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🧐 24/7 OTC Trading Is Coming! 🧐

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William McNarland & Anthony Varrell
May 16, 2024

GM Everyone,

As of yesterday, the OTC Markets announced that they will implement 24/7 trading in the near future. Holy sh*t, in the bin of bad ideas, this is one that should never have seen the light of day. We all talk about how inefficient the capital markets are; well, this would give the algorithms and the market makers even more leeway to run amok throughout the cannabis sector. However, as it stands today, we are not sure much can be done about this. Even if companies were to take a stand, there isn’t really anywhere else to go. As if we needed more urgency to get regulatory reform and uplisting status for a sector that badly needs it.

Today’s letter can be read in 7 minutes and 45 seconds.

What's Driving the Market Today?

Stock market futures are slightly higher this morning; these are the top highlights moving the markets:

  1. U.S. inflation cools, sparking hopes for Fed rate cuts by September.

  2. S&P 500 and Nasdaq hit record highs; Treasury yields drop.

  3. Dollar experiences most significant one-day drop of 2024, boosting global stocks.

  4. U.S. economic surprise index is at its most negative since January 2023.

  5. Netflix's ad-supported tier reaches 40M users; Walmart earnings awaited.

Schwazze Q1 2024 Earning Report:

Facts that matter:

  • Schwazze reports Q1 2024 revenue of $40.2 million, a 3% decrease from $41.5 million in Q1 2023.

  • Adjusted EBITDA improved to $9.2 million from $8.7 million in Q1 2023.

  • Schwazze reports net loss increased to $16.1 million compared to $10.6 million in Q1 2023.

Quick Hit: Adjusted EBITDA for Q1 2024 was $9.2 million, up from $8.7 million in Q1 2023. The improvement was driven by operational efficiencies and cost management. Justin Dye, CEO of Schwazze, stated, “Our focus on streamlining operations and maintaining cost discipline has resulted in improved adjusted EBITDA despite the revenue decline.”

Analyzing Small Cap Stocks: Village Farms

Facts that matter:

  1. Village Farms’ transition from produce to cannabis boosts profitability.

  2. Village Farms reports a 49% increase in net sales for Q1 2024.

  3. Village Farms shows strong financial health with minimal debt and high asset value.

Quick Hit: Village Farms (NASDAQ: VFF), initially an agricultural company, has made a strategic shift over the last couple of years into the cannabis market. This shift has significantly enhanced its profitability and growth prospects. The company reported an earnings report, with net sales increasing by 49% for Q1 2024 to $37.4 million, up from $25.1 million in the previous quarter. Combined sales, including both produce and cannabis products, rose 21% year-over-year to $78.1 million. The company’s three-year compound growth rate stands at 18.9%, indicating consistent revenue growth.

Coverage Initiated: New Lake Capital Partners

NewLake Capital stands out in the small-cap stock market for its strong financials and its unique position in the cannabis sector. The company’s business model operates on a simple yet efficient premise where it serves as a landlord to cannabis operations, offering real estate solutions that are both strategic and lucrative.They take in the money from the cannabis companies and manage it. The company takes a narrow, thin charge for doing that.

Cresco Labs’ Earnings Report: Interview with CEO Charlie Bachtel

Facts that matter:

  1. Cresco Labs shows strong Q1 with $184M in revenues and $92M gross profit.

  2. Strategic foresight in Cresco Labs leads to canceling M&A for efficiency.

  3. Cresco Labs’ strategic market expansions poised to leverage federal changes.

Quick Hit: Cresco Labs announced a strong start to the year with Q1 revenues reaching $184 million, a gross profit of $92 million, and an adjusted gross profit rising to $95 million, a 7% increase from the previous year. Furthermore, the company achieved an impressive adjusted EBITDA of $53 million, marking an 82% increase year-over-year, and a substantial boost in operating cash flow to $36 million—up by a staggering thousand percent from last year. These figures clearly show Cresco Labs’ success in refining operational efficiencies and improving its core business strategies.

The Next Surge Of The Psychedelic Stock Renaissance | Trade to Black

Facts that matter: Join us on the TDR Trade to Black episode with Cody Shandraw, the President of the Healing Realty Trust, to discuss the next wave of the psychedelic renaissance. Cody has invested in over 50 psychedelic companies, including clinics, drug development, and emerging technologies. Cody has been looking very closely at the industry and makes his thesis known in this episode about why this might be the time for the next leg up in psychedelic stocks. Cody will also share his thoughts on the upcoming scheduled FDA review for Lykos Therapeutic in August and what may happen to psychedelic stock if approved. In addition, he will look at catalysts from the large pharmaceutical companies and why these companies are watching the psychedelic space so closely.