💸 The Tape

Americans are now more likely to use cannabis on a near-daily basis than to drink alcohol or smoke cigarettes. That's not an advocacy survey or a sell-side projection — it's the 2025 National Survey on Drug Use and Health, run by SAMHSA, released Monday.

The topline: 21.4 million Americans aged 12 and over report using marijuana on 20 or more days out of 30. Daily or near-daily alcohol use, measured identically, comes in at 17.2 million. Cigarettes register 19.9 million. Cannabis also clears nicotine vaping (17.5 million), smokeless tobacco (4.3 million) and cigars (2 million).

One caveat belongs up front, because it will get lost in the headline cycle: the cigarette figure counts only respondents who smoked on all 30 days — a stricter bar than the 20-of-30 threshold applied to cannabis and alcohol. Measured consistently, daily cigarette use would land higher. The alcohol comparison, however, is apples to apples, and cannabis takes it by more than four million people.

The trend line is the story

A single year of survey data is a snapshot. The trajectory behind it is the actual finding. Prior work using NSDUH data found the per capita rate of daily cannabis consumption has risen nearly fifteenfold since 1992. Separate research drawing on the federally funded Monitoring the Future study found younger adults are roughly three times more likely to consume cannabis on a daily or near-daily basis than alcohol. Gallup reached a parallel conclusion in 2024: more American adults smoke marijuana than smoke tobacco cigarettes.

Stack those together and this week's release stops looking like a milestone and starts looking like a generational substitution that has been running for three decades and simply crossed a threshold visible enough to make news.

The politics land awkwardly. Alcohol and tobacco — the two substances cannabis just passed — sit entirely outside the Controlled Substances Act. Cannabis remains largely federally prohibited, though the Trump administration has reclassified medical cannabis to Schedule III and is weighing broader rescheduling. The same survey also shows teen marijuana use continuing to decline even as adult-use markets proliferate, which quietly retires the single most durable argument prohibition advocates have deployed for a decade.

Now the part investors should actually care about

Here is the uncomfortable arithmetic. Consumption is at a record high. Legal revenue is not. Industry analysis reported earlier this year found legal marijuana revenue declined for the first time in 2025 — the first annual contraction the sector has ever posted, arriving in the same year daily consumption set a record.

That gap doesn't evaporate. It relocates. Twenty-one million near-daily consumers are buying product somewhere, and a growing share of them are buying it outside licensed channels — from illicit operators, from hemp-derived THC sold in gas stations and smoke shops under a federal loophole, and increasingly from intrastate markets where the tax stack makes the legal price uncompetitive. Federally funded research this year found precisely that: set cannabis taxes too high and consumers migrate to the illegal market. Polling has found the reverse also holds — restrict hemp THC products and consumers move toward licensed operators.

For anyone underwriting cannabis equities, that's the whole thesis in two sentences. Demand is not the problem. Capture is. Every quarter of MSO earnings that shows negative same-store sales against a backdrop of expanding consumption is measuring leakage, not consumer indifference. The addressable market is growing. The licensed share of it is shrinking.

Which makes the hemp regulatory question — and its November deadline — arguably more consequential to 2027 revenue than the rescheduling docket. Rescheduling fixes the tax line. Hemp enforcement fixes the top line. Only one of those is currently on a clock.

The alcohol trade is messier than it looks

The obvious pairing here is the cannabis-displaces-alcohol trade, and there's real support for it: beverage alcohol volumes have been under structural pressure for years, and the generational data is stark.

But the cleanest natural experiment available complicates it. SNDL Inc. operates both Canada's largest private-sector liquor retail network and one of its largest cannabis retail networks. In its June quarter, liquor same-store sales fell 6.2% — and cannabis same-store sales fell 4.6%. Both declined. If cannabis were straightforwardly eating alcohol's lunch, one of those numbers should have been positive.

The likelier read is that consumers are trading down and shopping around across both categories simultaneously, while a meaningful slice of cannabis demand exits the regulated channel entirely. Substitution is real over a decade. It is not reliably a quarterly tailwind, and anyone modeling it that way is going to be disappointed on schedule.

Worth noting that the industry's largest players are hedging accordingly. Tilray Brands just closed a fiscal year in which beverage revenue ($254.0 million) nearly matched cannabis revenue ($268.3 million), having acquired BrewDog outright. When the sector's most visible operator builds a beer business roughly the size of its cannabis business, that's a considered position on how cleanly the substitution thesis converts to earnings.

The bottom line

A federal agency just documented that cannabis is the most-used daily intoxicant in America, ahead of two substances that are fully legal, federally regulated, taxed at scale, and sold in every grocery store in the country.

