The Highlights
Global equities rallied on news that President Biden would sign the debt ceiling bill over the weekend. Coupled with a strong jobs report, the news drove the MSCI World Index and the S&P 500 up 1.60% and 1.88%, respectively, for the week. Small caps, which often have a higher beta, followed suit, up 3.33%, while the NASDAQ was up 2.04%. This marks six straight weeks of gains for the NASDAQ. The VIX fell below 15 for the first time since February 2020, indicating investors are not fearful of the current conditions. Despite the strong beta rally, US cannabis stocks, as measured by the MSOS ETF, dropped 0.19% last week. The YOLO ETF, which is 29% Canadian companies, fell 2.64% as investors continue to sell names like Tilray (NASDAQ: TLRY), which was down 7.53% last week and down 37.91% over the last month. There was considerable dispersion among the US multi-state operators (MSOs). Columbia Care (NEO: CCWH, OTCQX: CCHWF) gained 10.48%, while AYR Wellness (CSE: AYR, OTCQX: AYRWF) lost 26.96%. AYR doubled from April 21 to May 19, so it is not surprising to see some profit taking in the past few weeks. Minnesota Legalizes Cannabis Minnesota has become the 23rd state in the United States to legalize adult-use cannabis. Governor Tim Walz signed a unique legalization bill into law that also permits the sale of hemp-derived cannabinoids like delta-8 THC. Unlike most states that legalized cannabis through ballot initiatives, Minnesota achieved it through the legislature. The new law will allow individuals 21 and over to possess and cultivate cannabis starting August 1. Sales of cannabis will be taxed at 10%. The state will establish the Office of Cannabis Management, which is expected to take about a year to issue the first retail business licenses. Adult-use sales are scheduled to begin in early 2025. Minnesota stands out by welcoming hemp-derived cannabinoids, including delta-8 THC, into its state-legal cannabis industry. Fourteen other states have either banned or strictly regulated hemp-sourced products due to competition with their established cannabis industries.
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