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📈 Lets Get Some Follow-Through 📈

Author

Anthony Varrell
June 18, 2024

GM Everyone,

Yesterday afternoon we actually showed some signs of life. Stocks were green for the most part, with many of the major players ending the day with over 5% gains, and $MSOS closing up 3.85% on the day. I never thought I would be celebrating little things like this, but here we are. Now let's see if we can get some confirmed follow-through on the tape today.

Lets have a green day.

Today’s letter can be read in 8 minutes and 42 seconds.

What's Driving the Market Today?

Stock futures are slightly up, here is what traders are focused on today:

  • U.S. retail sales expected to rise, signaling economic resilience.

  • Tech stocks boost Nasdaq to near 20% YTD gains.

  • Fed's Harker suggests a single rate cut this year, trimming expectations.

  • Euro zone yields calm as French election tensions ease.

  • Asian markets up, bolstered by global tech optimism.

💸 High Impact

Now This Is RICH

The What - I almost fell out of my chair yesterday when I first read the headline that there is a newly filed class action lawsuit representing a consortium of operators from New York that have had their illegal dispensaries shut down. Now that is rich.

In a suit filed on 6/12, the plaintiffs are alleging that the state needs judicial oversight and compensatory measures put in place for lost revenue and damages incurred by “Operation Padlock To Protect.” I think someone needs to educate them on the pitfalls of running an illegal business. When you are shut down for not complying with the law, you aren't necessarily entitled to damages. You're a criminal.

We have seen over 300 stores closed to date for selling cannabis without a license. Congrats, we now have around 2,000 more to go. The 62 licensed retailers that put their blood, sweat, and in many cases, their own capital to work to launch their cannabis businesses need to be protected by the laws. This enforcement, if anything, needs to be more aggressive and swift.

The Why? - New York has the opportunity to be one of the largest adult use cannabis markets in the world, generating billions of dollars in sales annually. However, it has been nothing short of a disaster since the rollout, and to be honest, this lawsuit might be one of the least absurd things to happen since.

We have seen operators leave the market and companies put operations on pause to see how things progress as the Empire State is given time to work on its issues. But things are progressing at a snail's pace, and when you are bleeding cash daily waiting for the powers that be to get it together, every day matters.

These stores have popped up by the thousands in the Big Apple over the last few years and were something I never thought we would see in the United States. Some would go so far as to classify the nature of these stores as a pandemic sweeping across the state of New York with no end in sight. Someone call Fauci? 🥸🥸

📈 Dog Walkers 

Verano Announces Buyback Program

You asked for it, and you got it. Yesterday, Verano Holdings authorized up to a $50 million share repurchase program, where they will buy back their stock. This is a very bullish sign from one of the leaders in the industry that has always taken a more institutional approach to business. Love to see this, but let's see how aggressively they start to buy back the paper.

The Cannabist Is Rightsizing

The Cannabist announced a corporate restructuring starting with right sizing the busines to the tune of a $10M annual cost savings. This couldnt of been easy. As well as the divestiture of their Florida assets consisting of 14 retail locations and 3 cultivation sites. Good riddance. As far as I’m concerned Florida was the bastard child of the $CBST footprint and a tough move that had to be done. Onward and upward.

Maryland To Pardon 175,000

Finally, some wholesome news coming out of the policy front in cannabis land. On Monday, the Governor of Maryland pardoned more than 175,000 low-level marijuana convictions. YES. The Governor was giving out pardons like Oprah gives away cars... But on a serious note, this is amazing to see. People's lives should not be negatively affected by misdemeanor cannabis charges when there is an adult market alive and well in the state. Bravo, Governor.

🔢 Number O.T.D.

22,700,000

That is the number or pre-rolls that were sold in Michigan in the first four months of 2024. California was a close second with 12.6M. Holy sh*t the state of Michigan sells a ton of pre-rolls.

🗞️ The News

📭 Research

Initiating Coverage: Green Thumb Industries - Download Here

Reconfirming Buy Rating: MariMed - Download Here

Initiating Coverage Of Verano Holdings Corp. - Download Here

Initiating Coverage: Trulieve Cannabis - Download Here

📺 YouTube

High Tide CEO + Cannabis Stock and Regulatory News

What we covered:

✅Anthony Coniglio, CEO of New Lake Capital, joined us live from the Benzinga New Jersey Cannabis Conference to talk about the recent raise of the dividend. 

✅ Raj Grover, CEO of High Tide, joined us for a recap of their earnings and to talk about the future growth of the business in Canada.

✅The Cannabist’s announced a $10M restructuring and divestment from the Florida market.

✅ Verano authorized a $50M share repurchase program.