The consumer verdict is in and has been for some time. What remains unresolved is whether the regulated market gets to serve that consumer, or whether it continues watching record demand route around it to unlicensed operators and hemp-derived competitors selling functionally identical products with none of the compliance cost.

Twenty-one million people, every day. The question for the next twelve months isn't whether the demand exists. It's who books the revenue.

📈 Dog Walkers

$SNDL ( ▼ 9.63% ) Is At An Inflection Point

SNDL Inc. (NASDAQ: SNDL) turned in a quarter that reads like two companies stapled together — one shrinking, one about to get considerably more interesting.

Start with the shrinking half. Net revenue fell 3.7% to C$235.8 million. Gross margin compressed 370 basis points to 23.9%. The company swung to a C$7.8 million operating loss from C$5.0 million of income a year ago, and adjusted EBITDA slid to C$12.5 million from C$19.4 million.

Most of the damage sits in one place. Cannabis Operations gross margin fell to 1.8%, down from 25.8% — a 24-point compression management attributes to ramp-up inefficiency on the Jeeter launch. That one should prove transitory. Less transitory: cannabis retail same-store sales fell 4.6% on market contraction in Alberta and Ontario, and liquor retail SSS dropped 6.2%. Every consumer-facing banner comped negative, which makes Jeeter a headwind stacked on a headwind rather than the whole story.

Now the interesting half. SNDL closed the quarter with C$183.2 million of unrestricted cash and no debt, C$598.5 million in total cash and investments, and free cash flow of negative C$6.7 million — actually a C$1.2 million improvement year-over-year. It also repurchased 11.7 million shares at a US$1.43 average, bringing cumulative buybacks to 29.0 million since Q4 2024.

Then, on July 27, the Parallel restructuring closed. Pending regulatory and Nasdaq sign-off, SNDL expects direct control of medical operations in Florida, Texas and Massachusetts — 56 dispensaries, three cultivation and manufacturing facilities, roughly US$150 million in annualized revenue. CEO Zach George floated combined revenue exceeding C$1 billion.

Clear that bar and SNDL becomes the first US-listed company consolidating plant-touching American cannabis revenue. That's the trade here: a debt-free balance sheet buying time for a transition the Canadian core can no longer fund on its own.

$JUSHF ( ▼ 6.2% ) Reports Q2

Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF) posted revenue of $71.3 million, up 10% year-over-year, with both channels pulling. Wholesale was the standout — $9.4 million, up 68%, an all-time record and the first quarter above $9 million, driven by higher production volumes and better product quality across every state but Nevada.

The footprint keeps widening. Jushi closed the quarter with 42 dispensaries across eight states, up from 40 in seven a year ago, and five vertical markets. In-house brands now account for 57% of retail revenue, and the company pushed out 501 new SKUs, including the Van Golden live resin launch in Pennsylvania. Ohio was the growth engine, adding $4.6 million in retail revenue on three new stores. Gross margin held at 44.2%, though income from operations slipped to $0.7 million and adjusted EBITDA eased to $13.3 million.

But the real story is Virginia, which delivered record quarterly revenue this quarter — retail up on a 10% increase in units sold across six dispensaries, and wholesale up $1.1 million on partner demand. That's the warm-up act. Virginia has now enacted adult-use legislation with sales beginning July 1, 2027, converting a limited-license medical program in a populous East Coast state into a full recreational market.

Jushi is unusually well-positioned for it: vertically integrated, already the incumbent, and operating stores that CEO Jim Cacioppo says were built "with adult-use demand in mind." The company is advancing cultivation and processing investments to meet the volume step-change. globenewswire

The catch is funding the build. Against $219.8 million of gross debt, $35.5 million of cash, and $9.9 million in quarterly interest, Jushi has roughly eleven months to scale capacity — and is openly evaluating financing options to get there.

📺 Trade To Black

What SNDL’s Latest Quarter Really Says | TTB Presented by Flowhub

• Revenue and margin both went backwards. Q2 revenue fell 3.7% to C$235.8 million, gross profit dropped 16.6% to C$56.3 million, and margin compressed 370bps to 23.9% — producing a C$7.8 million operating loss.

• The culprits were a mix of market and self-inflicted. Softening liquor and cannabis demand, heavier promotional activity, Jeeter production ramp-up costs, and a C$2.3 million SunStream writedown.

• The balance sheet remains the story. SNDL closed with C$183.2 million in unrestricted cash and no debt, repurchased 11.7 million shares for C$23.3 million, flagged C$20 million-plus in expected incremental operating income, and improved free cash flow to negative C$6.7 million from negative C$7.9 million — even while absorbing a C$6.9 million incentive payment.

• The U.S. build is the real catalyst. SNDL expects direct control of Parallel's medical operations in Florida, Texas and Massachusetts — roughly 56 retail locations and C$150 million in annualized revenue, pending regulatory approval.