you know, um, all this risk in the market.
[00:25:30] Right. You know, if the spy goes to like 3 30, 300 as some analysts think, like real analysts, not these Cantor Fitzgerald. Cowan like idiots, and now all of a sudden when they say anything good, we listen to ’em. Not these morons, but like Mike Wilson from Morgan Stanley, like, um, Mike Kreitz. Like these guys have been on the money.
[00:25:55] And where do you think. If we, if we [00:26:00] hit eight 70. All right. On
[00:26:03]Kellan Finney: M S O
[00:26:03]Jason Spatafora: S, um, in October, right when the market hit eight 50 and there was still hope for safe, what happens when you take that hope away and then let the market tank? It’s a, it’s a real different picture, right? And then it’s like, if you’re still, you know, at, at some point people are gonna waive the white flag and try and par their losses by buying growth, which I think, and, and that’s what happened during Covid, you know, and people would say, oh, well my average on, on cure leaf is $3.
[00:26:39] I’m like, good for you. I bought, you know, I was buying Boeing at 90 bucks. You know, it doubled in a week. How long did you have to wait? You know, I was buying Square at 40. It went to 200 Lulu limit, like on and on and on, because people are going to pile into growth and that’s really where the [00:27:00] generational opportunity is to make money.
[00:27:02] Because Covid was like that. But you know, COVID was an anomaly and 2018 was like that. And we had that little bear market. And the thing that’s interesting about Covid and you know, The conditions for pot stock were perfect. They will never be that perfect again. You had all of these people, kids getting money from the government, you know, opening
[00:27:28] up eTrades, Robin Hoods, TD
[00:27:30] accounts, um, And what are they gonna buy?
[00:27:35] I mean, weed is like the biggest meme stock out there, you know? And it’s like if you weren’t on Robinhood, then you’re like, oh, I can buy Curaleaf I can buy Trulieve I can buy all this stuff. And there was just all of this QE happening that was just jacking up the market and the market. You know, like stocks want to go.
[00:27:55] Right, if the conditions are there and all the conditions were there, but it gave you [00:28:00] these hyper-inflated valuations and these prices that were unrealistic, but you know, if you were averaging up on Trulieve at 50. And all of a sudden it’s 25, you’re like, it’s a steal. It’s 50% off. But the market doesn’t function like that.
[00:28:18] And you can see that by the other stocks in the mar. I mean, look at Nvidia. Look at Roku. Roku was 450 bucks. It went from 60 to four 50 during Covid, it’s in the forties again, you know, and like Shopify, like all so many of these companies. So it’s, we are not in like our own little. Like 80%, 90, I mean, Carvana, come on.
[00:28:42] Carvana was three 50. Now it’s like three bucks. And the pot stock investor is just kind of oblivious to all this. And they try and say that they’re not, but they’re oblivious because [00:29:00] they wouldn’t be talking about dollar cost averaging. They wouldn’t be trying to, um, you know, Draw parallel between like M S O S and ARC or like X B I like these idiots.
[00:29:14] They wouldn’t talk about, oh, it’s the algorithm. It’s the algorithm. No, it’s your stupidity like traders, cuz there’s a part. Of us, or you know, like a portion of of, of, uh, of my account that I trade. Right. And it’s got a very specific reason. Like I trade and I mainly trade options. And I trade options. I take half of the profit and I put it into long term stocks.
[00:29:39] That way I don’t need to grow my account with my money. I use it from my trades. And, and that’s a good, just a good way to manage risk, right? Like we would see. You know, and I’ve, I’ve tweeted some of these like screenshots. They’re like, oh, Dan’s buying all right. Yeah, let’s buy, let’s buy [00:30:00] these puts, let’s buy these puts like, this is all artificial buying.
[00:30:04] So like in September, um, when mj u s was buying, Dan was buying right alongside of that and inflating, you know, uh, the sector, right. Inflating the sector. Well, when somebody that knows what they’re doing sees that, they’re like, this is going to come down so hard. And so what happened? We went from like 1381 to eight 70 in like two weeks and everybody was short.
[00:30:34] You, you dumped, your risk got short. And then it’s like, okay, well now I can buy everything half off, you know? Buy it back, you have zero risk and then you do it again and again and again. And you know, like that’s been the best setup is just watching, you know, watching like foolishness in the market and, and taking advantage of it.
