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  • 📈 New York Is On The Mend 📈

📈 New York Is On The Mend 📈

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William McNarland & Anthony Varrell
May 13, 2024

GM Everyone,

Have we finally hit the inflection point where the state of New York starts to get their cannabis program right? Late last week, Governor Kathy Hochul announced that heads are going to roll at the OCM, and the time for radical change is now. This was also accompanied by the city of New York starting to actively crack down on illicit dispensaries via the NYPD and chaining up various doors. Maybe, just maybe, they are starting to see the writing on the wall and the dire need for change in the Empire State. But this will be the ultimate "show-me" story for operators and investors, as New York is being seen as a place of weakness for several operators. And for some, it makes more sense to just up and leave.

Today’s letter can be read in 8 minutes and 22 seconds.

What's Driving the Market Today?

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

  1. Inflation Data Anticipation: Markets await U.S. CPI data, which is crucial for gauging Federal Reserve easing expectations, as core CPI is predicted to slow.

  2. Stable U.S. Profits: This quarter, S& profit growth was 7.4%, surpassing in’, surpassing initial expectations and driving stocks near record highs.

  3. China's Economic Measures: China announces significant treasury bond sales to stimulate its slowing economy amidst ongoing geopolitical tensions affecting stocks.

  4. Global Economic Focus: Eurogroup meetings in Brussels discuss national budgets and banking, influencing European markets; AP Moeller-Maersk shares rise due to increased freight rates.

  5. Currency Markets Shift: Hedge funds cut short yen positions significantly, suggesting a change in market sentiment towards the Japanese currency.

Crimson Wine Group: An Undervalued Small Cap Stock

Facts that matter:

  1. Crimson Wine’s understated real estate values impact its market valuation.

  2. Challenges from GAAP practices understate Crimson Wine’s asset value.

  3. Real estate valuation gaps spotlight Crimson Wine’s investment potential.

Quick Hit: Crimson Wine Group Ltd. (OTC:CWGL) presents a notable example of potential market undervaluation, as highlighted in both our current analysis and further insights from the wine industry. Established in 1991 in Napa, California, the company has long been recognized not only for its substantial vineyard holdings but also for its deep integration with real estate values and accounting practices within the wine industry.

New York’s Office of Cannabis Management Overhaul by Hochul

Facts that matter:

  1. The Office of Cabbabis’s redirection under Kathy Hochul aims to streamline cannabis operations.

  2. New Cannabis Enforcement Task Force set to combat illegal operations.

  3. Criticism arises over delayed reforms within New York’s cannabis sector.

Quick Hit: Under Governor Kathy Hochul’s guidance and following an assessment by Jeanette Moy, the OCM has pinpointed several structural inefficiencies impeding its effectiveness. The Governor’s strategy involves redirecting the agency towards more efficient methods that promote improved communication and quicker processing of cannabis licenses. “It’s about pointing O.C.M. in a new direction and implementing solutions that work for everyone,” Governor Hochul stated, underscoring the shift toward more proactive and responsive governance.

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.

Trulieve and the Future of Marijuana in Florida

Facts that matter:

  1. Trulieve would have the most upside if Florida’s marijuana legalization passes.

  2. Tax reform is crucial for Trulieve’s financial operations amid legalization.

  3. Florida’s potential marijuana market is massive, says Trulieve CEO.

Quick Hit: Last week, polling data showed that marijuana legalization in Florida is at a critical point. Although most support the initiative, it still falls short of the 60 percent approval needed for constitutional amendments in the state. According to Cherry Communications’ survey for the Florida Chamber of Commerce, 58 percent of likely voters are in favor, with 37 percent opposed and five percent undecided. This figure slightly surpasses results from other polls, such as USA Today/Ipsos, which recorded a 56 percent support rate, and a Florida Atlantic University poll at 47 percent.

Trade to Black Small Cap Sunday – Would We Buy These Four Stocks?

Facts that matter: In this week's edition of Small Cap Sunday, we're investigating four small cap stocks that have caught our attention. After a week of analysis, are these the best small cap stocks to buy? Join us as we discuss the potential of these small cap stocks and whether they are the best stocks to buy. If you manage your portfolio, this episode of Small Cap Sunday is a must-watch. Join Co-Hosts Shadd Dales and William (Bill) McNarland, CFA, as they discuss their week of analysis of interesting stocks that caught their eye. Their analysis includes four small cap stocks this week including:

Crimson Wine Group (OTCQB: CWGL) is a Napa Valley wine producer with 1,000 acres of pristine vineyards. Is the value of their land not properly represented in their financial statements due to GAAP accounting? Is the land worth 4X the company's market cap? Watch and find out!