Shake & Bake
I felt the earth, move, under my feet.
note: no paywall today; enjoy, and have a great weekend.
Daily Recap
The U.S. cannabis sector is looking for major markets to open up and jump-start sales growth over the next two years. Analysts and companies expect 2025 to be a boom if Florida and Pennsylvania legalize adult-use and cannabis sales in Ohio and New York begin to ramp, as expected.
We’re also likely to see regulators reschedule cannabis to a less restrictive category of drugs this year, but optimism is hard to find on further federal reform from there.
"Putting the pieces together, these catalysts outside of rescheduling will likely have modest impact on the 2024 P&L, but set the stage for meaningful contributions to the P&L in 2025." -AGP analysts Aaron “touch of” Grey
Tsunami Warning
Florida's cannabis market is on the verge of a massive shift as the state prepares to legalize adult-use marijuana this November. With a robust MMJ program already in place, with over 871K registered patients and $2B in annual sales, the Sunshine State is poised to become one of the largest, most lucrative markets in the United States.
The legalization of adult-use suggests that Florida could see $4.9B to $6.1B in sales the first year of implementation (June ‘25-May ‘26). The explosive growth presents a once-in-a-lifetime opportunity for the state's leading cannabis operators to capitalize on the expanded consumer base and skyrocketing demand.
Democracy Labs
Voters favor permitting state governments to establish their own canna policies free from federal interference, according to polling data surveyed in three states: Missouri, Ohio, and Wyoming.
Respondents in all three states—including majorities of Democrats and Republicans— strongly supported allowing states to set their own policies.
“The data is clear: midwestern voters want autonomy to develop policies that work best for them; voters understand the importance of having the right to choose what policies work best for them without interference from the federal government.”
Times Square Dancing
An Albany County Supreme Court judge wrote a decision Wednesday that invalidated the Office of Cannabis Management’s (OCM’s) entire slate of adult-use regulations—but he amended his decision to only void rules banning third-party advertising.
After shocking the industry with his initial ruling, Judge Kevin Bryant struck down New York’s marketing and advertising regulations, opining that the regulators’ advertising standards were “arbitrary and capricious,” and left the other regulations alone.
Stocks & Stuff
It was a seismic session in Cannaland and the symbolism was good and thick. After a few tremors this morning, U.S. cannabis ETF MSOS finished the session up 7% to eek out a positive week despite yesterday’s steel-tip boot to the groin. harshed mellow.
Below, we’ll contextualize the recent price action, chew through today’s fray on both sides of the border, calibrate our technical levels, check on state sales trends, and look forward to what we continue to believe will be an exciting month for cannabis.
All that and more, just scroll down.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ PT Notional: $178M ($106M)
Top Stories
Florida's Cannabis Market Set to Explode with Adult-Use Legalization
New Markets Poised to Lift U.S. Cannabis in 2025
Judge walks back order invalidating all of New York’s cannabis regulations
Voters Strongly Support Letting States Make Their Own Marijuana Laws
These 23 States, DC Collected $2.9B in Cannabis Excise Tax Revenue in 2023
Delaware on track for starting recreational weed sales.
Black market cannabis thrives in California despite legalization
Hawaii House Passes Bills To Expand Marijuana Decriminalization And Create Expungements Process
Industry Headlines
Sen. Padilla pushing DEA to reschedule marijuana soon
Planet 13 Grand Opening for DAZED! Lounge at the World’s Largest Dispensary
Village Farms International Named Fastest Growing Cannabis Company by Financial Times ‘Americas’ 👇
Reflections (written 7PM last night)
[yesterday’s] massive volume made me think that those with deeper pockets made a stand, pulled the rug and did what they had to do to accomplish their mission.
^ broader market/ buyer's strike/ lack of custody/ no order books/ extended charts likely all contributed. We discussed the potential for a false breakout all session but it cut deeper than expected, despite the open interest stickiness at $10.
The post-earnings/ pre-next catalyst ether is where a matter of trust and leap of faith will go a long way bc as we saw [yesterday], bears are prone to protect their turf when backed into a corner/ in the face of major technical breakout.