[00:30:59] Right. [00:31:00]
[00:31:01]Bryan Fields: So to quickly put, push back on you, isn’t time in the market for someone, let’s say who’s a more novice, let’s say they, they put 10% of their investible assets in cannabis stocks and they look at true weave and they go, Florida is still medical. Only soon there’ll be adult use. Georgia’s gonna come online, Pennsylvania’s gonna come online.
[00:31:17] Maryland’s gonna come online. And if I can get it in at $7, it’s probably has an opportunity to grow over the next five to 10 years. Isn’t it a worthwhile position still to hold if you have it in the sizable portion of diversified p.
[00:31:30]Jason Spatafora: Uh, yeah. Yeah. If you’re coming in cold like today, yeah. I think that you know, one, you know, you have to make, you have to create a budget.
[00:31:38] How much do you want? Okay. So if you’re saying, all right, I wanna buy thousand shares, right? So that’s how I approach. Any, any investment, any trade, any option, whatever. I look at it and I’m like, if I had to hold this how much, and I couldn’t, I could only buy it once, how much would I buy? I’m like, okay, I’ll buy a thousand shares.
[00:31:56] Right, of true, of true leave. Right? I mean, not me, [00:32:00] but, you know, some, some novice, but maybe you
[00:32:02]Kellan Finney: right. . No, I, I wouldn’t
[00:32:05]Jason Spatafora: buy a thousand chairs. I come in and I’m like, all right, so I don’t know what the closing price was. Let’s say just say seven bucks. Okay, that’s $7,000. That’s my budget. You know what? I’m gonna buy 2,500 right now because I, I, there’s still some risk and it could go lower, and I’m gonna wait.
[00:32:25] Right? I’m gonna see what the market does and I’m gonna tier. All right. That’s a lot different than dollar cost averaging, right? Because you’re going in there with a plan dollar cost averaging people the way that they talk about it. No, you’re just averaging down, right? Which that means you, you had no plan, you had no stop loss.
[00:32:46] And, and let’s say, you know, when you do get into this position and then all of a sudden you’re at your full position and it’s just not working for you, um, your stopwatch should be like 10 15. [00:33:00] And I know stop loss is like, it’s like alien in the cannabis industry, but, um, is that a universal rule that you would apply?
[00:33:09] Yeah. It’s like that, that, that, that’s a universal rule that I, that I apply. Like maybe if something’s outta support, um, then I’ll give it like 15%. But like I always tell myself because I, you know, I hate being wrong. Right. Especially when I trade. Um, everybody does. So, If the thing’s going against me and I’m like, this thing’s probably gonna go lower, I just tell myself, it’s not that you’re wrong, it’s that your timing is off and that’ll end up saving you a lot of money.
[00:33:38] Um, because, you know, like you, you, you can’t get into a stock. Like, look, there were people that are getting into the sector in like February, 2021 when it’s like peak, peak bubble, right. And. They were just like, oh, I’m, I’m just gonna add [00:34:00] more. They’re getting cheaper. They’re getting cheaper, but at some point you have to say no.
[00:34:04] Now I’m just, I’m just losing money. You know? And if you are gonna do that way, well, you know, maybe you shouldn’t understand how to hedge your position. Right? Nobody knows how to hedge their position. It’s, and it’s really easy, you know, like the greatest trade in pot stocks was to just be short M S O S, um, in February and just get a year long contract.
[00:34:29] I could only imagine what that thing is paying, but,
[00:34:33]Kellan Finney: Um, most people they’re sponsoring this podcast today,
[00:34:38]Jason Spatafora: That’d be amazing. Just That’d be amazing.
[00:34:42]Bryan Fields: So what’s your thoughts on the business model versus the, the share price? Do you look at when you’re making those investments? I guess you look at ’em differently between trades and
[00:34:49]Kellan Finney: long-term investments. Yeah, you have to, you have to, are trades just all technic.
[00:34:54]Jason Spatafora: Well, no, I mean, I mean, of course other factors in there. I mean, no, it it, [00:35:00] I mean, when you said, like, when you said technical, you mean like on a chart? Yeah.
[00:35:04]Kellan Finney: Like looking at more like technic, like technical, like support resistance, like Yeah. You know, macd or all of those
[00:35:10]Jason Spatafora: kinda stuff. Yeah. Technic technicals have been out the window for this sector for years.
