Seismic Shifts

The cannabis landscape is taking shape.

Daily Recap

Bipartisan talks over a marijuana banking bill were “very productive” over the August recess, the office of the lead GOP Senate sponsor told Marijuana Moment, and a key Democratic chairman said an agreement on advancing the legislation is “imminent.”

Senate Banking Chair Sherrod Brown (D-OH) confirmed that lawmakers are closing in on a bipartisan agreement to move ahead with the legislation (PoliticoPro), which follows similar assurances from Senate Majority Leader Chuck Schumer last week.

Maryland canna retailers sold a record $92M of product during their second month of adult-use—that’s $2.8M per day—while Massachusetts hit the $5B milestone in canna sales after The Bay State generated consecutive record breaking months.

Medical cannabis patients saw an improved quality of life and lower pain, anxiety and depression after three months of use, a study shows and I can confirm, and that’s all before (potential) rescheduling allows for research that will help to demonstrate the efficacious agility of this magical plant.

Seismic Shifts

The news cycle of this past week hasn’t been lost on the forgotten tribe of canna bulls as the upside price action and massive volume awoke long-dormant animal spirits.

[total notional volume for the entire U.S plant-touching publicly traded universe was $18M last Monday. The last four sessions averaged more than $275M).

We used to contemplate what might happen if SAFE passed/ 280E went away/ stocks could list on major exchanges/ CPG M&A was back on the table/ institutions ungated/ MSOS trended on WSB/ there was insider buying and stock buybacks—but I’m not sure that anybody contemplated these catalysts potentially happening all at once.

[^ I’m not saying they all will happen bc real risks remain—DEA not playing ball, govt shutdown, stock market/ rates/ macro—and we still need to see where OH FL PA land, but the probability spectrum is adjusting through a rapid process of price discovery]

One of the most intriguing dynamics as we unpack this situation is the structural set-up, which could potentially turn nice into spice in short-order.

The timing of last week’s leak into the barren wasteland of summer’s end + the (listed and naked) short base + potentially seismic catalysts + napkin math suggesting a 2-3X fundamental turn sans 280E = perhaps the single best set-up I’ve seen in my 34 years on Wall Street.

And some would say the real buyer’s haven’t even entered the room yet.

Channel checks suggest there’s been minimal to no institutional buying, which makes sense given, ex-TerrAscend, none of these stocks can be held at Wall Street banks (and presumably won’t be able to until SAFE Banking is passed). We’re also told that legacy funds and momo guys aren’t chasing after being burned so many times before.

Meanwhile short interest on U.S. cannabis ETF MSOS increased 4% coming into today and we continue to hear that a cabal of evil Canadian hedge funds have been pressing and defending their short bets after getting trapped by the late-August announcement.

[we obviously can’t confirm whether that’s true but worth noting MSOS traded ~$15 in December on speculation that only SAFE would pass before the wish-list was in play]

[note/caveat: I’ve been bullish on U.S cannabis for well over a decade]

[note/caveat: this isn’t a call for the day/ week/ at all and is catalyst-dependent]

In other news, three-in-five Floridians support cannabis legalization as their Supreme Court weighs the reform ballot initiative; Labor Day weekend gave a lift to U.S canna sales (+8.4% vs previous wknds; +6.4% YoY); MSO CEOs implored NY Governor Kathy Hochul to let them enter the state’s adult-use market as the NYS Senate gets involved; border sales see a 2X boost for most marijuana retailers across U.S; the first concert allowing on-site cannabis use will be held in Illinois this weekend; I’m gonna front-run that by enjoying some kind bud at the Jones Beach Sting show Friday night; we spy new insider buys at TerrAscend, ponder the potential Reddit crack, offer random thoughts on the current condition, say the quiet part out loud and delve into the latest wild canna rumor/ conspiracy theory making it’s way around the street.

All that, and more, just scroll down…

SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ PT Notional: $255M

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