Taxation Without Representation

The U.S. govt is choking the golden goose.

Daily Recap

Taxes derived from the licensed sale of state-regulated adult-use canna products was more than $4.4 billion in 2024, the highest total ever recorded in a single year, per the Marijuana Policy Project.

Cannabis sales generated the greatest amount of tax revenue in California (over $1B), followed by Illinois ($578M), Michigan ($524M), and Washington ($516M).

Since 2014, when Colorado and Washington became the first states to regulate adult-use cannabis, states have generated more than $24.7 billion in tax revenue from the sale of cannabis products—despite onerous and inconsistent federal regulations.

These businesses legally operate in 40 out of 50 states, employ 450,000 Americans, and generate over $35B in annual sales yet they are denied services from federally chartered banks and employees cannot obtain mortgages from traditional lenders.

Furthermore, these businesses cannot take traditional business deductions when filing taxes—resulting in effective tax rates often exceed 75%—and they can’t be listed on the NYSE or NASDAQ, while canna companies from other countries are listed on U.S. exchanges, obtaining significant financial advantages over American companies.

The Wishbone Offense

Governor Greg Abbott is approaching a crossroads and the future of hemp-derived products in Texas hangs in the balance. His decision attempts to navigate a conflict between the state’s medical cannabis companies and a powerful albeit unregulated hemp industry that is supported by significant voter and consumer pressure.

Abbott is in a tough spot. If he bans hemp-derived THC products, he'll appease many within the state’s political establishment but disappoint the growing number of Texans who consume these products.

Separately, a bill that would expand the Texas Compassionate Use Program (TECUP) to include pain as a qualifying condition and add additional medical dispensaries is also pending. The deadline for these decisions is June 22 and it’ll determine the future of cannabis policy in Texas.

West Coast Flavor

California wants to permanently ban hemp THC from the state, making it illegal to sell hemp drinks and potentially costing the state more than 18,000 jobs and billions of dollars in lost revenue.

The California Department of Public Health proposed the ban on Friday, which would make a controversial earlier emergency ban permanent, according to a CDPH. It is now in a 45-day comment period, with a public hearing planned next month.

Hopium Rising

In a private meeting last week with two members of the US House of Representatives, President Donald Trump, according to a staffer for one of the lawmakers present, said, “We’ll be moving forward soon with rescheduling marijuana,” per The Marijuana Herald.

The reported comment marks Trump’s first known statement this year on the federal cannabis rescheduling process, which began under former President Joe Biden.

Separately, cannabis advocate Weldon Angelos, who was pardoned by Trump in 2018, offered, “President Trump supports cannabis reform and is going to reschedule it.”

Stocks & Stuff

It was a green day on Wall Street as WWIII jitters faded, alongside the price of crude. Stocks closed higher, paced by tech, the dollar was flat, and the VIX closed under 20.

Canna stocks continued to trade in the ether, with $6M total notional on the MSOS. The ETF finished the session +2.3% but remains -42% YTD as Texas and Pennsylvania posture as potential month-end catalysts.

Below, we’ll top-line the latest, chew through the weekend chatter, update the recent exodus, hone in on hemp happenings, check growth in the regulated market, and see how much of the former would leak into the latter should the hemp loophole close.

All that and more, just scroll down.

SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: $6M

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