Moscow Mule
Mitch scratches his seven-year itch.
Daily Recap
There was massive news over the weekend as the Senate reached a deal to end the longest shutdown in U.S. history. Allowing for procedural delays—such as what Sen. Rand Paul (R-KY) has threatened—the House will still need to pass the bill.
The explosive item for the cannabis industry was the inclusion of language from Sen. Mitch McConnell (R-KY) to ‘return the hemp language to its original legislative intent’ by banning the sales of intoxicating hemp, an item we flagged a few weeks ago.
The bill “prevents the unregulated sale of intoxicating hemp-based or hemp-derived products, including Delta-8, from being sold online, in gas stations, and corner stores, while preserving non-intoxicating CBD and industrial hemp products,” per a summary published last night by the Senate Appropriations Committee.
Legal hemp products would be limited to a total of .4 milligrams of total THC or any other cannabinoids with similar effects and, in a surprising move to many, there wasn’t a carve-out for low dose beverages despite insane demand and mainstream adoption across national retail chains such as Circle-K and Target.
Importantly, the new hemp rules wouldn’t take effect for a year, which would allow for legislative attempts to create a pathway for particular items—such as beverages—and as of the time of this publication, the Senate has yet to push this puppy through.
Why this Matters
The massive growth and widespread adoption of THC have been largely obscured by the bifurcation between the state-legal regulated cannabis complex and the largely unregulated intoxicating hemp channel, which proliferated via a loophole in the 2018 farm bill and manifested into a ubiquitous if not overwhelming reality.
That is not to say that all hemp operators are bad actors—far from it, there are a lot of good people who’ve built great businesses—but the obfuscation created by the farm bill provided open cover for cartels and crime rings. Clarity, by hook or by crook, will benefit consumers while providing tangible guardrails for law enforcement.
As cannabinoids merge into a single regulatory framework, the industry, or those who emerge, will benefit in kind and the stakes are huge, with a recent report suggesting that the medical cannabis market is poised to grow to $138 billion in the next seven years for a 26% CAGR (compounded annual growth rate).
Additionally, once the government opens and the intoxicating hemp loophole closes, if that is indeed the path, the stage will be set for President Donald Trump to deliver his decision on rescheduling cannabis, which would allow RFK Jr. and the U.S. gov’t the opportunity to finally study this magical plant.
No Stopper, Copper
Cannabis-related arrests far outpace arrests for other drug violations in jurisdictions where its possession and use remain criminally prohibited under state law.
In five states, more than half of all drug-related arrests reported by state and local law enforcement agencies in 2024 were cannabis-related and in nine other states, 40% or more of all drug-related arrests were for marijuana-related violations.
“The perpetuation of cannabis criminalization, and the vigorous enforcement of this policy by law enforcement in prohibition states, is a financially burdensome and terribly destructive policy that disrupts lives and has lasting consequences.
Joe and Crowe Know
Stocks & Stuff
It was a green day on Wall Street as the end of the gov’t shutdown took shape. The White House expressed support for the bipartisan deal that would ease an economic headwinds and provide clarity ahead of the December FOMC meeting.
Cannabis stocks were well bid, led by blow-out earnings from Village Farms and sparked by optimism of federal reform. U.S. canna ETF MSOS finished the session +11% (+23% YTD).
Below, we’ll synthesize current events and explore the implications across channels, categories, segments, and operators, and offer up a slew of random thoughts as the government mule stirs and the space begins to reheat.
All that and more, just scroll down.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: $67M
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