Green Shoots
U.S canna stirs beneath the surface.
Daily Recap
Former President Donald Trump is going after Vice President Kamala Harris over her prosecutorial record on marijuana, claiming that she put “thousands and thousands of Black people in jail” for cannabis offenses.
Trump’s line of attack is notable given the 2024 Republican presidential nominee is implying that he disagrees with criminalizing people over marijuana and is moving to leverage the role that Harris played in racially disproportionate mass incarceration.
Front Nine
Missouri sold more cannabis than Colorado in the first six months of the year, reaping $709M in total revenue from all legal adult transactions. That ranked the Show-Me State fifth in total sales nationally, per Green Market Report.
California brought in $2.1B in revenue, topping the list. Michigan was next with $1.6B in sales, followed by Illinois ($847M) and Massachusetts ($795M).
Poll Position
A UNF poll of likely voters in Florida released on Tuesday found strong support for amendments that would legalize marijuana and enshrine abortion rights in the state.
According to the poll, which was a random sample of 774 residents, Amendment 3, “Adult Personal Use of Marijuana,” had the support of 64% of people asked and 31% said they would vote “no.”
Shawn Hemp
As part of a government effort to encourage the use of more environmentally friendly building materials, the U.S. Environmental Protection Agency awarded a $6.2M grant to a nonprofit that works with hempcrete, a concrete-like material made with hemp.
The idea is to make hempcrete better known to manufacturers and builders in order to lessen dependence on concrete and other materials that cause more greenhouse gas emissions.
Stocks & Stuff
The crying waiting game continues in Cannaland as the DEA digests the rescheduling comments and the sector readies for earnings, which will begin on Monday w Ascend and Green Thumb. Volumes remain anemic, if not apathetic, in the absence of news.
U.S. cannabis ETF MSOS finished the session -2% and is again near the March lows, a level its toyed with and teased for over two months after being rejected once again at the 200day moving average.
Looked at another way, MSOS was breaking $5 last August; two weeks later, it traded $10. Right now, we're pretty much splitting the difference and on fumes, no less, as we await a series of potentially seismic catalysts while staring at a wall of worry.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF notional: $73M
Top Stories
Trump: Harris Jailed Thousands And Thousands Of Black People Over Marijuana
Missouri sells more cannabis than Colorado in first half of 2024
EPA Awards $6.2M To Promote Hempcrete
Ohio’s Adult-Use Cannabis Dispensary Licenses Now on Deck
Minnesota Preapproves Over 3,000 Marijuana Business Licenses
New York’s Operation Padlock closes 1,000 illegal cannabis shops
I'm a very conservative Republican. Here's why I support legal Florida cannabis
Thailand Decides Not To Re-Criminalize Canna And Eyes $1B Medicinal Industry
Industry Headlines
Trulieve Cannabis donates $5 million more to adult-use campaign in Florida
Green Thumb Announces Opening of RISE Dispensary East Syracuse
Mercer Park Opportunities Corp. Announces Completion of IPO
Cannabis Rescheduling ‘Done Deal,’ Story Cannabis CEO Says
A preview of second-quarter cannabis earnings
A Political Shocker Paves the Way for a Bull Run in This Sector
Lay of the Land
We’ve seen several potential green shoots across cannabis this week, not that any of them will matter until such time they’re confirmed by higher prices (MSOS > $8.20).
Still, given the dog days of summer, with regard to both the calendar and the price performance, it was nice to see some positive movement under the hood.
In no particular order:
Verano-Cannabist: a rare win-win deal and the first canna transaction of note in ages. George gets VA (+ deeper in AZ) and CBST lives to fight another day while making a case for a SOTP valuation.
Tilray earnings beat and guided street higher: I’m not a huge fan of the stock given the fugazi math, relative valuation (20x EBITDA vs MSOs at 7x) and that its more a beerco than a cannaco but it remains a psychologically important vehicle.
BoJo comments (below); while nobody knows what the future holds and there maybe confirmation bias in play, his view jibes with what we’ve heard re: Trump (supportive of S3, banking and states' rights).
Ohio is edging closer to launch adult-use cannabis sales after the DCC has more-or-less completed its licensing process to allow existing cultivators, processors and testing laboratories to participate in the state’s adult-use marketplace.
Kamala Harris—the first major Presidential candidate to support legalization—is expected to announce her running mate by Tuesday, when they’ll hold their first rally in Philadelphia. PA. Gov. Josh Shapiro is the odds-on fave on PredictIt (78%), which would be positive for U.S.—and potentially, Pennsylvania—cannabis.
And given the implications of a younger and more diverse Democratic ticket…
…we’ve got a good shot a pot pivot as the odds of this becoming a political football increase in kind. The question remains: when will President Trump show his hand?
Earnings are coming and while we're not expecting many upside surprises given the consumer stress, the bifurcation will be on full display, w winners positioned to play offense (Verano) and others in need of federal help, if not more.
96 days until the election, which has implications for everything from canna policy to social mood, if not strife; be safe, maintain perspective and think positive.
Just as tech rose from the post-Y2K ashes and evolved into everything that everyone thought technology could and would be, so too shall canna; we just gotta get there.
The Garland Zone™️
One of the in-the-knows recently shared that we could see a final rule published by Aug. 6th (40 min. mark) and while that remains to be seen (bc nobody knows), we do expect Cole Memo 2.0 around the same time, which will help elucidate how it’ll all fit.
Curaleaf Chairman Boris Jordan on U.S. cannabis:
"Don’t think we’ll get an ALJ hearing bc this will be litigated anyways—it will go to court—so why push a hearing when you know it will go to court anyways? Having a hearing is only a minor help to court process since someone will submit a lawsuit in 5th district in TX, elsewhere to get favorable judges.
Question is whether they get an injunction? If they publish the rule → no injunction, we win. If there is no standing for injunction, we are in good shape. Think the risk is post-rule, not pre-rule—but think post-rule chances are very good, as well."
AGP on U.S. cannabis earnings:
We look for 2Q prints to be broadly in-line with sales expectations (flat or up slightly), with continued margin improvement. For 2H catalysts that impact the 2024 P&L, we'll be interested in German trends (following 4/1/2024 reform), timing of adult-use sales beginning in OH (retailers awaiting COs), along with continued store openings in key states and wholesale opportunities.
Additionally, we'll look for comments on updated tax strategies following the IRS PR clarifying its stance, and whether it causes MSOs to adjust plans announced during 1Q earnings season.
We expect questions around notable catalysts to continue, including the potential timing of a Final Rule rescheduling cannabis to Schedule III before the election (comment period ended 7/22) and prospects for FL's adult-use measure passing.
Stems & Seeds
CBD Lotion Tied To Reduced Skin Damage From UV Rays, New Study Finds
The Oscars of Cannabis: Cannabis industry makes history at California State Fair
Have a safe journey and 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.