[00:35:15] You know, they’re, they’re like, um, , they’re good to know, but those technicals are gonna lie to you more than they’re gonna tell you the
[00:35:25]Kellan Finney: truth
[00:35:26]Bryan Fields: because it’s gonna influence you to think it’s a good idea.
[00:35:29]Jason Spatafora: No, because cause the, the market
[00:35:32]Kellan Finney: not mature. They’re not blue stock, they’re not like blue chip stocks that
[00:35:34]Bryan Fields: behave according to
[00:35:36]Jason Spatafora: his historical trends.
[00:35:37] Right? There’s not like a volume shelf that you can really look at and be like, oh, look at all this. I mean, these things don’t trade a lot. Okay. So like, people, when people are like, oh, I’m looking at the technicals, it’s gonna, you know, we’re gonna get safe banking, we’re gonna rip to 25. I’m like, Like, where do you buy your drugs?
[00:35:55] Cause I’d I’d like to, I’d like to get your hookup. [00:36:00]
[00:36:00]Kellan Finney: Invest in that company. .
[00:36:02]Jason Spatafora: Yeah. I mean, look, it’s, it’s all animal spirits and, and psychology. Like, look, you can get one headline. A company, a chart could look great, right? Um, and then boom, like, did anybody think that we were just, I, we blew
[00:36:17]Kellan Finney: through.
[00:36:19]Jason Spatafora: Every support that was created from September to two weeks ago just got blown up on high volume.
[00:36:30] Right. So, so, yeah. You should pay attention to the downside. Cuz now that’s, you’ve got all that resistance. That resistance is gonna play a part, but then also you have to factor in the fatigue of the market. You know, the guy that bought, um, M S O S at 10 and thought that it was the bottom right. If that thing gets to 10, he’s probably gonna be like, I, I’m just gonna get out.
[00:36:53] And then you gotta deal with the guy at 11 and the guy at 12 and 13 and 1425. And, [00:37:00] and 35 . And 50 and, yeah. Oh, Nancy Mac is gonna kill. Gonna do it. Oh. 33,
[00:37:08]Kellan Finney: you know, like,
[00:37:09]Jason Spatafora: so, so yeah, like that. You can’t really look at like technicals, but you know, if you’re looking at like the company, um, like what they’re doing, like what their product is like Med Men, right?
[00:37:21] Med Men’s a great example. Med Men’s an amazing brand, right? It is
[00:37:26]Kellan Finney: one of the most
[00:37:27]Jason Spatafora: disgusting public companies that has ever existed in this. Disgusting. Like you, if, if you went through that prospectus, you were like, this thing is just a share selling scheme. Okay. Now if I go into a Med Men, I’m like, oh, this is great.
[00:37:46] Like, oh, nice, you know, oh, maybe I’ll get one of these like, uh, med men shirts. Um, you know, so completely different animal. And there’s, it’s a, it’s really hard for investors to [00:38:00] separate the. Right. They’re like, oh, look at, look at how much,
[00:38:05]Kellan Finney: um, true leave is dominating
[00:38:08]Jason Spatafora: in Florida. Okay. And does, you know they’ve been dominating in Florida forever.
[00:38:15] Has it helped their share price?
[00:38:17]Kellan Finney: At what point does like these companies generate cash? So like, what point is that cash flow gonna actually affect
[00:38:23] the stock price? Um,
[00:38:27] I know that’s the, what do you think , when, when,
[00:38:30]Jason Spatafora: when you get rid of two 80 e
[00:38:32]Kellan Finney: you think that’s the biggest catalyst
[00:38:33] or, so I think two 80 is the biggest catalyst for the sector.
[00:38:36]Jason Spatafora: Yeah. I think it’s always been that because you’re basically just making these companies 30% more valuable. Yeah, I, I
[00:38:43] talked, I talked to a banker kind of, uh, too, and he said that safe banking won’t even move the needle for like a lot of the larger institutes, like your JP Morgans and your Wells Fargos.
[00:38:53] They, they said that it has to be rescheduled for them to like actually seriously consider it. Yeah. Is there
[00:38:58]Bryan Fields: any truth to that statement?
[00:38:59]Kellan Finney:[00:39:00] Yeah, that’s,
[00:39:00]Jason Spatafora: that’s probably true. Right. You know, they, they don’t want to, they don’t want to have to deal with like compliance and SN and everything, you know, and, you know, and that’s what kind of caused the blow up.
