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😶‍🌫️ It Was All A Dream 😶‍🌫️

😶‍🌫️ It Was All A Dream 😶‍🌫️

William McNarland & Anthony Varrell
July 02, 2024

GM Everyone,

The bodies keep stacking up with negative headlines and quotes, some of which are from people who really don’t matter regarding Schedule 3 being in jeopardy. I would like to think that nothing has changed and this is just clickbait that is par for the course, but in reality, it really does make you think. This industry is constantly one step forward, three steps back, with self-inflicted gunshot wounds, and people are starting to get tired of it. We have reached out to legal experts who are leaders in the cannabis space for comment and clarity and will report back.

Today’s letter can be read in 8 minutes and 40 seconds.

What's Driving the Market Today?

Stock futures are down this morning:

U.S. manufacturing contracts for third month, prices at six-month low.
10-year Treasury yields hit highest in a month; yield curve narrows.
Trump favored in polls, increasing political uncertainty.
Eurozone inflation eases, but services prices stay high.
Powell's speech and job openings data awaited.

💸 High Impact

Boies lawsuit thrown out is good news?!?!

The What - The dismissal of a lawsuit by major marijuana companies aiming to block government prohibition enforcement is a notable development. While the initial reaction may have been disappointment, industry leaders view this as a strategic step towards higher courts. Anthony Coniglio, CEO of NewLake Capital, explains, “Many of the folks that brought the suit explained that it was designed to get to the Supreme Court. It was actually designed to fail at some point along the way so that it could make its way through the appellate process and ultimately get to the Supreme Court.”

This strategic litigation underscores a deliberate effort to challenge and potentially overturn outdated precedents, setting the stage for more favorable federal regulations. The recognition by the federal court that plaintiffs have standing to bring the suit further strengthens the industry’s position. Coniglio notes, “A real obstacle for the plaintiffs here would have been if the judge would have said that they have no standing…but actually the judge in the ruling…states that he does believe that they do indeed have standing.”

The Why - State-level developments continue to drive cannabis industry growth. Ohio’s impending start of adult-use sales and Pennsylvania’s expected movement towards legalization are critical. Dan Ahrens from AdvisorShares highlights the influence of state actions, “Ohio pressures them a little bit…because they’re going to have that border business going to Ohio. Pennsylvania is coming.” These state-level advancements are crucial for the overall market, contributing to increased acceptance and normalization of cannabis use. The progress in Ohio and Pennsylvania exemplifies how regional markets can catalyze broader industry growth and influence neighboring states.

Investor sentiment in the cannabis industry is highly volatile, driven by regulatory news and market reactions. Recent sell-offs, partly due to misunderstandings about legal and regulatory announcements, highlight the importance of informed investor education. Ahrens stresses the significance of a focused investment strategy, “Our fund is very, very top heavy…And it’s top five holdings, top 10 holdings…There’s some stuff at the bottom that might have a little more torque, might have a little more upside.” Long-term investors are encouraged to focus on fundamental strengths and growth prospects, tuning out short-term volatility and headline-driven market fluctuations. The overall outlook remains positive, with anticipated regulatory advancements and state-level expansions providing a solid foundation for future growth.

The potential rescheduling of cannabis from Schedule I to Schedule III is a critical focal point for the industry. While this move would significantly alleviate financial and operational burdens, complete descheduling remains a distant goal. Coniglio remains cautiously optimistic, “I think it takes a fair bit of time. I think it’s going to take a lot of research and a lot of normalization before we actually get descheduling.”

📈 Dog Walkers

Trulieve Expands in Florida

Trulieve (CSE: TRUL, OTCQX: TCNNF) has announced the opening of two new medical cannabis dispensaries in Florida, located in Madison and Panama City. This expansion aims to increase access to medical marijuana for patients in these areas, reinforcing Trulieve’s commitment to enhancing healthcare services across the state.

North Dakota Voters Oppose Legalization Initiative

In North Dakota, a new poll reveals that a majority of voters oppose the upcoming marijuana legalization ballot initiative, even as the campaign edges closer to reaching the required number of signatures. The mixed sentiment poses a significant challenge for advocates as they push for the initiative to be included in the November elections.

Nebraska Medical Marijuana Activists Push for Signatures

Nebraska medical marijuana activists are in a race against time as they need 12,000 more signatures by Wednesday’s deadline to get their legalization initiative on the ballot. This marks the third attempt by Nebraskans for Medical Marijuana to bring medical cannabis to voters, highlighting the persistent effort despite past funding challenges.