All American

U.S. cannabis is a home grown industry.

Daily Recap

The U.S. cannabis industry is on fire, with total revenues last year of at least $50 billion —or roughly half of the total estimated U.S. market, allowing for illicit activities.

The problem is that while the demand for THC continues to soar as society shifts away from alcohol, that growth has been bifurcated across two channels: one (intoxicating hemp) is federally legal but illegal in select states, and the other is legal in most states but federally illegal and classified as a Schedule I narcotic, alongside heroin.

This is a (mostly) American industry at a time when the dependence on foreign supply chains is causing a lot of consternation. Per TerrAscend Chairman Jason Wild:

“93% of our COGS is in the US and we’ve been working for months on alternatives to the minority of imported inputs that we buy—but even if we had to get them from current sources, the impact from the tariffs on our total COGS would be immaterial.”

Still, as I was updating this policy document last night, I had to make an adjustment…

…to allow for the 60,000 Americans who have recently lost their jobs because the U.S cannabis industry continues to suffer from outdated policies and a profound parallel universe that was created by the 2018 farm bill loophole.

We’ve discussed the implications (here and here) but the ramifications continue to manifest, with the hemp trade infested with Mexican cartels and Chinese drug rings, while the companies and employees who’ve done everything by the book are treated like second-class citizens by their own government.

The U.S. cannabis industry needs a uniform regulatory THC construct given cannabis and hemp are the same plant—but until that happens, individual states will continue to shape their own policies, as we’ve seen these last several months.

Legends Box

A Republican Pennsylvania senator is calling for the creation of a state “legacy” fund, using tax revenue from adult-use cannabis sales to make long-term investments in the Commonwealth’s economy.

As the legislature debates various cannabis legalization proposals, Sen. Dan Laughlin (R) is making the case that beyond using tax revenue to fund immediate projects, the state should earmark a portion of the tax dollars to “provide a sustainable source of prosperity that lasts for generations.”

Open Season

NYS regulators are investigating some of America’s largest cannabis companies after receiving complaints they have been selling out-of-state cannabis to NY dispensaries, an illegal practice that is one of the industry’s dirtiest open secrets.

The OCM is investigating whether certain companies, including Stiiizy, the nation’s best-selling brand, laundered weed through a processor on Long Island, according to two people with knowledge of the matter. Stiiizy has denied any wrongdoing.

Going Dutch

The Netherlands expanded a government-run initiative allowing legal cannabis sales. While growing cannabis is still illegal, cannabis shops (known as coffeeshops) in 10 municipalities will sell marijuana from 10 licensed producers, including Village Farms.

“Weed was sold here legally for 50 years, but the production was never legal. So, it’s finally time to end that crazy situation and make it a legal professional sector.”

Stocks & Stuff

It was another volatile session as investors grappled with a new global roadmap, to the extent that any of them can locate a GPS. U.S. cannabis ETF MSOS lost a nickel, which is good for 2% these days, as it registered yet another all-time low.

Below, we’ll talk through the tariff turbulence, share some of the wisest eyes on Wall Street, map cash flow metrics, and elucidate why protecting the integrity of regulated markets is essential to consumer safety, public health, and the future of U.S. cannabis.

All that and more, just scroll down.

SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: $10M

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