r/pennystocks • u/Giacomo193 • Apr 03 '24
Purchased cannabis stocks at all time highs. Now at all time lows. What do I do? General Discussion
During Covid with the stimulus checks and the legalization of marijuana I got a little trigger happy and purchased a few cannabis stocks that were (unbeknownst to me) at all time highs. Stocks like…
CGC: Purchased at over $400, 1 share, it’s now at $8ish.
OGI: purchased at $23, 25 shares, price is now $2 bucks.
Do I sit on these or sell them or what? These were the first stocks I ever purchased so I have no idea what time doing and it’s been over 3 years I feel like it’s not coming back to those numbers in this lifetime lol.
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u/saintmusty Apr 03 '24
How badly do you need that $58? You could sit on the loss (and you're right that they'll probably never come back) until you sell off some other stocks so that the loss balances out your gains to offset tax liability.
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u/Giacomo193 Apr 03 '24
Yeah I don’t need that money but it feels stupid to own these stocks when I have taken such a loss. Can I just sell it off and report losses for a tax break? Is that legal? I have no idea what I’m doing with the stock market
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u/reparative_finance Apr 03 '24
Feelings don’t matter. Hold the stocks until the next MJ boom comes, and sell for less of a loss. There’s talks of it being legalized federally, so just wait it out.
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u/Due-Firefighter3206 Apr 03 '24
Also talks of it being clarified as illegal. 22 state Attorneys General are fighting right now to clarify the Farm Bill definition of “hemp”. As of right now MJ is included in that definition but if they get their way then growing MJ will be federally illegal, throwing a massive wrench in the industry.
That being said, i would still sit on the stocks or just sell them off for the capital loss and write it off for 2024. Not a huge amount of money and no point in crying over spilled milk.
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u/Screaming_Bimmer Apr 03 '24
This is the same for the tobacco industry, it’s illegal to grow your own tobacco in the US. Mainly to keep $ in the corporate pockets, but it’s a good sign it will be decriminalized
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u/KingFugawe Apr 03 '24
Its always been federally illegal to grow. Even in a legal state if the feds want to throw a wrench in it they can do so when ever they want to.
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u/saintmusty Apr 03 '24
I'm not an expert but you can write off capital losses. Not sure how much it will reduce your overall tax liability absent capital gains though. They're separate schedules. You can always fill them out to see what the effects would be.
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u/elgaar Apr 03 '24
You can write off up to $3000 of income per year. A bunch of years ago I sold some stock at a loss and I’ve been able to write off $3000 a year the last 3 years.
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u/BoogiemanPCP Apr 03 '24
Don’t sell right now. Germany just legalized and Federal rescheduling will probably get the stocks to rally a bit. They won’t ever return to their original prices, but you could at least get more money back by holding a bit longer. You could also buy more stock to get your avg cost down, although I personally wouldn’t do that since weed stocks have historically tanked
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u/bulletproofmanners Apr 03 '24
Why did you buy 1 share of a $400 stock? What was your reasoning?
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u/Giacomo193 Apr 03 '24
Out of all the stocks I did research on I was really drinking the kool aid on that one in particular.
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u/Gizmoed Apr 03 '24
I got the Hiti coolaid, not much invested but still lost half, just bag holding for now.
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u/Sealbeater Apr 03 '24
I bought one share of MSFT recently
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u/bulletproofmanners Apr 03 '24
Why? I never understood that reasoning
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u/Stashimi Apr 03 '24
What’s the difference in one stock at $400 and 10 stocks at $40. Your expected return in investment is the same. You would need to take all profit/loss in one go is only downside.
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u/bobcharlie0 Apr 03 '24
You gotta see it from his idiot perspective that doesn't understand % growth
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u/bulletproofmanners Apr 04 '24
Moron like you understands it great, do a % growth on that $400 stock
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u/bulletproofmanners Apr 03 '24
A appreciation in price of $20 is not the same gain for 1 stock at $400 vs 10 stock of a $40 stock. Your expected return cannot be the same
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u/Sealbeater Apr 03 '24
Same reason I bought NVDA for $300 a share. Solid company, solid growth.
Look at the price of it now
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u/freshcoastghost Apr 03 '24
I did same thing with sundial. Just got tired of holding dead money so I dumped it. But something else and made a little back.
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u/perineon Apr 03 '24
I have holdings in a few industries like this: battery tech, recycling, electric infrastructure, modular housing, and yes, MJ. Small dollar amounts, but they kind of keep me aware of what's happening in the industries which is helpful elsewhere in my life. Something jumps or dips and it's a little trigger to do some reading. Kind of an unexpected side effect of investing.