I’ve been wrong as rain on DC timing so suffice to say my personal April wish-list is a DEA ruling + SAFER thru the Senate (+full passage by summer); confident that bw SIII + banking, custody + exchanges will follow and we'll finally get to the starting gate of big ticket institutional adoption/ cap tables.
Initial support is in the low $9's, trend channel support arrives around $8 (depending on when) w moving averages laced along the way, while bears will embrace and try to amplify a double top narrative w side of trapped bulls, courtesy of the false breakout.
No news will likely be no bueno given the run—and there's market risk—but we didn't come this far to come…this far, and knew we'd need to go through it to get to it.
Keep your head up. P&Ls should never dictate post-market moods although they do, sometimes, but hopefully not today given the catalysts we perceive directly ahead.
Freak Show Friday
Battered and abused U.S canna bulls edged out of today’s gate after yesterday’s melt knowing outsized moves tend to test the prevailing direction at least once the next day. The Canucks were equally wary and uncharacteristically docile despite a bounce in the broader market.
At 10AM, Sen. Majority Leader Chuck Schumer sent sent his Dear Colleague letter to the Dems outlining his priorities ahead of the Senate’s return Monday, which included, “the opportunity to safeguard cannabis banking in the weeks and months ahead.”
It was great to see the reflexive venom and disbelief in response to his latest promise as that bar should remain low until it's cleared—but if they plan to get this bad boy on the tape by the summer, as some have speculated, it will likely have to hit the Senate floor this month; and yes, I think we’ve gotta shot at seeing that happen.
At 10:23 AM, the ground began to move beneath our feet and that’s not a metaphor—an earthquake shook our building, which is about 16 miles from the epicenter—and I couldn’t help but appreciate the symbolism.
The morning after (that all happened) was dominated by upside tries in MSOS w $9.75 and $10 as incremental technical resistance/ steppingstones. The Canadian kind was a bit more digestive, with many of the proxies trading 5-10% lower after huge rallies.
nibbling back at some tilly upsides into $2.50 after taking that trade w an eye toward more meaningful support at $2, if/when. idea here is to have some trading inventory for sale on positive headlines, bc not a fan of the name long-term.
Into the early afternoon, MSOS was +3.5% as the adage, ‘stairstep up, elevator down’ came to mind following yesterday’s earthquake. Insofar as that script likely continues until our catalysts arrive, I, like you, look forward to soon channeling some Carol Ann.
Around 2PM, we saw this trade go up…
13:58:48 MSOS color, customer sells 5,000 May 7 Puts @ $0.26 to buy 5,000 May 14 / 16 Call Spread for $0.23 .. collected 0.03 as package 5,000x
…which was in addition to the 22K May 17-19 call spreads that were bought yesterday prior to the melt, and we know two things: 1) MSOS options are where dreams come to die, particularly as they pertain to predicting politics and 2) sans news, custody or volumes, the outsized open interest has routinely overwhelmed the price action.
When today’s dust settled, it was a better day than yesterday but overall, it was a fairly quiet, nondescript week, or at least that’s what one would think if they looked at the final figures. MSOS, with all it’s shimmers and shakes and real seismic quakes, landed eleven cents higher than where we entered this stretch.
ATB on U.S. canna sales
According to data from nine US markets covered by Headset, March total cannabis sales increased 9.3% m/m (and 4.3% y/y).
Maryland started adult-use sales on July 1, 2023, and generated total sales of $96.6mm in March, up 9.3% m/m.
Michigan sales increased 14.0% y/y on unit growth of 45.3%, driven by a 21.5% decrease in avg. item price and 833 licensed dispensaries in March 2024 (16.2% increase y/y), of which 781 are licensed for adult-use sales (up 19.1% y/y).
Florida sales increased 17.7% y/y on unit growth of 14.9%, with a 2.4% increase in avg. item price, 628 dispensaries (up 14.0% y/y), and patient growth of 9.2% y/y.
Stems & Seeds
Groundbreaking study cracks one of pot's greatest mysteries
Enjoy your weekend, 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.
only skimmed; have to read later, but thumbs up for working Carole into a good headline. + "seismic session"
enjoy your weekend.