The Super Bowl
Canna emerges as a political football.
Daily Recap
Former President Donald Trump says he is starting to “agree a lot more” that people should not be criminalized over marijuana given that it’s “being legalized all over the country,” adding that he will “fairly soon” reveal his position on the canna legalization measure on the November ballot in Florida, where he is a voter.
“As we legalize it, I start to agree a lot more because, you know, it’s being legalized all over the country,” Trump said at a press conference at Mar-a-Lago Thursday. “Florida has something coming up. I’ll be making a statement about that fairly soon.”
The former President would be a welcomed ally as the industry battles Governor Ron DeSantis and his newest lapdog, Ken Griffin, over the Florida Nov. ballot initiative.
Across the Aisle
VP Kamala Harris and her new running mate Gov. Tim Walz just became the first major party ticket to support federal legalization of cannabis. Harris, who prosecuted canna offenders as a prosecutor, has since used her position in the senate and oval office to push pro-cannabis legislation.
Walz, who has a strong history of supporting cannabis reform, including signing the bill to make adult-use of cannabis legal in Minnesota, is equally onboard.
“The War on Drugs was an abject failure. It's time to legalize marijuana and bring justice to people of color harmed by failed drug policies.” VP Kamala Harris
Moore of This
The governor of Maryland said the mass pardons he issued for prior canna convictions was about more than addressing the public policy consequences of criminalization.
Moore, who issued over 175,000 pardons for cannabis and paraphernalia convictions in June, said the move was “important because I want people to be able to better enter into an economy” and also because he “did not understand how we continue to punish people for something that’s no longer illegal in my state.”
Stocks & Stuff
It was another quiet session in Cannaland when, into the last hour of trading, and just as the sector began to fade anew, former President Donald Trump said this…
…which triggered a bevy of buying and lifted U.S. canna ETF MSOS 10%, right into the resistance at the March lows, at least for the time being.
Below, we’ll dig into the levels, set-up, earnings and implications of today’s news.
All you have to do is scroll down.
SPY 0.00%↑ QQQ 0.00%↑ IWM 0.00%↑ MSOS 0.00%↑ ETF Notional: 104M
Top Stories
Trump Says He Agrees People Should Not Be Criminalized Over Marijuana As More States Legalize
Kamala Harris Picks Pro-Cannabis Minnesota Governor as Running Mate
People line up at Ohio dispensaries for first day of recreational cannabis sales
Florida recreational marijuana initiative has raised $66M
Harris-Walz Is First Major Ticket To Support Cannabis Legalization 👇
Industry Headlines
AYR Wellness Earnings + Call Notes
Village Farms Earnings + Call Notes
Cresco Labs Earnings + Call Notes
Terrascend Earnings + Call Notes
Verano sees Virginia as ‘highly accretive’ – with or without adult-use
4Front Expands Product Line Up in Illinois and Massachusetts with Smoke Breaks
Pregame (written in real-time at 6:45 AM) 👈
Lots of earnings to digest/ still to come and we know what's on tap, catalyst-wise, even if the precise timing isn’t unknowable. Between here and there, we'll have to navigate shitty charts and even-shittier sentiment, which continues to self-fulfill as stocks break support levels and then fail at those newfound resistance zones.
It's been a long year since last August, when MSOS was breaking $5 and the despair was similar—but if I said to you last Sept. after the two-week stock price double, that we'd have the set-up we do now, the candidates we have now, and the levels we're at now, most of us would be entirely more optimistic than we are now. true story.
The risk, of course, is that our sector, absent news, continues to be dust in the macro winds, on whisper-thin volume, which could continue the slow motion capitulation that's been in place all summer. I mean, the bears have no incentive to leave until the food supply dries up, or they get it shoved us their ass.
Cresco and Villy report this AM, among others, and J-dubs and others this afternoon, before Freaky Friday and our requisite respite. And if you're waiting for canna to be tabled on the campaign trail, you're not alone. It is high up on the Dems messaging re: Walz but there is more to come, from both camps, as we edge to November.
Good luck today; think positive; be grateful.
The Here and Now
They say that false moves lead to fast moves. We saw that after the false breakout at the end of April, and we may be seeing the same set-up evolve the other way.
While it remains to be seen what the former President will say regarding U.S. cannabis, we do have a sense of where he’ll land given what we’ve discussed in this space.
The readthrough has implications across several dynamics, from the Florida vote to allaying fears that he would repeal Schedule III to the potential halo effect that this could have on passing SAFER banking in the lame duck.
This comes as the Democratic ticket has postured a positive stance on the issue, but has yet to mention it on the campaign trail. After six years of being lied to by Sens. Schumer and Booker, stakeholders are understandably wary of any more talk in the absence of a tangible walk.
We still face structural challenges—without custody, it doesn’t take a lot of capital to push this sector around—but with the meat of earnings done, the specter of change afoot and 88 days until the election, our space is officially now in play.
Timing is Everything
Charlie is likely the most plugged-in CEO of the space and while the first sentence of that second graph is true enough, the last sentence is intriguing, as well.
ATB on Ohio
According to initial commentary from companies with a presence in the state, the launch of AU sales has resulted in a notable step-up of daily sales, with some companies seeing Tuesday’s first-day sales values generating a week’s worth of cannabis sales value, reflecting a roughly 700% increase in one-day sales.
While sales will normalize to lower daily values over time, we believe Ohio could see sales 2x to nearly $1bn in the 12 mo., which could prove conservative. Assuming all 126 medical dispensaries currently operating are converted to dual-use, the average store in the state could initially approach $8.0mm in annualized sales per store and be a key growth driver for MSOs in H2/24e.
Of the public MSOs we track, 10 have a presence in the state. Acreage Holdings, Inc. has the highest relative retail exposure at 21.7%; Acreage is pending acquisition by Canopy USA, LLC, a US-domiciled company, followed by Ascend Wellness (relative retail exposure of 13.5%), Cresco Labs (7%), Green Thumb (5.2%) and Verano ( 3.5%).
Matt “Shooter” McGinley on Verano:
We expect a sequential build in revenue into '25 that, in combination with Verano's lean operating structure, should result in margin upside and strong cash flow generation. Acquired assets in AZ will add scale and boost its retail base from 6 to 8, while VA assets are likely to contribute little to topline under the medical program but could become material contributors when that state eventually establishes its adult-use program, in our view.
Viridian on U.S. cannabis:
CANNABIS DEBT MARKETS ARE ON FIRE!
Better-than-expected deals $TSNDF $JUSHF $AAWH
Why is credit so enamored all of a sudden?
We think they've embraced the CF+ impacts of S3 even while the equity market couldn’t seem to care less.
Stems & Seeds
Animal Feed Officials Are Considering Hemp Seed for Chicken Feed
Have a safe journey 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.