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Marijuana Stocks Underperformed in 2018: Here’s Why — 5 Points

1. Surprisingly, Marijuana stocks have had a rough year in 2018. This past year has been groundbreaking in the pot industry. Canada legalized recreational marijuana. Two more U.S. states, Utah and Missouri, legalized medical marijuana and two others, Vermont and Michigan, legalized adult-use recreational marijuana. Despite this growth pot industry, stocks have faltered.

2. Specifically, the Horizons Marijuana Life Sciences ETF, which is the first publicly traded exchange-traded fund (it debuted in 2017), “was down 45% year to date, and has given up better than three-quarters of its gains since inception.”

3. Why have marijuana stocks performed so poorly this year? The following 3 reasons help to explain, in part, why stocks have been underwhelming. First, there has been a shortage of cannabis, for two reasons. 1) Cannabis growers haven’t had time to complete their grow and sell their product; 2) In Canada, there is a lot of red tape surrounding pot production and distribution. Canadian pot growers need a cultivation license, and it is taking a while for the government to keep up with the influx of applications.

4. Second, since about mid-October, investors have been scared away from pot stocks. Earning results weren’t as substantial as expected, and now actual earnings is becoming more important than potential earnings. Specifically, “Seven of Canada’s largest growers combined to lose nearly $300 million in their most recent quarter.”

5. Lastly, not many marijuana stocks “have been able to secure access to nondilutive financing options. The result has been a reliance on bought-deal offerings to raise capital.” Bought-deal offerings can be fine, but they can also weigh on a company’s share price, as well as potentially leading to reduced earnings per share.

Source: https://www.fool.com/investing/2018/12/26/3-reasons-marijuana-stocks-went-up-in-smoke-in-201.aspx

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Chicago Sun Times Lists Top 10 People in the Cannabis Industry in 2018

1. Charlie Bachtell — CEO and Co-Founder, Cresco Labs.

2. Ben Kovler — CEO and Founder, Green Thumb Industries.

3. Teddy Scott — CEO and Founder, Pharmacann.

4. George Archos — CEO and Co-Founder, Verano Holdings.

5. Mark de Souza — CEO, Revolution Enterprises.

6. Dina Rollman — Chief Compliance Counsel, GTI and Founder, Illinois Women in Cannabis.

7. Dan Linn — Executive Director, Illinois NORML and General Manager, Maribis

8. Donte Townsend — Founder, Chicago NORML.

9. Kelly Cassidy — Illinois State Representative (Democrat, Chicago).

10. Heather Steans — Illinois State Senator (Democrat, Chicago).

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The Cost of Tariffs: U.S., China Trade War Resulted in Billions of Losses for Both Economies in 2018 — 5 Things to Know 

1. The trade war between the United States and China resulted in billions of dollars in losses for both sides in 2018. The auto industry, tech industry, and agriculture industry in the two countries took the biggest hits.

2. Specifically, “due to Beijing’s tariffs on soybeans, corn, wheat and sorghum alone,” the United States and Chinese economies each lost around $2.9 billion annually. China is the worlds largest soybean importer and relies on the U.S. for $12 billion worth of soybeans. With the tariffs, though, China has had to import soy from Brazil instead. For the U.S., this dropped the price of soybeans per bushel from $9.76 to $8.75 from July to December.

3. Overall in the agricultural industry, U.S. exports to China fell by 42 percent, or $8.3 billion, in the first 10 months of 2018 compared to a year earlier. Specifically, soy farmers in North Dakota, which exports crops to China, are facing “$280 million in losses because of Beijing’s tariffs.” Mark Watne, president of the North Dakota Farmers Union, added, “You could almost put another $100 million on top of this because all commodity prices are down and that affects North Dakota farmers indirectly.”

4. Not only did the U.S. and China lose money in the agricultural market, but “China also suffered as products such as phone batteries were hit by U.S. tariffs, and customers began looking to buy from other countries.” Specifically, tariffs on imported Chinese products cost the tech industry $1 billion per month.

