💸 The Tape

If you want to see the future of cannabis consumption, skip the dispensary. Go walk the lakefront to Navy Pier, catch a show at The Salt Shed, and finish the summer at Lollapalooza. At every stop, you'll find the same thing: THC beverages sold alongside beer — and increasingly, instead of it.

The company behind that transformation is RYTHM, Inc. (Nasdaq: RYM), and its twin brands — RYTHM Beverages and Señorita — have spent 2026 executing the most aggressive mainstream venue strategy the cannabis industry has ever seen.

The Illinois Experiential Takeover

The milestones have come in rapid succession. In early 2026, Señorita and RYTHM made history at Chicago's United Center — home of the Bulls and Blackhawks — as the first THC beverages ever sold at a major U.S. arena, with RYTHM, Inc. named the venue's official THC sponsor. In May, Navy Pier — the most visited destination in the Midwest at 8 million+ annual guests — named RYTHM its official THC beverage partner in a multi-year deal centered on the RYTHM Stage in the Pier's Beer Garden, complete with events, sampling, and seasonal programming. Every beverage sold there carries 5mg of hemp-derived THC in a 12oz can — a sessionable, approachable dose engineered for the beer garden crowd.

And this week came the crown jewel: Señorita is the Official THC Beverage Partner of Lollapalooza — the first time THC beverages will be sold at one of America's marquee music festivals, in front of hundreds of thousands of fans over four days in Grant Park.

The connective tissue between those tentpoles is just as important. Both brands now pour across 16" on Center venues — The Salt Shed, Thalia Hall, The Empty Bottle — and Jam Productions rooms including the Riviera Theatre, Park West, and The Vic. The 2026 footprint has included Windy City Smokeout, Sueños Music Festival, the Chicago Pride Parade, and Taste of Randolph. Beyond Illinois, Señorita signed on as the official THC beverage partner of Opry Entertainment Group venues and expanded into Georgia-based Oak View Group properties. Retail distribution now spans 6,000+ locations including Circle K, Total Wine, ABC Fine Wine & Spirits, and Chicago's own Binny's, plus direct-to-consumer shipping to 30+ states.

Notice what's absent from that list: dispensaries. This is a strategy built on meeting consumers where they already gather — arenas, festivals, piers, and liquor stores — executed with the timing advantage of Illinois's new Hemp Act, which legitimized where and how THC beverages can be sold while banning the gray-market chaos. Regulation didn't kill the category in Illinois. It gave premier venues the legal confidence to sign multi-year partnerships.

The GTI Relationship: A Structure Worth Understanding

Here's where the story gets strategically fascinating for investors. RYTHM, Inc. is not a scrappy beverage startup — it's the spun-off brand and hemp platform of Green Thumb Industries, one of the largest and best-capitalized cannabis MSOs in America. Ben Kovler — GTI's founder — serves as Chairman and Interim CEO of RYTHM, Inc., and the two companies remain deeply intertwined by design.

The economics of that relationship are remarkable. RYTHM, Inc. holds the brand portfolio — RYTHM, Señorita, incredibles, Dogwalkers, and others — and licenses those brands back to GTI for use in the regulated, plant-derived cannabis channel. That licensing arrangement delivers RYTHM, Inc. approximately $70 million in fixed annual licensing fees — a contractual, high-margin revenue base that exists before a single can of Señorita is sold. Layer the hemp beverage business on top — $13.3 million in Q1 revenue at a 78% gross margin, with Q2 guidance of $22 million (up 65% sequentially) — and you have a Nasdaq-listed brand company with bond-like base income and hypergrowth beverage upside.

The analysis writes itself: GTI kept the regulated cannabis operations — cultivation, dispensaries, state licenses — while giving the brands a separate vehicle that can do everything a plant-touching company cannot. RYTHM, Inc. trades on Nasdaq without deconsolidation gymnastics. It sells at the United Center, Navy Pier, and Lollapalooza — venues no dispensary-licensed product could touch. It ships DTC across state lines. And when consumers encounter RYTHM or Señorita at a festival, that brand equity flows straight back into GTI's dispensary shelves, where the same names sit on regulated flower, vapes, and edibles. It's a two-entity flywheel: the hemp company builds mainstream awareness in mainstream places; the MSO monetizes it in regulated markets. No other cannabis organization has structured brand-building this cleverly.

The Beverage Boom — and Alcohol's Problem

None of this would matter if the category weren't exploding. It is. THC beverages have become the fastest-growing format in cannabinoid consumption, with Target expanding sales to 300+ stores across multiple states, total wine-and-spirits chains dedicating shelf sets, and the National Restaurant Association lobbying Congress to preserve the category as "an alternative to alcohol."

