Angels & Demons
The push-pull continues in canna.
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It’s January expiration tomorrow, the first since the last expiration, which was the day after President Trump’s historic Executive Order to reschedule cannabis.
$505M notional traded in the ETF that day (MSOS finished that session -27%, before losing another penny on the final expiration Friday of the year.
President Trump said that day, December 18th, that “this will be the law of the land in 30 days,” while the EO itself said to ease federal restrictions on cannabis and increase research of medical cannabis “ in the most expeditious manner possible”
This was consistent with the story arc that we (were one of the few to) narrate and amplify in this space throughout 2025, and it’s one we believe we continue.
The Trump administration spent the last year busting Chinese crime rings and Mexican cartels and shuttering illicit grow operations and vape manufacturers before Congress set a timer on closing the intoxicating hemp loophole.
Most investors thought a Trump administration and GOP-controlled congress would be the third coming of Prohibition, which is why the cannabis sector spent the first half of last year in the toilet—but promises made were promises kept.
I don’t know when Pammy will Pam and the final rule will post but we continue to take POTUS at his word that he will follow through on his campaign pledges or S3, banking (capital markets), clemencies, and states’ rights.
And yes, we believe we’ll see more—perhaps a lot more—prior to the midterms given the youth vote polling and the loss of (some of) the crypto crowd. More here, here.
Top Stories
Legal Cannabis Sales In U.S. Pass $2.3B In December, $27B in 2025
Flurry of cannabis M&A that followed Trump EO a sign of things to come
Republican Lawmakers Openly Defy Trump On Cannabis Rescheduling
Texas Medical Canna Finally Poised To Boom, But One Major Obstacle Remains
Smart & Safe Florida Raises More Than $52M to Support 2026 Initiative
Gov. Andy Beshear Cuts Ribbon At Two Of Kentucky’s Medical Cannabis Facilities
Campaign To End $1.6B Massachusetts Cannabis Industry Likely To Proceed
59% Of Indiana Voters Support Legalizing Adult-Use Canna, 84% Support MMJ
Medical Cannabis Finally Rolling in Alabama
Like Standard Drinks, but for Cannabis
Industry Headlines
Ascend Announces Opening of New Dispensary in Englewood, Expanding Ohio
Verano Upsizes Revolving Credit Facility to $100M and Extend Maturity Date
Safe Harbor Expands Consulting and Managed Services Platform
OTC Markets Group Welcomes Cannara Biotech Inc. to OTCQX
TDR: Michael Bronstein, President of ATACH
Random Thoughts
We edge into tomorrow’s expiration with the last expiration still staining sentiment.
I’ve seen posts re: market makers manipulating markets to inflict maximum pain on holders and as we saw, they’ve gotta lotta firepower when they need it.
A final rule will go a long way toward regulatory clarity although (amigo #2).
Will the 5-10% chance of a legal stay give new investors pause? 🤷♂️
The WH isn’t happy with the price action since the EO, or that US canna has to list in CAD, but timing a Trump Truth (re: listing) is trickier than trying to game a final rule.
POTUS is aligned with an American Cannabis First policy and there’s simply no way to do that without access to custody, listing, capital markets, M&A, et al.
The growth is coming (post-hemp + new states), regulatory parity has been ordered, and we hear of a possible settlement with the IRS, as opposed to prolonged litigation.
GOP Congressmen filed a bill to delay the hemp ban by two years but it remains to be seen if Moscow Mitch or Andy Harris let any extension pass; hemp will remain a fluid situation into November.
Schwab has banned trading in select Canadian cannabis companies but we’re told it has more to do with internal small cap volatility rules vs. anything to do with canna.
Chart Check: MSOS
This year’s price action has been like Pinocchio’s girlfriend (tell the truth, tell a lie, tell the truth, tell a lie) as we edge higher on light volume. It’s quiet, but that’s subject to change ofc.
Mood Ring
In a normal world, Wednesday’s relative 💪 in cannabis would be a tell but 1) we’re Abby-normal sans reg parity, and 2) volumes were so light it’s hard to tell what’s real; still, investors remain super-depressed, although a select few have a dash of hope.
AGP 2026 Cannabis Outlook
To summarize, we view the scenario of rescheduling becoming effective (280 benefit and first domino), cannabis banking reform (exchange listing, capital markets and strategics) along with more markets legalizing (return to robust growth) sets up the bull case scenario for re-rating with each of these steps building momentum for the next domino to fall.
ATB on U.S. Cannabis
We reiterate our bullish call on MSOs for 2026.
Our thesis is simple: We view rescheduling as the most likely scenario this year. Upon materialization, we project >100% equity upside driven by significant multiple expansion.
The Valuation Gap: Tier 1 MSOs currently trade at <7x EBITDA. We believe a rerating to >10x EBITDA is justified post-rescheduling.
Why 10x? Our confidence in this multiple is supported by three pillars:
Fundamental Fair Value: Our DCF-based models support intrinsic valuations at these levels and higher upon reform.
Investor Sentiment: Our Fall 2025 Investor Survey indicated that the majority of buy-side participants view >10x EBITDA as the appropriate fair value under a rescheduling scenario.
Historical Precedent: As shown in the chart below, the sector has reached 10x during previous periods of regulatory optimism.
Stems & Seeds
Scientists Resurrected Extinct Cannabis Enzymes And Traced The Drug’s Origins
Have a safe journey, please enjoy responsibly.
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CB1 has positions in/ advises some of the companies mentioned and nothing contained herein should be considered advice.
The tension between enforcement against illicit operations and closing the intoxicating hemp loophole reflects the complexity of federal cannabis policy evolution. Your point about the Trump administration's approach—targeting Chinese crime rings and Mexican cartels while setting a timer on hemp—reveals a strategic enforcement framework that most analysts missed. The "promises made, promises kept" narrative you tracked throughout 2025 is particularly compelling given how many investors expected Prohibition 3.0. The fact that GOP Congressmen filed a bill to delay the hemp ban by two years while Moscow Mitch and Andy Harris remain wildcards shows how fractured the conservative position has become on this issue. The real story is regulatory parity creating the foundation for American Cannabis First, regardless of expiration volatility.