5. Retail, manufacturing, and construction also drove losses after the tariffs were imposed. The Dallas Fed said, “Input price pressures remained elevated in part due to tariffs, particularly in manufacturing and construction, and firms were struggling to pass these higher costs onto customers.” GM, Ford, and Fiat Chrysler said tariffs will cause a loss of $1 billion for each of their companies in 2018.

Source: https://www.reuters.com/article/us-usa-trade-china/trade-wars-cost-u-s-china-billions-of-dollars-each-in-2018-idUSKCN1OR1JH

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Pot to Continue Growth in 2019: Analysts Predict $16 Billion Investment into Industry Next Year — 4 Things to Know

1. In 2018, investors put $10 billion into the legal cannabis industry in North America. That $10 billion was already two times more than what was invested in the previous three years combined. That number is expected to continue to grow in 2019 — Beau Whitney, vice president and senior economist at New Frontier Data, predicts that investors will put $16 billion into the pot market in the coming year. 

2. Whitney claims that as the marijuana industry continues to grow, investors will have more clarity and a higher incentive to invest. “Investors are getting much savvier when it comes to this space because even just a couple of years ago, you’d throw money at it and hope that something would stick. But now investors are much more discerning.”

3. Previously, investors, including big name corporations, were hesitant to invest large sums of money into the industry until more states began legalizing weed. Now, with 66 percent of U.S. states legalizing marijuana in some capacity, and more planning to make that move, investors are much more likely to dive into the industry. Even Coca-Cola, for example, has stated publicly that it has interest in joining the industry and just needs a few more states to legalize the product recreationally.

4. Additionally, to start 2019, Democrats will take control of the House and “want to use it next year to pass legislation that eases federal restrictions on the legal marijuana industry.” Accordingly, legislation allowing state-approved commercial cannabis activity under federal law would “open up banking for the marijuana industry nationwide and make it easier for cannabis companies to secure capital.” This, of course, would incentivize further investment into the industry.

Source: https://www.northbaybusinessjournal.com/northbay/sonomacounty/9113889-181/north-america-legal-cannabis-industry

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Sears Chairman Eddie Lampert Submits $4.4 Billion Bid to Save Company, 50,000 Jobs — 5 Points

1. On Friday, Sears Chairman and former CEO Eddie Lampert announced that he is submitting a $4.4 billion takeover bid for the U.S. retailer. In October, Sears filed for bankruptcy, and it has been trying to escape both liquidation and laying off 10,000-plus workers ever since. 

2. Lampert’s $4.4 billion bid is being backed by “$1.3 billion in financing from three different financial institutions.” Bank of America Corp, Citigroup Inc, and Royal Bank of Canada are those backers. Lampert and Sears are hoping the money will preserve around 425 yet-to-be-closed stores along with keeping 50,000 workers, out of the 68,000, employed. 

3. An ESL Investments (Lampert’s hedge fund) spokesman said, “Factoring for all considerations, we believe that our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation. Much work remains and there is no assurance our proposal will be completed.”

4. The next step for Sears is to determine whether the bid is viable. It is possible that the company could still reject the bid. And, without a proper, viable bid or another buyer (which a bankruptcy court judge must approve of), Sears would have to close permanently after 125 years.

5. Sears employees are desperately hoping that the bid helps the company stay open. Not only do they want to keep their jobs, but they feel particularly attached to the company. Bill Rudolph, a Sears employee, said, “It was a place where people cared for each other. Mattie Hughey, another employee, added, “It feels like family.”

Source: https://www.nytimes.com/2018/12/28/business/sears-retirees-alumni-meetings.html / https://www.reuters.com/article/us-sears-bankruptcy/sears-chair-lampert-makes-4-4-billion-bid-to-keep-retailer-alive-idUSKCN1OR1NM

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All is Not Well at Wells Fargo: Bank Pays $575 Million to Settle Claims Over Opening Fake Accounts — 5 Points

1. The United States claimed that Wells Fargo, an American multinational financial services company, “created phony accounts and committed other customer abuses.” Essentially, the bank allegedly opened fake accounts without the knowledge of customers. On Friday, Wells Fargo agreed to pay $575 million to settle those claims. 

