Hat Trick
The Mindset Value Wellness 2025 Annual Letter
Disclaimer: The below post is the 2025 Annual Investor Letter that I sent to investors in the Mindset Value Wellness Fund. This post is NOT a solicitation. I talk about stocks that I own and my view of the future. It is imperative that you do your own due diligence and not rely on anything written below. I’m posting this in order to show how my writing translates to actual performance. With that, I hope you enjoy and gain insights.
The Mindset Value Wellness Fund gained 20.5% on a net basis during Q4 and finished up 6.7% year-to-date.
A Hat Trick: Three Positive Years in a Row in Cannabis
Cannabis investing has been far more volatile than I ever imagined when I launched this fund. We stumbled out of the gate after launching in 2022, but I’m proud to report that 2025 marks our third consecutive year of positive returns—a veritable hat trick.
I’ve spent time in the past publicly owning my mistakes, so allow me—briefly—to give both myself and the Mindset team a well-earned pat on the back.
The Mindset Value Wellness Fund is up 200% since the beginning of 2023, an astonishing return when you consider that the primary cannabis index, the MSOS ETF, is down more than 32% over the same period.
We have long argued that cannabis offers tremendous alpha due to several structural inefficiencies:
· minimal institutional participation
· limited quality research
· a lack of focus on unit-level economics
· and an obsessive fixation by many investors on federal reform, often without regard to cost structure or long-term competitive advantage
These conditions have allowed us to focus intensely on companies with durable cost advantages and on compelling special situations.
Out of 27 publicly traded U.S. cannabis companies, only six have produced positive returns over the past three years. Our portfolio performance during this period has been driven primarily by three companies—which also happen to be the top three performers in the entire sector:
· #1 Glass House Brands (OTC: GLASF): 67.46% CAGR
· #2 Grown Rogue (OTC: GRUSF): 67.45% CAGR
· #3 Vireo (OTC: VREOF): 55.6% CAGR
The next-best publicly traded cannabis company generated a positive CAGR of just over 27%.
These results are the product of a true team effort, including Fateh Mann, our Senior Analyst, and Caroline Farrell, our Head of Operations and Administration. I’m extremely fortunate to work alongside both of them.
However, we are not resting on our laurels. On the contrary, we are actively pursuing our next investments and positioning the portfolio for the next three years. Our focus remains unwavering: cost control, operational excellence, and capital discipline.
Trump Moves to Reschedule Cannabis
Last quarter, I wrote:
“While patience has been necessary and the waiting frustrating, we believe there is now a strong likelihood of meaningful federal reform before the midterm elections next year.”
In December, President Trump signed an executive order directing Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the Controlled Substances Act (CSA) in the most expeditious manner in accordance with federal law.”
In plain English: Trump instructed the Attorney General to move cannabis to Schedule III.
This was a historic moment in U.S. cannabis policy—arguably the first meaningful federal shift since cannabis was placed into the CSA as a Schedule I substance alongside drugs like heroin.
Without getting lost in procedural weeds, I now expect cannabis to be officially rescheduled sometime in the first half of this year.
Importantly, I view this announcement as the beginning, not the end, of the opportunity in cannabis. December’s news did not instantly make investors rich—because it isn’t the endgame. It is the first pitch, not the final inning.
I expanded on this idea in greater detail in a post titled The First Pitch.
Grown Rogue’s Cost Advantages Should Drive Strong Growth
One of the primary ways we have generated outsized returns in cannabis is by focusing on unit-level economics, particularly the cost to produce one pound of cannabis flower. From the outset, we have sought operators with genuine and sustainable cost advantages.
Our research revealed one of the great myths of cannabis investing: that cannabis is easy to grow.
This insight led us to become early investors in Glass House Brands and to “pound the table” in 2022 and 2023, when the stock price failed to reflect its cost advantages or the growth potential those advantages would unlock. Glass House could profitably grow cannabis when many competitors could not.
Since then, Glass House has significantly outperformed the broader cannabis sector and now trades at a healthy valuation multiple that reflects both its cost leadership and its growth runway as additional greenhouses come online.
While Glass House benefits from massive scale and state-of-the-art greenhouse cultivation, we believe Grown Rogue has developed a meaningful cost advantage in indoor craft flower. Our research indicates that Grown Rogue may operate at more than a 50% cost advantage relative to larger U.S. cannabis operators, who mainly grow indoors.
This advantage matters because it allows the company to operate profitably in markets where others cannot like in markets like Oregon and Michigan. Further, this allows the company to produce outsized returns when it enters markets like New Jersey with constrained supply.
In December, Grown Rogue announced it was sold out in New Jersey and had begun construction on Phase 2 of its indoor facility. The company has also started building a new facility in Minnesota—a market that is structurally short on cannabis flower and likely to remain so for some time.
However, there may be even more compelling opportunities not in traditional expansion through new licenses or greenfield builds, but instead with stepping into facilities abandoned by operators who could not compete or went bankrupt.
The cannabis industry is currently experiencing widespread distress driven by oversupply, falling prices, and capital scarcity. Based on our research, very few operators are capable—or willing—to take over these distressed assets and operate them profitably.
Grown Rogue has noted on recent conference calls that it is in discussions with cannabis lenders and cannabis real estate investors. Since the company operates at half the cost of peers, the opportunity to restart defunct facilities could represent a significant growth lever.
And what makes these opportunities especially attractive is the potential speed and capital efficiency. Instead of a two- to three-year buildout, these facilities could potentially be brought online in six to nine months with substantially lower capital expenditures. The incremental returns on invested capital could be materially higher for these distressed deals.
One of the major factors suppressing cannabis valuations has been the lack of visible growth pathways. Too many companies lack a clear plan for how incremental capital will generate attractive returns. Grown Rogue does not suffer from this problem.
We see a long runway for reinvestment and growth over the next three to five years, and it is our view that following a period of digestion and consolidation, both the company’s growth rate and stock price could inflect meaningfully this year.
New Opportunities Arise
We are currently working on new compelling transactions that may offer attractive yield along with substantial equity upside. We continue to be struck by the quality of asymmetric opportunities available in cannabis, largely due to the ongoing absence of venture and private equity capital.
These types of opportunities are increasingly rare in other sectors—and we believe they should continue to present themselves in cannabis.
More to come shortly.
Summary
In our view, reform marks the start of the game, not the end. We see a long runway of growth and a robust opportunity set ahead.
Our portfolio is likely to remain volatile in the near term, particularly given limited liquidity in publicly traded cannabis equities. However, just as the past three years have been rewarding, we believe the next three years could be even more compelling.
With meaningful catalysts, improving earnings, and strong growth prospects across the portfolio, we remain optimistic about both the near-term and long-term outlook.
As always, please don’t hesitate to reach out with questions or comments.
Sincerely,
Aaron M. Edelheit