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👀 Keep Your Eyes Peeled 👀
William McNarland & Anthony Varrell
May 28, 2024
GM Everyone,
We are coming to a time of year when it's easy to stop paying attention, as summer is not usually packed with headlines and we have to wait a few more months for earnings. Despite that, we are at a time in the industry when things are moving fast. Ohio, the Farm Bill, rescheduling, and Florida adult-use data are all topics that should capture our attention daily. These catalysts are rapidly developing and can have material impacts on the industry. So let's not get bogged down in the doldrums of summer, as there is plenty to pay attention to.
Today’s letter can be read in 6 minutes and 32 seconds.
What's Driving the Market Today?
After the extended weekend, the futures are opening flat, here is what expected to move the market:
U.S. consumer confidence likely dipped in May, PCE inflation data awaited.
Treasury yields dip; Fed's Kashkari hints at possible rate hike if needed.
Dollar down for third day; euro up as ECB rate cut looms.
Apple shares climb on strong iPhone sales in China.
DEA Clarifies Hemp Rules: Impact on Cannabis Industry
Facts that matter:
DEA’s THCA ruling could drastically impact the hemp and cannabis industry.
DEA’s stance influences the Farm Bill’s discussions on hemp regulations.
Stakeholders advocate for unified hemp regulations for market clarity.
Quick Hit: The DEA’s interpretation that tetrahydrocannabinolic acid (THCA) must be considered in the total delta-9 THC concentration could have far-reaching consequences for the hemp and cannabis industry. The DEA clarified this stance in response to queries regarding the legal status of THCA under the Controlled Substances Act (CSA). As the DEA stated, “In regards to THCA, Congress has directed that, when determining whether a substance constitutes hemp, the delta-9 THC concentration is to be tested ‘using post-decarboxylation or other similarly reliable methods.'
Analyzing Small Cap Stocks: Next Leaf Solutions
Facts that matter:
Next Leaf Solutions’ shift from extraction to consumer packaging.
Next Leaf Solutions’ CEO shift aims for broader consumer reach.
Next Leaf Solutions’ revenue growth hits 129% in LTM.
Quick Hit: Next Leaf Solutions operates primarily in the cannabis extraction sector, with over 70 patents to its name. This portfolio highlights the company’s expertise and innovative capabilities in safely and efficiently extracting oils from cannabis. The company initially focused on extraction but has shifted its strategy towards becoming a consumer packaging company. They now produce a variety of cannabis products, including gummies, oils, pre-rolls, and even shaved cannabis ice.
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.
OpenAI and Reddit Partner to Enhance GPT with Real-Time Data
Facts that matter:
OpenAI and Reddit team up to integrate real-time Reddit content into ChatGPT.
Reddit’s data to make ChatGPT responses more context-aware, says OpenAI COO.
Reddit CEO highlights platform’s vast and relevant data for enhancing ChatGPT.
Quick Hit: OpenAI and Reddit’s new collaboration marks a milestone in the integration of AI with real-time content. The partnership seeks to enhance ChatGPT, OpenAI’s flagship conversational AI, by incorporating Reddit’s extensive data. This integration will allow ChatGPT to access up-to-date and contextually rich information, making interactions more relevant and insightful.
Would We Buy These Four Small Cap Stocks? | Trade to Black Small Cap Sunday
Quick Hit: On our latest Trade to Black Small Cap Sunday Podcast, we provide research for four potential small-cap stocks: Boston Pizza Royalty Fund (TSX: BPF.UN), Danimer Scientific (NYSE: DNMR), GameHost (TSX: GH), and Nextleaf Solutions (CSE: OILS). Our analysis will cover their business models, revenue drivers, historical financial performance, and creditworthiness. Could one of these companies be a multibagger?