2. This settlement is between Wells Fargo and attorneys general from all 60 states and the District of Columbia. In response, Wells Fargo CEO said, “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”

3. The bank has been under investigation since 2015, when the company “acknowledged that employees had opened millions of fake bank accounts for customers in order to meet sales goals.” Wells Fargo also stated that it sold auto insurance and other product to customers who did not need them. 

4. The bank will now face stricter regulations and pay over $1.2 billion in penalties. Additionally, as part of the settlement, “Wells Fargo will create a customer restitution review program to refund customers who have not gotten compensation from remediation efforts already in place.” Over the next three years, Wells Fargo plans to lay off over 10 percent of its workforce to cut costs. 

5. California Attorney General Xavier Becerra said, “Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products – from bank accounts to insurance – that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.”

Source: https://www.cnbc.com/2018/12/28/wells-fargo-to-pay-at-least-500-million-in-settlement-with-us-states.html / https://www.nbcnews.com/news/us-news/wells-fargo-pay-575-million-settle-state-investigations-n952846

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3 Thoughts on Business Development, The Economy From Les Stern, Marketing and Market Research Consultant

Question One: Please introduce yourself, including what you do.

My name is Les Stern. For the last 19 years I have run an independent marketing and market research consultancy – L. Stern & Associates. Our emphasis is healthcare, but that is not exclusive. I have more than 35 years of marketing and market research expertise. Before that, I was a newspaper reporter. I have a BJ (journalism) degree from the University of Missouri, and an MBA from the University of Chicago Booth School of Business.

Question Two: Is the economy moving in the right or wrong direction? 

That is really hard to say. There is so much good and so much bad.  On the bad side, there is still discrimination. There is still price gouging. There is still sexual harassment. There is still a quest for profit at all costs. I am a free market person.  I do not believe in wage or price controls. But I do believe you need to treat people humanely. I am very disappointed that the corporate tax cuts did little to spur employment or an increase in real wages. One time payouts do not accomplish anything long term. Sad to see so much of that money going into stock buybacks. ON the other hand, there is a lot of good. They are becoming customer focused and are spending a lot of money determining what customers want and coming up with innovative ways to do that. Innovative companies like Amazon and Apple are successful because they understand the customer. That also applies to companies like Starbucks. There are also a lot of progressive companies that are making sure there is equity in the workplace. On the whole I am an optimist, so I am hoping the positives eventually will win out. I am counting on the millennials to do that.

Question Three: What are your top 3 tips for successful business development?

1. One of my favorite quotes is from Samuel Goldwyn, who said: “The harder I work, the luckier I get.” So tip #1 is work hard. My best example. More than 10 years ago I drove from Northbrook downtown to a luncheon I really did not want to go to. However, there I ran into a former colleague who introduced me to someone who, if I did a flowchart tracking my sources of revenue, would be my #1 source of business.

2. Understand your customers. Sitting in your home office and assuming you know your customers want is a recipe for disaster. I have experienced it at other organizations. You need to talk with your customers.  

3. Don’t try to grab every nickel on the table. The best way to ensure long-term financial success is to sacrifice a little in the short-term. And it is OK to tell clients or customers you did not charge them for something.




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The Latest in the Mueller Investigation — 5 Things to Know

1. The Justice Department, and Robert Mueller, have “all but declared” Trump to be guilty of two campaign violations. First, they believe that Trump conspired with Michael Cohen, his former lawyer, to silence Karen McDougal and Stormy Daniels, two women with whom Trump allegedly had affairs. 

