Make America Green Again™️
U.S. cannabis has bipartisan support.
Daily Recap
Daily and near-daily cannabis use is now more common than similar levels of drinking in the U.S., according to an analysis of national survey data over four decades. Alcohol is still more widely used, but 2022 was the first time intensive level of marijuana use overtook high-frequency drinking.
In 2022, an estimated 17.7M people used cannabis (near-) daily compared to 14.7M (near-) daily drinkers, according to the study, and from 1992 to 2022, the per capita rate of reporting (near-) daily marijuana use increased 15-fold.
“A good 40% of current cannabis users are using it daily or near daily, a pattern that is more associated with tobacco use than typical alcohol use.”
SPY vs. HIGH
A farm bill battle is pitting hemp against its cousin (by marriage): cannabis. The fight centers on intoxicating hemp products, which have stealthily developed into a multi-billion-dollar industry subject to few rules and regulations.
Some canna companies and trade groups are pushing Congress to close the loophole that allows for the production and sale of intoxicating hemp-derived substances—but the hemp industry has a different ask of lawmakers: leave the plant alone.
“This will probably be one of the more interesting debates and discussions in the farm bill.” House Agriculture Chair G.T. Thompson (R-PA)
The People’s Court
Litigator David Boies, whose prior clients include former Vice President Al Gore and plaintiffs in the case that led to the invalidation of California’s same-sex marriage ban, led his team into a Massachusetts courtroom today on behalf of U.S canna companies.
A ruling on the motion to dismiss could take anywhere from weeks to months, legal observers said of the case, while the full lawsuit could take years to conclude, as it will likely be appealed no matter which side wins at the district level.
Baby won't you carry meeeee
The majority of Tennessee voters favor legalizing recreational cannabis. According to the latest Vanderbilt poll, more than half of Tennessee voters favor full recreational use of cannabis in the Volunteer State, let alone medical usage.
Nearly all of the states that border Tennessee have legalized cannabis in some form—mostly for medicinal purposes. Kentucky is the latest neighboring state to approve a medical cannabis program, while Missouri and Virginia both have full adult use.
Stocks & Stuff
Cannaland continued to struggle as the specter of a long rescheduling process with no perceived news until the other side of the comment period has the bears on the prowl and the bulls on their heels. U.S. cannabis ETF finished the session off 4%.
Given the ongoing concerns that a new administration could potentially arrest these positive canna developments, we’d be wise to remember how popular this issue has been polling (in Ohio, and Florida…) as we search for signs of further GOP adoption.
Below, we’ll chew through today’s price action, top-line oral arguments as the DOJ tries to dismiss David Boies, check our charts, sniff the sentiment, and explore why emerging concerns of the viability of this evolving canna evolution are overblown.
All that and more, just scroll down.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ PT Notional: $102M/ $77M
Top Stories
Daily marijuana use outpaces daily drinking in the US, a new study says
California Lawmakers Approve Bill To Legalize Marijuana Cafes
Minnesota’s Marijuana Law Makes Military Veterans Eligible For Social Equity
Majority of Tennessee voters favor legalizing recreational cannabis
Investigation into NY cannabis regulator Damian Fagon still going
New Cannabis Regulations in Bundestag: Traffic Rules, Cultivation Restrictions
One-third of Canadian cannabis users consuming illegal weed
Thailand's Cannabis Legalization Policy Needs Reform and Not a Reversal
Hemp and marijuana go to war 👇
Industry Headlines
Curaleaf Celebrates Miami North Biscayne Dispensary Opening
Cannabis companies square off with DOJ over federal cannabis prohibition
Massachusetts Federal Judge Wary of Nixing US Cannabis Laws
Pregame (written 7:30 AM) 👈
We limp toward today's hump after waiting for the watched pot to boil yesterday, only to see it simmer slightly into the close.
The known highlight today will be the oral arguments of the effort by the DOJ to dismiss a lawsuit filed by David Boies on behalf of a group of cannabis operators. That soap opera begins at 10:30AM ET and you can listen to it at 10:30 AM here.
Technically, we know the drill: MSOS held its primary trendline but the tone has been tenuous, at best, and the bulls are far frin out of the woods yet. Remember, our sector struggles came amidst a big-time risk-on rally; the other side of that is out there, too.
We spoke about a dearth of known catalysts on Monday and the perceived window for the bears to press. I've been sniffing at other potential headlines that could move our space and one stands out: a pro-pot pivot by the other presidential candidate.
The issue seems plausible for a populist: 91% of the country is supportive of cannabis legalization in some form, and the removal of the uncertainty (if the GOP wins in Nov.) would be enough to pull some (many) of the fence-sitters into the arena.
The timing isn't knowable, nor are there any guarantees it’ll happen, but yesterday we saw reports that the Trump campaign will accept crypto, and we know states' rights is a traditional GOP flex—and it's not like the Dems haven’t left themselves exposed.
Either way, I know one man who’s “a firm believer in mercy and second chances,” and that’s my friend Weldon Angelos, who was pardoned by Trump in December 2020 after serving thirteen years (of a 55-year sentence) for selling $900 worth of weed.
Hump Day Hash Out
As our regular 2% dip began, I couldn’t shake the thought from my head…
put another way, if the presumptive GOP presidential nominee came out pro-canna—through the lens of business, no less—it would chop off an entire tail of concerns and that, to me, is the most viable leftfield upside trigger.
…but I also knew it was in my head and it wouldn’t much matter, at least for today.
The bears were salivating as they swiped down at the MSOS primary trendline/ May lows, both of which resided a bit under $9, as we fired up David Boies on Line 2. To that end, while I’m no lawyer, I was told that a plaintiff loss today could actually help to expedite the process of pushing this issue to the U.S. Supreme Court.
The space sat stagnant as the hearing progressed and the judge moved from item to item and issue to issue, each of which triggered a particular pang of PTSD. ‘This has been some clusterfuck journey,’ I thought to myself as I continued to eye the landscape.
I listened to the USCC Zoom as I scanned various levels and pondered the fatal flaw of technical analysis: that stocks are better higher and worse lower. That can reasonably be said of sentiment, I thought, but it’s counterintuitive re: fundamentals.
MSOS ticked green (+.01) in the early afternoon but it got whack-a-moled as the tape pulled back for the first time in 47 years. If this morning we wondered what a risk-off tape might do to our fragile eggshell minds, it felt like we were about to find out.
By 3PM, the bears were pounding $9 bids again with hopes of triggering a technical panic into the Memorial Day weekend. They see the window to pounce absent news, and know the bulls will likely need a left field spark to shake the rewarded behavior.
The ETF traded as low as $8.84 (-4%) and closed thereabouts despite the broader tape recovering most of it’s losses into the close. The bears have the bulls on the ropes, no doubt about it, but tomorrow, as they say, is a new day.
Random Thought 🤯
Why not attach SAFE Banking to the Farm Bill for all of the new U.S. farmers?
Matt “Shooter” McGinley at Needham:
Results in the first quarter of 2024 continued the recent trend of improvements in topline, margin expansion, and better cash flow generation as operators continue to gain efficiency. Gross margin has now recovered to 2022 levels, and the SG&A rate improved for the fifth consecutive quarter. We expect Ohio to provide a single-digit lift in revenue for operators with assets in the state. Even without Ohio, we anticipate continued operating improvements throughout 2024.
Stems & Seeds
Enjoy your night, stay safe and please enjoy responsibly.
If you’d like to help Mission [Green] change federal cannabis policies, please click here.
CB1 has positions in / advises some of the companies mentioned and nothing contained herein should be considered advice.