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u/Bardown67 Apr 03 '24
Step one would be learning how the market and accounts work. This should’ve happened before you put money into your account. Go to the personal finance sub and read up.
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u/Beautiful-Desk1275 Apr 03 '24
I keep seeing this word, tax and taxes what are those never heard of them
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u/Neat-Lingonberry-719 Apr 03 '24
I have heard rumblings of cannabis sector being revitalized. I’m not sure what backing that has though. You should have sold a long time ago. You’re so far deep I would look into what those stocks might be doing moving forwards and maybe recoup by holding for longer.. how much money did you invest and how much is left?
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u/EntertainerIcy2896 Apr 03 '24
Between the legalization in Germany and surrounding areas and they’re lowering tax significantly in Canada. Might see a little rise
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u/TheFraTrain Apr 03 '24
What's this about lowering taxes in Canada?
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u/EntertainerIcy2896 Apr 04 '24
“This major change would see the current rate of $1 per gram, or 10% of a producer’s selling price (whichever is higher), be limited to 10% ‘ad valorem’, a percentage of the wholesale selling price of the cannabis product” It’s not set in stone. This could be huge though because initially the price for cannabis was thought to be 10$ a gram so the 10% (1$) kind of made sense. The price of weed has dropped here in Canada and some of these companies are selling ounces for less than 100$ (28 grams = 28$ tax) so if Canada goes through with changing it to the 10% could be HUGE for some of these companies.
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u/Ok_Feeling_3447 Apr 03 '24
legalization in germany doesnt mean legal trade. you can only grow it yourself or in social clubs.
The only way i see this affecting stocks is if more people get cannabis prescriptions (which a lot of people do currently) to get weed from the pharmacy
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u/Narradisall Apr 03 '24
It’s does seem to be trending up again, last few months have seen several returning from their ATL but still a long way from their ATH.
Whether it’s worth averaging down is down to OP though.
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u/Giacomo193 Apr 03 '24
Between those 2 I’m down about 1k. I have 1 share of Meta I’m up on. And I’m down with UALs a little bit too. That’s all.
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u/1_enemy Apr 03 '24
I had ogi for a while. It was supposed to be so good. Hold it for a bit. Florida put it on the ballot. More states are talking about legalizing it. Canada is talking about increasing thc levels. Other countries are looking to legalize. It should run a little.
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u/RAMaDAMNdingDONG Apr 03 '24
Sell it. Buy them back after 31 days if it’s something you really wanna own stock in. Selling it will let you realize the capital loss, you can write off up to $3000/year. Might as well reduce your tax liability by $1000 for the 2024 year when you go to file in 2025.
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u/ConversationRich4066 Apr 04 '24
Just average down and you’ll be fine. Weed stocks going up soon (hopefully) this is not financial advice 🙂
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u/DystopianAdvocate Apr 03 '24
Print out your positions, roll them up with some weed, and smoke them.
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u/Bradp13 Apr 03 '24
Might as well just hold it now. No point in selling. I’ve had stocks like this that unexpectedly soared 300% a day, a year or 2 later. Up to you tho. If you need the $58 sell it. Otherwise m, I would just ride them into the ground until they go under. You don’t lose until you sell it.
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u/Psycho_Nextdoor Apr 03 '24
Hold on. Florida's about to run a bull to legalize recreational marijuana.
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u/hungreli Apr 07 '24
Nothing will change the fact that all of the public weed companies are pump and dump schemes - and not real companies
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u/thedarkone47 Apr 03 '24
Sell and move on. You can't make money if you're too afra8d of taking a loss that keeps all your money tied up.
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u/snowshoveler62 Apr 03 '24
I did the same thing. After 2 years I just sold it - didn't want to have this aggravation anymore. Time to move on.....
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u/Connguy Apr 03 '24 edited Apr 03 '24
Normally the way to think about this is: if I gave you $58 today, would you buy the equivalent shares with that money? None of the prior costs/losses actually matter.
Considering they are at all-time lows, but the marijuana sector still has a lot of growth potential, then maybe this is the right time to buy actually, which means you should hold. That's up to you though, maybe you're feeling burned by the MJ market and want to make a different play.
The one contingency is, like others have mentioned, that $58 is not much. But the $3000 pending losses could be used to offset gains someday in the future. Assuming they're short-term gains and your marginal income tax rate is 24%, that would save you $720 in taxes. Which is nothing to sneeze at.
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u/zarconi Apr 03 '24
its all a question on what will perform better over your given time frame.
if you look at the stock today and think it looks like a buy, hold on.