[00:39:13] In 21, right? Because you had all these promises. Safe banking, oh, we’re gonna make it, make these things. Um, uh, the banks are gonna be able to custody them. So what did the banks do? Well, the banks are like, well, I need to be compliant because I want in on that money, on those fees, on those exchange fees. So I’m gonna force everybody to sell that way.
[00:39:36] I’m like, when I come to them and this is ready to go, I’m like, Clean slate. I don’t have any cannabis stocks. We are not holding any cannabis stocks. So they forced, um, they f they forced a fund out, I think a Wasatch like 300 million position, like basically at the top, like, you’re welcome Wasatch, you know, wherever they were, housing that.
[00:39:59] Um, and [00:40:00] then, You know, and so then it was like JP Morgan and then and Morgan Stanley and Merrill Lynch and you know, um, bank of America, all these things trying to get compliant. And the market pulled back and then we’re going into the summer and we’re on like the normal cycle, right? 30, 40% pullback. June is the worst part, and then volume slowly starts creeping back up.
[00:40:26] M S O S went down tap 30, 35, and then we started to just like float back to into the forties and then, Schumer and Booker did their press conference. And um, it’s funny because some of the banks were like, yes, we’re working on it. We’re working on it. And then you didn’t hear from them. And uh, then the market tanked.
[00:40:49] And then when, when Safe got put into the N D A A, it was actually, um, Uh, Morgan Stanley came out with a note and Bank of America yet, [00:41:00] you know, our clients are asking for cannabis stocks. We think that we’ll have a solution by like January once. It wasn’t in the N D A A. Again, you never heard from those people again, from those banks again.
[00:41:15] So like the custody of the stock is, it’s massive because there’s always gonna be an oversupplied stock coming into the market from these companies. You know, either through acquisition, insiders, founders, whatever, you know, original like. Uh, debt holders. Um, and if you don’t have institutional support to backstop the stock, you, and you leave it into the ha in the hands of retail who’s notoriously dumb about trading or investing, then you get what, what we have right now, which is like the worst parts of the Bible in this sector.
[00:41:55]Bryan Fields: Let’s do a, a quick rapid fire. If you had to choose one cannabis [00:42:00] company to hold forever, who.
[00:42:03]Jason Spatafora: Oh my God. Probably green. One.
[00:42:07]Bryan Fields: Bigger threat to the cannabis industry. Big pharma or big tobacco.
[00:42:13]Jason Spatafora: Neither
[00:42:15]Bryan Fields: medical operators should be allowed to convert to adult use when the markets open up. Yes. Which event is more disruptive to the cannabis industry? Federal legalization or interstate commerce?
[00:42:28]Jason Spatafora: I mean, they’re basically the same thing. Well, I’d say federal legalization. W but not in a good way.
[00:42:36]Bryan Fields: It’s fair, true or false?
[00:42:37] You were involved in the game stock.
[00:42:40]Jason Spatafora: Game game like G M E? Yeah. False.
[00:42:44]Bryan Fields: Better investment plant touching operators or selling shovels to the operator.
[00:42:51]Jason Spatafora: Um, selling shovels to
[00:42:52]Bryan Fields: the operators shovels true, true or false? The wolf persona is actually Jason in real life, a character or combination in both.[00:43:00]
[00:43:00] Combination of both. What is one ideal or fact about investing in cannabis that most wouldn’t know
[00:43:09]Jason Spatafora: that when legalization happens, most companies are gonna get killed?
[00:43:17] Because then it be then like the whole, you know, then bec it becomes an execution story. You know, and this is why I got out of like 80% of the Canadian companies right before C 45, you know? Then it’s like brands, and then are you executing? Are you, what are you doing with your capital? Um, At that point then
[00:43:39] yeah, it’s,
[00:43:40] you see a lot of death in the industry.
[00:43:42] It’s like, um, and, and you saw that in Canada. There were so many public companies in Canada that were like, you know, TGA Aurora or Danagram, you know, um, so many. Supreme Pharma, man, I don’t even know that. Thing’s like 2 [00:44:00] cents or something. Um, and once, once legalization happens, everybody thinks it’s like, oh, this is it.
[00:44:07] We’re gonna be rich. Most of you
[00:44:09] are gonna be poor.
[00:44:12]Kellan Finney: When you started, yeah.
[00:44:14]Bryan Fields: When you started your journey in the cannabis space, what did you get? Right? And most importantly, what did you get
[00:44:18]Kellan Finney: wrong? What
[00:44:20]Jason Spatafora: did I get right? What I got right was, Playing the momentum, taking my profit. Moving on to the next thing, treating the industry like a giant game of Frogger.
