Monday Morning Point Guard
The June playoffs are set to begin.
Recent Recap
Welcome to June, a month chock full of milestones, from Father’s Day, to the Knicks returning to the N.B.A. Championship Finals to the adult-use ALJ hearing and a drop-dead Virginia budget deadline come month-end.
The last week of May saw early motion behind the scenes before late movement on the screens as U.S. cannabis C-suites execs prepared for what’s next. For the week, U.S. cannabis ETF MSOS was +12% (-3.5% MTD, -4% YTD).
In addition to the known catalysts, there are other potential milestones before the midterms, including custody and listing, as those arduous processes have begun, with several operators vying to be the first to jump the shark.
^ Verano and Vireo announced reversed splits this morning to position for uplisting.
And there’s the unfished business of clemencies, which were among promises made by President Trump when he campaigned for office. Those, too, could cross the tape, perhaps in time for the 250th American Anniversary next month.
The obvious question, at least heading toward the summer solstice, is whether these catalysts will rerate the sector prior to the events, or if they’ll require further evidence…
The ALJ hearing begins in 28 days and will finish less than two weeks after, which will also land in and around July 4th. Let freedom ring, in more ways than one.
Chart Check: MSOS
After basing above the cluster of moving averages, the ETF continues to knock, knock, knocking on the downtrend line from the top of the December rug.
Top Stories
Three States Challenge Trump DOJ’s Schedule III Cannabis Rule
Lawmakers Urge IRS and Treasury to Clarify Cannabis Tax Rules Following Rescheduling Order
Virginia Lawmakers May Use Budget to Revive Adult-Use Marijuana Sales After Spanberger Veto
Pennsylvania Medical Marijuana Sales Top $453 Million in Q1, Up 6% From 2025
Illinois Cannabis and Hemp Omnibus Bill Heads to Governor’s Desk
Minnesota Governor Walz Signs Landmark Cannabis Omnibus Bill, Reshaping State’s Cannabis Industry
New Jersey Lawmakers Send Hemp Beverage and Medical Marijuana Licensing Bill to Governor
Nebraska, Indiana, Louisiana sues over marijuana classification
$2.6B Farm Receipts is Largest Jump In Canadian Cannabis Production Since 2020
Grandma’s new remedy: Pot edibles
Industry Headlines
Rescheduling and the Path to U.S. Exchange Listings
Verano Announces 1-for-5 Reverse Stock Split to Prepare for Prospective U.S. Stock Exchange Listing
Vireo Growth to implement 30-for-1 share consolidation
Next Phase of Cannabis: Sam Brill on Growth, Competition, and Opportunity 📺
Dr. Dana Lambert on Andira and the Future of Cannabinoid Healthcare 👀
They Look at Me Like It’s Christmas and I’m Santa Claus (Glass House Brands)
Heard on the Street
“I remain confident that Schedule III will happen and that it will survive judicial review under Loper Bright just as surely as it would have under Chevron.”
Sugar Shane Pennington, Porter, Wright, Morris, and Arthur LLP
Hemp on the Hill
Hemp will have a slim shot in the House tomorrow, where any survivors will face a likely death in the Senate. We expect tweaks to the legal definition of full spectrum CBD but it remains to be seen if and how that would be addressed < November ban.
Meanwhile, US Cannabis Stocks Are Trading On Robinhood. What Does It Mean?
The RH listings are the first of many steps that we expect will democratize our space over the next few months; idk if I can say, ‘it’s still early,’ after a decade of pursuit but the reality is that for 99.99% of the investing population, it is.
ATB on U.S. Cannabis
The MSOS ETF rallied last Thursday, finishing the day up 10%.
We believe the move was at least partially driven by rumors around a potential NYSE up-listing of TSX-listed US operators (Curaleaf/TerrAscend) via ADRs, and potential inclusion of MSOs for trading in Robinhood (right now, only GLASF is on the platform).
While these are rumors, it’s a fact that MSOs have been preparing ahead of potential up-listings, for example by redomiciling from Canada to the US and consolidating shares (Curaleaf started this, and we expect certain other MSOs to follow suit).
We believe being early, and potentially first, in up-listing is an important factor that would help attract the initial wave of expected liquidity improvement in the sector.
The recent move in cannabis caught the eye of our quantitative / technical analyst Mark Derriet; certain names are starting to base, with Curaleaf being the strongest one.
While we expect the sector to remain volatile, fundamentally, Tier 1s still trade at <7x EBITDA, and we believe they should trade at >10x in a full rescheduling scenario.
As a reminder, the rescheduling hearing will start on June 29 and end by July 15. While there is no outside date for a final ruling, expect the DOJ to move fast, with a potential decision by late August.
Stems & Seeds
Cannabis compounds reduce alcohol consumption in rats, study shows
Take 20% off the Ignite it Chicago Cannabis Conference
Have a safe journey, 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.
Big Short guys
You posted The Big Shirt guys' 6-month-old projections for GLASF but their new #s are way higher.