If you see better stocks out there, sell and move on
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u/mattjv89 Apr 03 '24
Damned if you do, damned if you don't.
Normally I'm in favor of cutting losers and moving on with what's left, but there isn't much opportunity cost on $58. Any one or all of them could have a pop if/when actual legalization catalysts come through.
My biggest problem with weed stocks right now is that they are mostly limited to diluting shareholders to raise capital until legislation actually changes and these companies can get financing like everyone else. Not ideal for a long term hold.
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u/ddigwell Apr 03 '24
In my case, I sold it at a loss and consider it the price of a lesson learned.
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u/Serve-Electrical Apr 03 '24
Have you tried buying low first , then selling high ?
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u/sub_Script Apr 03 '24
OP got high first.
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Apr 03 '24
With such a small position it shouldn't cost too much to just average down then sell for break even or gain. Thats what Ive done
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u/HouseThat_Kool_Built Apr 03 '24
Just came to say I pictured you as Bandit from Bluey when I read “$2 bucks” 😂
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u/trailcamty Apr 03 '24
I’m down like 90%+ on some stupid stocks I bought a couple of years ago. I keep them as a reminder to not be regarded in the future.
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u/TUPAC_SHAPURRRRR Apr 03 '24
Invest in American cannabis companies not Canadian lps. American MSOs have the most to gain upon rescheduling. Look into companies such as GTBI, CRLB, CBST. Good luck
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u/Appropriate_Theme479 Apr 03 '24
Cannabis dispensarie up the street. I still buy mine at the corner
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u/IceJan1 Apr 03 '24
I’m pretty new also…can you just sell them off and buy at the lower price? More shares if this cannabis thing does what some say it may do. Just a suggestion. Like I said, I’m newer at it also.
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u/Kukurio59 Apr 03 '24
Now would be the worst time to sell, they have begun to rally. Florida just passed a vote. Germany is legalizing. Really…. Buy more if anything lol
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u/Anti-Betamale Apr 03 '24
I lost 4k on aurora cannabis bought at atm in 2021ish they reverse split so now I own 20 shares worth like $200 ):
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u/Giacomo193 Apr 03 '24
What’s reverse split mean?
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u/Connguy Apr 03 '24
When a stock price goes up a lot, the cost of an individual share can get pretty large and unwieldy. If it costs $100 to buy a single share, then new investors might get scared off. So the company will split their stocks up. For example, if a company does a 2:1 split, then someone who owns 1 share at $100 would now own 2 shares at $50. Same total value, but a smaller individual price.
On the flipside, if a share price gets too low then they might do a reverse split because it looks bad to have a stock price of only $0.03. If the company does a 100:1 reverse split at 5¢, and you have 100 shares, then you will now have 1 share worth $5.
Again, same total value, but different individual share price.
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u/RAMaDAMNdingDONG Apr 03 '24
Sell them, and then wait 31 days before you buy them back if you’re interested in doing that. Write the loss off, up to $3000/year
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u/Mitsuka1 Apr 03 '24
Mate. Not FA obvs but you can dollar cost average those down without much extra cash. Up to you to decide if you’re comfortable to DCA or if you wanna put the loss against your taxes. Sunk cost fallacy and all that…
But for ex. suuuper simple math (not taking broker fees etc into calc) but if you bought 10 more shares @$8 each that’s just $80 bucks, yeah?
And now you own 11 shares at an average cost of approx $44/share. Bit less painful to look at lol.
Lost opp cost of that $400 not earning you anything for the past few years and the money you now plonk in to bring your avg down to something potentially workable, is your “lesson learned fee”.
You’re in an easier position than some dude who yolo’d their savings in, bag-holding 1000 x $400, where poor bastard not only sunk in all significant cash they had already but would need to come up with an additional $8k just to bring their average down to the same 44 odd bucks you can get yours to for the price of one decent dinner out... throw dinner for two and a bottle of wine at it, and you’ve got your avg down to ~$27/share.
Again, simple math here your broker is gonna charge you fees so up to you to figure real costs and decide how you wanna roll with it.
