The Highlights
The US cannabis MSOS ETF inched 2.89% higher this week, while the global YOLO ETF gained 3.77%. MSOS had $13,308,500 in inflows this week, which interestingly came before the big DEA news on Thursday. On Thursday, the Justice Department officially proposed a new rule to reclassify cannabis from Schedule to Schedule III. The notice of proposed rulemaking sent to the Federal Register on Tuesday stated the Attorney General “concurs with the HHS’ recommendation, for purposes of initiation of these rulemaking proceedings, that marijuana has a potential for abuse less than the drugs or other substances in Schedules I and II.” This kicks off a 60-day comment period. After receiving and assessing comments, officials will analyze the input and make a final determination. Potentially, the intent is to have the final rule in place ahead of the Democratic National Convention, which begins on August 19. This would be consistent with our thinking that we are seeing a coordinated democratic effort to advance cannabis reform ahead of the elections to mobilize and sway younger voters. The President and Vice President both made social media posts promoting the news this week. Cresco (CSE: CL, OTCQX: CRLBF) CEO Charlie Bachtell joined us on Higher Exchanges to discuss politics and the company’s first-quarter results. Bachtell shared his perspective on Schedule III’s next steps, timing, and impact on Cresco’s business. Last year was the year of the core and Bachtell highlighted the tough decisions the company made to cut costs and rationalize the footprint. He told us, “Every year is now the year of the core. It is just who we are.” Those interested can listen on Apple Podcasts, Spotify, or X Spaces. Links are accessible in our full report. Gold Flora (NEO: GRAM, OTCQX: GRAM) reported 1Q24 earnings on Wednesday. Cultivation expansion drove revenue 13.2% higher sequentially, which exceeded our estimate of $29.2 million. Adjusted EBITDA of -$1.8 million missed our estimate of $0.1 million. Higher expenses associated with the expanded cultivation caused the lower AEBITDA. We will revisit our estimates.
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