2. According to Mueller and the Southern District’s sentencing memo, “with respect to both payments,” Cohen “acted in coordination and at the direction of Trump.” Furthermore, according to the prosecutors, Cohen and Trump “sought to influence the election … by orchestrating secret and illegal payments to silence two women who otherwise would have made public their alleged extramarital affairs with [Trump]. In the process, Cohen deceived the voting public by hiding alleged facts that he believed would have had a substantial effect on the election.”

3. For the second violation, the prosecutors believe that Russia reached out to the Trump organization as early as 2015. Specifically, “By that November, the Russians were reaching out about ‘political synergy,’” according to the sentencing memo for Cohen.

4. Mueller and The Justice Department seem confident in their reports, but moving forward and finding a definite ruling is complicated. These claims rely on information from Michael Cohen, who has previously admitted to lying to Congress. 

5. Trump has taken to Twitter to respond to the investigation. On Saturday, he wrote, “AFTER TWO YEARS AND MILLIONS OF PAGES OF DOCUMENTS (and a cost of over $30,000,000), NO COLLUSION!”

Sources: https://www.cbsnews.com/news/key-takeaways-memos-michael-cohen-paul-manafort-muellers-investigation/ / https://www.usatoday.com/story/opinion/2018/12/09/robert-mueller-donald-trump-campaign-russia-collusion-question-column/2237140002/ / https://www.npr.org/2018/12/08/675004122/what-to-make-of-the-latest-developments-in-the-mueller-investigation

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Holiday Shop Early: It May Be Harder to Find Toys This Year Without Toys R Us — 5 Points

1. In the wake of the closing Toys R Us, it will likely be more difficult to find the most popular toys at retail stores this holiday season. Toys R Us was “America’s only nationwide specialty retailer dedicated to toys.”

2. Toys R Us wild purchase toys in December because the company could spread the sale of those toys into January, February, and beyond. Other retailers, however, can’t buy an excess of toys in December because they won’t sell in the following months.

3. Target, Best Buy, and Walmart have announced plans to expand their toy sections for the holiday season. Still, these companies can’t buy the amount of toys that Toys R Us did, as their “focus inevitably shifts” away from toys after the holiday season.

4. Now, with a lack of accessibility to popular toys that are already being purchased. Isaac Larian, CEO of toy company MGA Entertainment, said, “A lot of scalpers buy these and charge people two to three times more.”

5. Larian added, “We try to make sure to ship enough goods that [scalping] doesn’t happen, but [popular toys are] selling more than we expected.” It is likely that many will not be able to find their favorite toys in the coming weeks before the holidays.

Source: https://www.businessinsider.com/toys-out-of-stock-more-exec-says-2018-12

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Amazon Looks to Move Checkout-Free Stores Into Airports — 6 Things to Know

1. Amazon is creating the future in airports. According to public records, Amazon is looking to bring additional checkout-free stores to airports. This is in an attempt to sell products to time-pressed travelers. 

2. Amazing has been creating and developing checkout-free stores for months. Customers enter the store by scanning their phone, cameras identify what items were taken from the shelves, and “when shoppers are finished, they simply leave the store and Amazon bills their credit cards on file.”

3. Seven checkout-free stores have been created by Amazon since January, located in Chicago, San Francisco, and Seattle. 

4. Currently, Amazon is “evaluating top U.S. airports for new locations.”

5. There are, however, concerns that Amazon faces in putting these stores into airports: 1) Workers would have to get clearances to “staff concessions” after they go through security. 2) Stores in busy sections of popular airports are expensive to lease. 3) “Many airports are publicly run and require would-be concessionaires to put in public bids for retail space.”

6. Still, many airports, like Dallas Fort Worth International Airport, are working hard to gain an Amazon Go location. There is no announcement yet regarding how close Amazon and various airports are to landing a deal.

https://www.reuters.com/article/us-amazon-com-store-exclusive/exclusive-amazon-targets-airports-for-checkout-free-store-expansion-idUSKBN1O60FU