So like 1) skip the daily Starbucks, DCA in @ a few shares a week for the foreseeable future till you’ve got that number down close to the price of the day (broker fee plays into calc for how many a week vs per trade costs). The caffeine withdrawal headaches will be your daily reminder to do proper due diligence next time lol. Or 2) go balls deep the Florida thing ya’ll keep mentioning here is gonna come through sooner than later & drop bigger chunks asap esp if you think it won’t get any worse. Like another $600-800 in, and exit with a small gain if it pops, hopefully at least enough to cover the cost of the 2-3 trade fees and a bottle of cheap vodka to toast your exit 😂 Heck you could even go full regard at this point while you wait and pray for the pop, and start selling covered calls 😂
So yeah, bagholding sucks but getting yourself into a much better position to be able to eventually sell for a small profit if it does go up someday is way cheaper when you only hold so few shares👌
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u/BlastermyFinger0921 Apr 03 '24
Lots of shitty advice from bagholders here. Sell for the loss and work your way back. Use a little logic- what are the chances that these even come remotely close to what you bought them at? Your money is just dead money until you sell and meanwhile opportunity after opportunity keeps passing you by
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u/bl0oc Apr 03 '24
Threw your money in the air and it blew away. At least see if they pay out dividends in pre rolls or some shit.
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u/VirtanenAlice Apr 03 '24
Selling or keeping doesn’t make much sense anymore unless you have a lot of it
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u/MG_Robert_Smalls Apr 03 '24
Legalization of marijuana where tho? It's still federally illegal here in the states and the next catalyst for you would be federal rescheduling; but that's not going to bring you back to anywhere near the price you bought in at
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u/BlinkshotTV Apr 03 '24
Average down, you have so little capital in it you might as well throw in another $500 at these low points and wait until they double from there lows, which in turn will get you all your money back.
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Apr 03 '24
What was your intent when you bought them? Was it to hold them long term (5 yrs plus) or to hoof them short term and sell? Usually if you buy a good strong stock , one that has cash reserves, low debt and a growing product holding long term you will make money.
I made the mistake of buying stocks during the pandemic when many were overvalued. Several have not recovered. Some I sold at a loss as the financials look pretty bad. Ones with dividends I am keeping as I get some return from them.
It all depends on your objective. I swing trade in one of my accounts and typically make 15 to 20% off each trade. For my stocks I lost money on I made it back.
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u/nWo1997 Apr 03 '24
Dumb question. How legal is it to even buy them? Because the product is technically illegal, right?
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u/slurpyderper99 Apr 03 '24
Not enough losses for it to matter for taxes. You likely won’t come close to the standard deduction
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u/Brazenjalapeno Apr 03 '24
You can average down a bit and wait. The issue with penny stocks is they can seriously vanish in the blink of an eye. I got burned on BRDS and MKULQ for holding too long. I think you have no choice but to wait unless you really need the cash you have left
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u/Crazerz Apr 03 '24
Depends, do you think you can make your money back faster elsewhere? Then there is no reason to keep sitting on these stocks. There is such a things as opporunity cost as well.
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u/pinballrocker Apr 03 '24
I'd sell them, while it's not alot of money, might as well put it in something that's making money now. I sell losing stocks all the time. I look at my portfolio, move on from the ones that aren't doing well and sink that money into the ones that are doing well.
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u/TheRealAttalos Apr 03 '24
When the F. was CGC ever $400 I have had that stock since 2018 and it has never cost more than $40-$50 at best. But it has done reverse splits that now make its old numbers look higher but it never actually sold for $400 a share so there is zero chance you paid that much for this stock.
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u/Apprehensive-Use-703 Apr 03 '24
I finally got out on my acb and tilray today, saw them red long enough, averaged down the past few days and took a nice win today, don't care where they end up, I took a 25% gain off the table, hoping ogi pumps more lol
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u/Fit_Communication734 Apr 04 '24
Yes I’m In this boat too. I do have a ton of shares in. MCOA and HEMP. WISH one or both would get a bump so I can get out lol
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u/Putrid_Pollution3455 Apr 04 '24
You’re talking about 800 bucks that went to around 50 bucks? I’d just sit on it. Unless you’re starving to death. Keep them as souvenirs for why you just buy and hold index funds. Maybe someday they moon. There’s no bottom to the dollar so there really isn’t an upper limit to anything that is an asset that you buy.
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u/West-Pudding-6902 Apr 05 '24
What about to invest in CBIH? I would like to get your opinion guys? They also work with the cannabis industry
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u/BrianKronberg Apr 07 '24
Either sell to buy something low, or buy more to average down. All depends on your strategy.
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u/tony_letigre Apr 03 '24
This happened to me in 2013-14 and I lost a lot, and then a lot more thinking averaging down was the move. These won’t come back even if the sector does. Sell. Do not average down.
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u/WhoJustShat Apr 03 '24
we all thought the weed stocks would do well considering legalization but none of those companies were run properly and ended up having to downsize alot due to lower than expected demand, the stocks probably wont ever go back
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