Fast and Furious
Daily Recap
The obvious focus today was on the reaction to news that the DEA granted a hearing on December 2nd, which would push federal rescheduling past the election.
While this was a disappointment to stakeholders hoping to skip this step, the process is the process, and it will presumably be more durable once all the boxes are checked.
There were a variety of views on what this might mean but one thing was crystal clear: this additional step wasn’t well received on this last day of Mercury Retrograde in thin, end-of-summer holiday trading.
Project Right Now 👀
Lest this note finds its way to the screens of either political campaign, we’ll share the logic and reasoning on why U.S. cannabis must wiggle away from the War on Drugs:
Popularity: An overwhelming majority of American adults (78%) support legalization of cannabis, recognizing its economic, medical, and social benefits, and 91% of the U.S. population supports legalizing cannabis in some form (Pew).
Economic: U.S canna employs 500K Americans in state-legal jobs (Vangst) who sold $29B worth of product last year, which is estimated to grow to $37B by 2027 (Cowen).
Health Benefits: Legal canna provides patients with access to medical cannabis that helps manage conditions such as chronic pain, epilepsy, and anxiety, and thereby “improving quality of life.” (Harvard). (broader list of indications here)
The U.S. Dept of Health and Human Services has already recommended changing the legal status of cannabis based on overwhelming support for medical benefits.
Wellness: Opioid Use/Overdose: States with legal cannabis saw reductions in opioid prescriptions, use and overdose deaths, suggesting that it’s a safer alternative for pain management (AMA).
Teens/Underage Use: Legalization doesn't lead to increased cannabis use among teens as regulated markets ensure better control over sales and reducing access for minors (NIDA).
Criminal Justice: We can’t replace the lost time for those who have been or remain locked up for non-violent cannabis offenses, but we can get on country back on the ride side of history.
Over 40,000 people are currently incarcerated for non-violent cannabis offenses in the U.S., with racial disparities disproportionately affecting people of color (LPP).
Citizen Safety: As the federal government continues to impose onerous and arguably illegal taxes on state-legal operators, the illicit market has proliferated, supporting violent, organized Chinese crime rings.
Stocks & Stuff
The volatility was fierce today as flustered holders weren’t keen on the notion of an additional rescheduling step. U.S. cannabis ETF finished the session -13%, broke the August lows and is now trading at levels last seen in December.
Since last summer, the rescheduling process has taken meaningful steps that included comprehensive endorsements from the FDA and HHS and a supportive legal opinion from the OLC. Ohio onboarded, margins (for the most part) improved and the space is trading near trough multiples ahead of a Florida vote that continues to poll strong.
Below, we’ll dive into numerous reactions to the recent news, explore the implications for the underlying names, update the technical take and do our best to keep it real.
All that and more, just scroll down.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: $114M
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