Baked In
Posts
🥸 Biden Flopped, Now What? 🥸

🥸 Biden Flopped, Now What? 🥸

William McNarland & Anthony Varrell
June 28, 2024

GM Everyone,

The debate came and went last night, and as expected, there was no mention of cannabis. The big takeaway from last night, though, is that Joe Biden is a certified “Weekend at Bernie’s” candidate, and much of the narrative this morning is about who is going to replace him. I buy into this narrative, but I also need to be a realist as we are 52 days away from the Democratic National Convention, and that would be a very tall task to execute. Regardless, I think this has no bearing on cannabis policy, as he really isn’t the one calling the shots, and the train has already left the station.

Today’s letter can be read in 7 minutes and 56 seconds.

What's Driving the Market Today?

Stock futures are slightly green this morning:

Trump leads post-debate polls, Biden's future uncertain.
Key PCE inflation data release expected later today.
French bond yields rise ahead of elections.
Japan's yen hits 38-year lows despite government warnings.
Nike's revenue forecast drops due to rising competition.

💸 High Impact

Ascend Wellness Is Ready For Ohio AU

The What - Ascend Wellness’s strategic placement of its dispensaries across Ohio is a critical component of its market leadership strategy. The company operates five dispensaries located in key urban, suburban, and rural areas, ensuring a wide market reach. One standout location is their flagship store in downtown Cincinnati, adjacent to the Hard Rock Hotel, Casino, and Convention Center. “It is a phenomenal location that our team identified and built a beautiful store there,” Hartmann remarked, highlighting the strategic importance of prime real estate.

In terms of future expansion, Ascend is prepared to adapt to any regulatory changes that might allow for additional licenses. “We are working on citing additional real estate should the expectation for the additional licenses come through as we expect,” said Hartmann, indicating the company’s readiness to scale operations in response to favorable regulatory developments.

While Ascend’s cultivation capacity in Ohio is currently modest, the company has made strategic supply arrangements to ensure a strong product offering in their dispensaries. “Our team has signed terrific supply arrangements to complement our Ohio grow,” Hartmann explained. This approach ensures that Ascend can meet customer demand while balancing its wholesale and retail operations effectively.

The Why - Ascend’s strategy varies by market, with some states like New Jersey and Illinois seeing strong wholesale operations. “In states like Maryland and Ohio, we will figure out the right balance of cultivation and production investment versus what we can source on the open market,” Hartmann added, emphasizing a tailored approach to each market’s unique dynamics.

Beyond Ohio, Ascend Wellness is eyeing growth in other key states, particularly Pennsylvania. With four dispensaries currently in operation and another under construction, Ascend is positioning itself for potential adult-use legalization in Pennsylvania. “We are excited about what we’re hearing out of Pennsylvania,” Hartmann noted, citing the governor’s support for adult-use cannabis as a positive indicator for future market opportunities.

Ascend’s broader expansion strategy includes increasing its overall footprint by 50% by the end of next year, with plans to grow from 36 to over 50 dispensaries. This ambitious goal underscores the company’s commitment to cementing its presence in existing markets and exploring new opportunities. “We expect to be over 50 by the end of next year,” Hartmann affirmed, signaling strong growth plans.

My Two Cents - Ohio adult use is here and just days away from coming online. We have talked about it, speculated on it, and hung on every word coming out of the state post the ballot initiative passing, and now we are here. The acceleration we expect from adult use activation is anticipated to be swift in terms of growth, which would be nice to see materialize as we have focused on Ohio for quite some time.

Expect this market to have an impact just like Maryland did last year in terms of top-line numbers for MSOs that have footprints ready to service the Buckeye State.

📈 Dog Walkers

UN Calls for Health-Focused Drug Policy

Yesterday, the UN Human Rights Chief called for a human rights-based approach to drug policies in a statement marking World Drug Day. The statement highlights the importance of shifting from punitive measures to health-focused strategies and urges global cooperation for policy reform.

Cronos Group’s Spinach Brand Thrives

Cronos Group’s (NASDAQ: CRON, TSX: CRON) Spinach brand is celebrating the summer season by introducing new product launches. These additions aim to enhance their product line with innovative and refreshing cannabis options for consumers.

Parallel Settles NY Suit

As of Wednesday, the open litigation against Parallel has been settled in the state of New York. This is one step in the right direction, with several steps left to go, as they are mired in litigation in other markets such as Florida. These suits have all alleged self-dealing within the company and its lending practices and seem to be falling like dominoes in terms of settlement. This will bode well for SNDL, which is going to be leveraging stakes in the Parallel footprint to gain exposure to the U.S. market.