💸TGIF💸

Author

Anthony Varrell
September 13, 2024

GM Everyone,

It looks like the hemp industry could be getting a long-overdue reality check, with sensible regulations possibly on the horizon. In the last 24 hours, our pal Chucky hinted at the Farm Bill being addressed by December to avoid the infamous "dairy cliff," which could send dairy prices skyrocketing—just what we need to kick off a new term, right? Meanwhile, New Jersey signed a statewide hemp ban into law, giving retailers 30 days to clear their shelves. With hemp’s future in limbo, regulatory changes could materialize sooner rather than later. Buckle up!

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

💸 High Impact

California’s Integrity Is Called Into Question

A former California cannabis regulator has filed a lawsuit against her ex-bosses, claiming whistleblower retaliation. This is the latest development in the ongoing saga of the state’s notoriously complex regulatory landscape. The former employee, Cassie Dugan, alleges that she was punished for flagging questionable practices within the Department of Cannabis Control (DCC), including improper licensing approvals and enforcement irregularities.

Now, if you’ve been following California’s cannabis regulation saga, you know this is par for the course. California’s cannabis framework has been a tangled mess since day one—bureaucracy, inefficiency, and poor oversight have stifled the legal market while the illicit market flourishes. But this lawsuit takes it up a notch, with Dugan accusing top officials of sweeping compliance issues under the rug. Her claims, if true, shed light on deeper systemic problems that could raise eyebrows among operators and investors alike.

From a financial analyst's perspective, this kind of turmoil is exactly what keeps institutional investors hesitant about the cannabis space, particularly in California. Regulatory instability is already a major barrier to entry, but add whistleblower lawsuits and internal dysfunction to the mix, and it becomes an even riskier investment.

California is the largest legal cannabis market in the U.S., but it’s also one of the most challenging to navigate. A lawsuit like this underscores the regulatory risk that continues to hang over the industry like a dark cloud. For operators in the space, this is a stark reminder of the importance of compliance, and for investors, it highlights the necessity of doing deep due diligence before diving into California’s cannabis market.

At the end of the day, regulatory clarity—or lack thereof—can make or break the industry. And for California, that clarity seems to be as elusive as ever. Expect more twists in this drama as the case unfolds.

📈 Dog Walkers

Green Thumb Industries Inc. Secures $150 Million Financing

Green Thumb Industries just secured a $150 million senior secured credit facility with an interest rate of SOFR +5%, set to mature in 2028. The company plans to use the funds for strategic growth, such as expanding its retail and cultivation operations, and to shore up its balance sheet. This move strengthens Green Thumb's financial flexibility in a capital-starved cannabis market, positioning them to take advantage of industry growth while keeping borrowing costs manageable compared to the broader landscape. A savvy play in a tough financing environment!

Verano Expands to 79 Dispensaries in Florida

Verano Holdings has expanded to 79 dispensaries in Florida, following the launch of MÜV Melbourne and MÜV Okeechobee. This brings their nationwide total to 152 stores as the company gears up for a potential $4 billion market opportunity if Amendment 3, legalizing adult-use cannabis, passes in November. Verano’s expansion reflects its strategic positioning ahead of the vote, aiming to capture major market share in Florida’s cannabis space, with a focus on delivering premium products and strong customer service.

Planet 13 Expands In Las Vegas

Planet 13 is expanding its Nevada footprint with plans to acquire a Las Vegas dispensary, further solidifying its presence in the state. The acquisition strengthens Planet 13’s position in the competitive Nevada market, as the company continues to grow its portfolio of high-traffic, premium cannabis retail locations. This move aligns with Planet 13’s strategy of expanding both vertically and geographically, as it seeks to capitalize on increasing demand in the Las Vegas cannabis scene.

🗞️ The News

📺 YouTube

Post-MDMA Decline: Charting the Future of Psychedelics I Trade To Black

What we covered:

✅ In our latest Trade To Black Podcast, we recap our conversation earlier this week with Christian Angermayer, Founder & Chairman of atai Life Sciences (NASDAQ: ATAI). Angermayer shared insights on the recent FDA announcement declining approval of novel MDMA therapy for treating PTSD, as submitted by Lykos Therapeutics.

Angermayer expressed no concerns about the future of the psychedelic industry, stating that ongoing trials could lead to the emergence of $20 billion market cap companies. We also receive an update on Big Pharma's perspective on the industry and discuss the potential for more industry executives to enter the space as trials progress.

Additionally, Angermayer shares his experience being featured on the Joe Rogan Experience podcast and discusses what the podcast host learned from their conversation.