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đź‘€ Closing Time For Earnings Season đź‘€

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William McNarland & Anthony Varrell
May 15, 2024

GM Everyone,

Earnings season is pretty much coming to an end after the reports we received this morning from Cresco Labs and AYR Wellness. Both, at first glance, have a lot to like, though there are a couple of speed bumps evident in the quarter. These final reports will give us a complete picture to evaluate the cohort of cannabis companies leading the pack as we barrel into the second half of the year (holy sh*t, time is flying). Charlie Bachtell, CEO of Cresco Labs, will be joining us this afternoon to discuss the latest quarter and maybe provide some real insights into what is happening in Washington. See you at 4 pm!

Today’s letter can be read in 6 minutes and 56 seconds.

What's Driving the Market Today?

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

  1. U.S. stocks hit new records, boosted by positive sentiment from recent producer price data and comments by the Fed chairman.

  2. MSCI's all-country index reached all-time highs, despite U.S. trade tariffs impacting Chinese shares.

  3. Anticipation for today's CPI and retail sales data is high, offering potential insights into U.S. economic trends.

  4. The dollar weakens against the euro as market anticipates possible ECB rate cut, affecting Treasury yields.

Revised Projections For The Global Cannabis Market

Facts that matter:

  1. U.S. cannabis sales are forecast to hit $33.6 billion by the end of 2023.

  2. The global cannabis market is projected to reach $197.74 billion by 2028.

  3. North America’s cannabis market sees a promising 26.65% CAGR until 2032

Quick Hit: The North American legal cannabis market is experiencing growth, with recent studies projecting significant sales and economic impact increases. According to a report by ResearchAndMarkets.com, the North America’s legal cannabis market is expected to grow at a compound annual growth rate (CAGR) of 26.65% from 2023 to 2032. This expansion is due to increasing legalization across states, favorable regulatory changes, and financial support through bank loans, facilitating business expansions and new market entries.

Psychedelics for Depression: MindBio and Enveric’s Joint Efforts

Facts that matter:

  1. MindBio and Enveric collaborate on new psychedelics.

  2. MindBio helps develop patient-friendly psychedelic options.

  3. MindBio’s efforts may reduce antidepressant side effects.

Quick Hit: MindBio is actively working to advance these treatments by progressing a drug candidate from Enveric’s NPP compounds library. These compounds offer enhanced gastrointestinal stability and absorption, indicating a patient-friendly approach to psychedelic-based therapies. Enveric supports this partnership with their innovative molecular discovery methods and their development of patented assets, which ensure precise formulation and dosing strategies.

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.

Organigram: Q2 Fiscal Performance and Strategic Plans

Facts that matter:

  1. Organigram records net loss despite a strong market position.

  2. Jupiter investment substantially increased Organigram’s cash reserves significantly.

  3. Organigram plans strategic expansion into new international markets.

Quick Hit: The company’s net revenue for Q2 Fiscal 2024 was $37.6 million, a 5% decrease from $39.5 million in Q2 Fiscal 2023. However, recreational net revenue saw a substantial year-over-year increase of 21%, reaching $33.1 million. The net loss for the quarter was $27.1 million, up from $7.5 million in the same period last year. Adjusted EBITDA for the quarter was negative $1.0 million, down from $5.6 million in Q2 Fiscal 2023.

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.