[00:44:33] Um, what did I get wrong? Um, maybe pressing, uh, some positions a little too hard. Um, believing too much in management. Um, you know, and, but from that, um, I’ve become a much better investor. Right,
[00:44:53] because the way that I look at it is you have to treat
[00:44:56] every single company, every single c e o, [00:45:00] as if at some point they’re going to try and screw you.
[00:45:03] So you always have to be on guard and you know, I, I know it’s like, It’s really easy because a lot of these, uh, these CEOs and, you know, some of them I love, you know, let me say that like I love Kim. Like I’m ride or die for Kim. Um, you know, other ones where I’ve had good relationships. Have done stuff where I’m like, that was like really messed up.
[00:45:31] Right. And you know, like understanding that sometimes the, the public persona of some of these people is not what you think it’s a, it’s. It’s like n never meet your heroes, right? I don’t treat any of these like heroes. I don’t treat them like sports teams either. You know, at the end of the day, the only thing that matters is your roi, right?
[00:45:53] Your return on investment. Like, can I turn a dollar into two? Um, or you know, [00:46:00] can I turn two into four? But what you also need to think about is, If I put in one, is it gonna become 50? Right? Everybody likes to think about all the money. They’re gonna, oh, we’re gonna be rich. We’re gonna buy Lambos and stuff.
[00:46:13] Let me tell you something. When you get to that point, you’re so conscious about money that you’re like, I’m not buying a Lambo. That’s a waste of money. Like that’s a depreciating asset. Um, Yeah, like I’d say yeah, maybe putting a little too much faith that some of these companies would do the right thing.
[00:46:34] Um, yeah, like especially early on, before
[00:46:38]Bryan Fields: we do predictions, we ask all of our guests, if you could sump your experience in a main takeaway or lesson learned to pass onto the next generation, what would
[00:46:45]Jason Spatafora: it be?
[00:46:51] If I could say that again. If
[00:46:54]Bryan Fields: you could sum up your experience in a main takeaway or lesson, learn to pass onto the next [00:47:00] generation, what would it be? This could be life advice, this can be lesson advice.
[00:47:03]Kellan Finney: Yeah. For, you know, in, in investing advice I would say, you know,
[00:47:06]Jason Spatafora: you see a hundred dollars bill on the ground, you pick it up.
[00:47:09] You don’t try and walk another block and say, well, maybe there’s a thousand bucks, and you just walk past that a hundred bucks, you know, if you’re gonna take profit. Like, always be conscious of like, you know, the market is very hard, okay? It’s not, you know, it’s there to take your money. It’s not there to make you money and.
[00:47:30] If you keep that front and center, you’re always gonna be aware of your risk, right? And when you do have a big win or you get lucky, you have to pull that, that capital out. You know? So you have to have rules and you have to stick to them, you know? And I, you know, in life I would say, um,
[00:47:53] Sometimes you’re gonna have to say things that are really unpopular. Um, and, uh, you’ll be [00:48:00] vilified for it sometimes, but there’s always gonna be somebody that, that listened, um, that took the advice and, uh, you know, that makes it worth it. But you know, like we. Like, try and help people. Right. You know, don’t be like so gung-ho an idea that then all of a sudden the idea doesn’t work and you know it’s not working.
[00:48:26] And then you keep pressing that idea onto them because then you’re just like, Jim Jones and you’re handing out Kool-Aid to people with cyanide, you know, and we just, we just had our, our Jim Jones, uh, moment in the cannabis. You know, um, which is
[00:48:46]Kellan Finney: really sad
[00:48:47]Jason Spatafora: because I know a lot of people, uh, just got completely wiped out.
[00:48:51] Um, and it definitely didn’t have to be this way. Well said.
[00:48:56]Bryan Fields: All right. Prediction time. Jason, I’ve given you a magic [00:49:00] wand to change anything you want in the cannabis industry. What aspect are you immediately changing that unlocks a cannabis rocket ship?
[00:49:09]Jason Spatafora: The ability for them to trade on a major exchange.
[00:49:13] How quickly do we
[00:49:14]Bryan Fields: see it pop once they do?