That phrase — alternative to alcohol — is the entire story. As Pollstar noted in covering the Lollapalooza deal, alcohol consumption is dwindling among younger generations while drink prices at live events keep climbing. The macro data is unambiguous: the U.S. now counts more daily cannabis consumers than daily alcohol drinkers for the first time in history, and Canadian market data shows cannabis spending rising 6.1% while alcohol declines. Gen Z drinks meaningfully less than any prior generation at the same age, citing health, hangovers, and calories — and a 5mg agave-based margarita with real fruit juice and no hangover, as Señorita positions itself, answers all three objections at once.

The alcohol industry sees it clearly. Beer volumes have declined for years; spirits growth has stalled; and the very distributors and retailers built for alcohol — Total Wine, Binny's, Circle K, Republic National — are now racing to carry THC beverages because that's where the growth lives. When Navy Pier's Beer Garden builds a stage named after a THC brand, the symbolism is complete: cannabis isn't knocking on alcohol's door anymore. It's on the tap list.

The Bottom Line

Kovler said it plainly: "Consumers are choosing THC, and the venues they love are responding." In 2026, RYTHM, Inc. turned Chicago into the proof-of-concept city for that thesis — first arena, first pier, first Lollapalooza — while its licensing spine with GTI generates $70 million a year before the first can cracks open.

The only cloud is the November 12 federal hemp deadline — and it's precisely why the Barr-Craig bill's beverage-friendly framework matters so much to this story. If Congress lands a regulated path, RYTHM, Inc. isn't just Chicago's summer story. It's the blueprint for how cannabis brands go fully mainstream in America.

The margaritas are already at Lollapalooza. The rest of the industry is still in line outside.

📈 Dog Walkers

$IXHL ( ▲ 1.28% ) On Track To Improve Sleep

Incannex Healthcare just moved its lead program from paperwork to patients — and the market it's chasing is almost incomprehensibly large.

The clinical-stage biopharmaceutical company announced that participant screening has commenced in DReAMzz, its Phase 2 dose confirmation study of IHL-42X for obstructive sleep apnea (OSA). The first tranche of clinical sites is approved and actively screening, with additional sites coming online as approvals land — marking the program's transition into active recruitment ahead of planned Phase III development.

The commercial setup here deserves attention. OSA affects an estimated one billion people globally, and there are currently no FDA-approved oral pharmaceutical therapies for the condition. The standard of care — CPAP machines — is notorious for poor patient compliance. IHL-42X, a combination of dronabinol (synthetic THC) and acetazolamide, holds FDA Fast Track designation, and the prior Phase 2 study delivered results that explain the agency's interest: up to an 83% reduction in the Apnea-Hypopnea Index versus placebo, with statistically significant improvements in fatigue and sleep-related impairment and a favorable safety profile.

The DReAMzz crossover study is designed to optimize dosing while tightening the link between objective sleep metrics and patient-reported outcomes — the dual evidence package regulators and payers increasingly demand for chronic disease therapies. CEO Joel Latham said the drug "has the potential to fundamentally change the treatment paradigm" for OSA.

The operational groundwork is done: global CRO appointed, drug manufacturing complete, import/export permits secured, and a fresh U.S. patent grant for IHL-42X in June plus an A$6 million R&D tax refund bolstering the balance sheet.

For a company also advancing PSX-001 for generalized anxiety and IHL-675A for rheumatoid arthritis, IHL-42X is the flagship — a cannabinoid-based oral therapy racing toward a billion-patient market with no approved oral competition. Screening has begun. The clock to Phase III is running.

📺 Trade To Black

Does This Hemp Bill Actually Fix Anything? | TDR Cannabis in 5

• The Barr-Craig Fix: The bipartisan Lawful Hemp Protection Act would raise the incoming 0.4mg total THC cap to 1% by dry weight — keeping THCA flower, most hemp edibles, and vapes legal under a new national regulatory framework ahead of the November 12 ban.

• What Gets Banned: The bill prohibits synthetic cannabinoids including converted Delta-8 and THCP, while imposing national testing and labeling standards, a U.S.-only cultivation and processing requirement, and new federal taxes on retail sales and THC beverages.

• The Enforcement Question: Shadd raises the issue the industry isn't discussing — whether the federal government actually has the capacity to enforce this framework, given that policing unlicensed shops, distributors, and online sellers has historically fallen to states that largely haven't stepped up.

• Two Possible Outcomes: The bill could produce a genuine regulated hemp market — or function as a delay tactic that simply buys the unregulated market more time, depending entirely on whether enforcement infrastructure materializes alongside the legal framework.