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📈 We Finally Have True Progress 📈

GM Everyone,

Yesterday marked a pivotal moment in the cannabis industry, ignited by a breaking story from the AP. The news revealed that the DEA is heeding the recommendation from the HHS to reschedule cannabis, with sources hinting at an accompanying opinion from the OLC. This revelation sent shockwaves through the industry, triggering an immediate halt in MSOS trading, while MSOX surged, achieving nearly a 60% gain intraday. Today, all attention is focused on the market, anticipating heightened volatility, particularly with the looming 2 pm Fed meeting.

Today’s letter can be read in 7 minutes and 12 seconds.

What's Driving the Market Today?

  1. Fed Rate Cuts Dwindling: Expectations for multiple Fed rate cuts in 2024 are now down to potentially just one, affecting bond markets.

  2. Bond Market Tensions: U.S. employment cost growth in Q1 and impending $1.1 trillion in Treasury sales are straining bond markets.

  3. Weak Currencies vs. Strong Dollar: With Japan and Switzerland’s currencies struggling, the dollar index is nearing six-month highs.

  4. Wall Street's Earnings Woes: Despite some earnings beats, overall corporate results, especially in tech, have disappointed, dragging stocks down.

  5. Focus on Powell and the Fed: Upcoming Fed discussions and policy announcements are highly anticipated, alongside earnings and economic data releases.

Rep. Nancy Mace Take on DEA Rescheduling and States Reform Act

Facts that matter:

  • DEA proposes shifting marijuana from Schedule I to III, noting reduced abuse potential.

  • Rep. Mace optimistic about DEA’s move impacting state cannabis laws.

  • Rep. Mace advocates for States Reform Act over DEA’s limited rescheduling.

Quick Hit: When asked about her views on the future, she offered a compelling perspective on the current historical moment. She remarked, “I do think people are going to speak out about it. And if you're against it, you're on the wrong side of history. This is something that is widely supported in both red and blue states across the country.” 

Cansortium Shows Strength

Facts that matter:

  • Cansortium Inc posts a 9% increase in Q4 revenue, signaling robust growth.

  • Florida's potential legalization could significantly raise Cansortium's revenue.

  • Adjusted EBITDA dips due to higher operational costs for Cansortium.

Quick Hit: Cansortium Inc (CSE: TIUM.U, CNTMF), operating under the brand name FLUENT, is a vertically integrated, multi-state cannabis operator that reported its financial results for the fourth quarter and the full year of 2023. The company achieved a record quarterly revenue of $25.5 million, marking a 9% increase year-over-year.

Rescheduling Reflections from Cannabis Leaders 

Facts that matter:

  • The Don was almost brought to tears by this monumental announcement.

  • For Brady Cobb this announcement is a culmination of a story dating back to his father in the 80’s.

  • This will be a transformational year for The Cannabist and rescheduling was only the first step forward.

Quick Hit: Don Murphy expressed a mixture of surprise and vindication following the announcement. Although he had anticipated the change, the reality of its occurrence overwhelmed him due to its potential implications. "It's really big to anyone who's a patient or has been a patient," Murphy explained, emphasizing the significant relief it brings by altering the legal perspective on their status—effectively ensuring they are no longer viewed as criminals. Murphy candidly admitted his inability to fully grasp the magnitude of what had unfolded, despite a long-held sense that change was imminent. He reflected on the emotional response from the community and stakeholders, highlighting the mixed reactions ranging from elation to strategic recalibrations among opposing factions.

Trade To Black

Why it matters: The Biden administration is set to reshape cannabis regulations after over 50 years. Sources reveal that the Drug Enforcement Administration is set to move to reclassify cannabis from Schedule I to Schedule III. We were joined by Congresswoman Nancy Mace from South Carolina, Cannabis lobbyist Don Murphy, The Cannabist Company Holdings President Jessie Channon, and CEO of Sunburn Cannabis, Brady Cobb, for a deep dive into the implications of this decision, and what this means for the industry, cannabis stocks, and if SAFER Banking will gain momentum from this.