One Plant, One Law

Cannabis and hemp are the same thing.

Daily Recap

The sentiment surrounding cannabis stocks is the worst that I’ve seen in my 35 years on the Street and it’s not without good reason—the space was debanked a decade ago and custody & clearing privileges were subsequently sacked, which introduced the most onerous elements of the current conundrum that we face as a space.

Choking the emerging state-legal industry from the oxygen necessary to breath while at the same time, allowing intoxicating hemp-derived cannabis to operate across state lines sans the 75% effective tax-rate (due to IRC Sec. 280E) is the height of hypocrisy.

And it shouldn’t be one or the other: consumers should be able to enjoy state-legal cannabis and hemp derived beverages as long as they meet the safety standards of the state in which they’re served. Prohibiting hemp isn’t the answer, but standardizing rules and regulations most certainly is as we’re talking about the same plant.

If I had the opportunity to sit with President Trump for five minutes, I would attempt to impress upon him two points. The first is that Mitch McConnell already legalized weed in the 2018 Farm Bill, just without the safety protocols required at the state level.

So the first ask would be simple: one plant, one law. Let the A students who want to be graded get graded, and expose the C, D and F students who are selling poison and marketing to our children. That should be more than enough to keep the DEA busy.

The second ask would be in response to his post from a few days ago..

…and I’d spit out a few truths: The 10 largest U.S. cannabis companies have invested more than $10 billion in the last 5 years (industry total > $20B), generated more than $4.5 billion state tax revs in 2024 and employ 500K U.S citizens. Still, the industry can’t access U.S. banks or capital markets and they’re forced to list on Canadian shit-boards.

It’s time to stop the fuckery, do the right thing and reward the entrepreneurs and pioneers that have been the hallmark of this once great nation—because if we really want to Make America Great Again, we have to Make America Green Again.

MOAR Facts

We’ve documented the many reasons why the time has come to end the war on drugs and we’ll share them again for those who might have missed them:

U.S Cannabis: 500,000 American Jobs, $29B in sales; est. $37B by 2027

Policy Opportunities:

• Cannabis States’ rights (i.e., abortion).

• Embrace S3: business friendly (remove 280E tax code).

• Pass SAFER Banking and open capital markets.

• Support uplisting: U.S. companies should trade on US exchanges.

• Clemencies: previous pardons + First Step Act were great but there’s more to do.

Economic Benefits:

Jobs: Over 500,000 people are employed in the legal cannabis industry, highlighting its significant role in job creation and economic support. (Vangst)

^ none of these jobs are currently reported by the BLS.

Revenue Generation: The legal cannabis industry is a substantial contributor to the economy, with revenues surpassing $29 billion in 2023 and expected to rise to $37 billion by 2027 (Cowen)

Social and Societal Benefits:

Reduction in Opioid Use and Overdose: States with legal cannabis have reductions in opioid prescriptions, use, and overdose deaths, suggesting cannabis as a safer alternative for pain management. (AMA)

Impact on Teen and Underage Use: Legalization does not lead to increased cannabis use among teens. Regulated markets ensure better control over sales, reducing access for minors. (NIDA)

Health Benefits: Legal cannabis provides patients with access to medical marijuana, which helps manage conditions such as chronic pain, epilepsy, and anxiety, thereby improving quality of life. (Harvard Health).

The U.S. Department of Health and Human Services recommended changing the legal status of cannabis based on overwhelming support for medical benefits.

Support for Legalization: The overwhelming majority of American adults (78%) support the legalization of cannabis, recognizing its economic, medical, and social benefits; 91% of the U.S. population support legal cannabis in some form (Pew).

Negative Impacts of Cannabis Illegality:

Incarceration for Non-Violent Cannabis Offenses: Over 40,000 people are incarcerated for non-violent cannabis offenses in the U.S., with racial disparities disproportionately affecting people of color. (LPP)

Impact of Section 280E of the Tax Code: Legal cannabis businesses are subject to Section 280E, which prohibits them from deducting business expenses, resulting in effective tax rates as high as 70%, hindering growth and innovation.

Financial and Banking Restrictions: Due to federal illegality, cannabis businesses cannot accept credit cards, access U.S. capital markets, list on U.S. exchanges or obtain commercial debt, all of which create significant operational challenges.

Growth of black market, spurred by Chinese organized crime: As the federal government sits idly by, we have seen black market growth, supported by violent, organized Chinese crime rings. (link)

In other News…

SAM the Butcher

Nebraska District Court Judge Susan Strong has denied a motion that would have prevented the governor from acknowledging and signing the results of two medical marijuana ballot initiatives Wednesday. Approved by voters in the general election, the initiatives would legalize and regulate medical cannabis.

This lawsuit, filed by former state senator and lobbyist for the anti-marijuana group Smart Approaches to Marijuana (SAM), states that due to the U.S. Constitution's Supremacy Clause, Nebraska can’t have medical cannabis bc it’s federally illegal.

German Shepherds

A top German official has signed off on a plan to allow for research-focused commercial marijuana pilot programs to test legal and regulated access to cannabis for consumers—the latest iteration of the country’s legalization law.

This is not quite the second “pillar” of the legalization law that the government had pledged was coming, but it will make it so universities and private companies can apply for permits to participate in commercial marijuana sales.

Stocks & Stuff

Objects in motion remained in motion as the capitulation continued in Cannaland, slicing another 5% off U.S. canna ETF MSOS. 1-800-GET-ME-OUT has been a theme since February 2021 the election as funds liquidate and tax losses are taken.

Below, we’ll top-line the daily dance, discuss the current set-up and sentiment, dig deeper on looming debt maturities, spy and offsides and otherwise keep it real.

All that and more, just scroll down.

SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: $50M

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