[00:49:18]Jason Spatafora: Well, there’ll be, you know, all the usual idiots front running it, but in this case they’re right to front run it. Um, and then, yeah,
[00:49:26] we’ll, you know, we’ll see an oversized move and
[00:49:30] then, uh, you know, just a
[00:49:31] complete rerating. Do I think that they go back
[00:49:34] to, uh, 20, 21 highs?
[00:49:37] Um, they could, um, but down the line, I definitely think. You know, there’s been a lot of deterioration in, uh, the, you know, the overall businesses because like, just like Apple, Amazon, all these other companies, um, that the sector needs to come to grips with. Um, they just think that, oh, these things are gonna moon, but actually the, the businesses and, and the [00:50:00] earnings are, are getting worse.
[00:50:01] And I would expect the next two earnings to be pretty bad in the cannabis industry. Ke. Uh, two 80, I think,
[00:50:11]Kellan Finney: uh, would probably, uh, be a huge difference maker for a lot of these organizations that are struggling with growth capital and, um, all that kind of stuff. I think So
[00:50:25]Jason Spatafora: what do you think, Brian? Go ahead, Jason.
[00:50:27] Well, you know why I didn’t say two 80 d e failure is too because yeah, I, I think that you get a rerate, but then you’ve got nothing, and then you just get a. So like two a, d e? Probably. Yeah. You know, like, look, when these things were making tons of money, they were still going down. , right. You know, like they were, I mean, when I first bought Pure Leaf, I think they were doing like 115 million a quarter.
[00:50:55] Now they’re doing 300 and something. Mm-hmm. a quarter, and [00:51:00] the price is lower than where I first bought it in 2020. So like, Would two 80
[00:51:05]Kellan Finney: e though, like decrease a significant amount of admin costs that these MSOs are, are hundred percent recurring and maybe they could then take that cash and do some stock buybacks or something like, they won’t
[00:51:20] They won’t, Hey, I can dream. I can dream, right. ,
[00:51:24]Jason Spatafora: they won’t do stock buybacks cuz it’s not, it’s not a good enough use of capital because every dollar ev, all the cash is so, So important, right? And most of these got like pure. Like they need cash if they’re gonna do acquisitions, because who the f is gonna take stock, right?
[00:51:42] And that thing’s just gonna keep getting bloated and more diluted and it’s just gonna, it’s just not gonna move at some point. So yeah, cash is, is just too valuable. But if you get up list and then you get 280E then you get. You don’t get 30 gas, [00:52:00] right? You get like a hundred percent like real quick.
[00:52:05]Bryan Fields: I mean that’s the fantasy we can all hold for, right?
[00:52:06] Like that’s, that that’s the formula that we need to unlock. I don’t know how we can get, uh, get DC to get that to happen cuz that, that seems like unlock I’m my biggest concern is that, When these big MSOs that are vertically integrated in multiple states have to get rid of some of these assets because they don’t need to be vertical in only states and people start specializing.
[00:52:23] I’m petrified to see what that does to their business, because I can’t imagine that they’re gonna have just willing takers to take these different aspects across different states.
[00:52:32]Jason Spatafora: Yeah, I mean, you’re kind of seeing something like that with the REITs, but on the flip side, it’s like, Hey, uh, we can’t pay rent anymore.
[00:52:41] Guess what? This is your property now. And they’re like, well, Shit, I, I don’t, I don’t want this, you know, and they’re doing all these lease bags. I sold it to you, .
[00:52:50]Kellan Finney: Yeah. You know, you’re gonna see a lot of these
[00:52:52]Jason Spatafora: greenhouses get converted to like strawberry farms and like, you know, they’re gonna be growing lettuce in them or potted [00:53:00] mums, tomatoes are back baby.
[00:53:01]Kellan Finney: Yeah, there’s always Village Farms .
[00:53:04]Bryan Fields: So Jason, for our listeners, they want to get in touch, they wanna learn more. Where can they.
[00:53:08]Jason Spatafora: Uh, I mean, obviously they can find me, um, on Twitter at Wolf of Weed Street, um, or they can find me in, uh, true Trading Group. It’s one of the head mods and you know, also one of the owners of, uh, you know, basically we, it’s courses and we actually teach you how to like, Trade and manage risk in the
[00:53:30]Kellan Finney: market.
[00:53:30]Bryan Fields: That’s great. Yeah, we’ll link those all up in the show notes to anyone interested in learning and uh, helping themself do better. Can take it. Definitely take advantage. Thanks for taking the time,
[00:53:38]Jason Spatafora: Jason. Thanks guys.
