The Highlights
Cannabis stocks had an excellent week, with the US cannabis MSOS ETF surging 11.39% and the global YOLO ETF ending +4.07%. YTD, MSOS is -6.29% and YOLO is -21.94%, indicating that US cannabis has been outperforming Canadian and other global names. The week started with BAT (LSE: BATS, NYSE: BTI) making a C$124.6 million investment into Canadian operator Organigram (TSX: OGI, OTCQX: OGI). Most of the capital is to create Jupiter, a strategic investment pool designed to expand Organigram’s footprint and capitalize on strategic growth opportunities. This follows Philip Morris (NYSE: PM) making a $650 million investment into Israeli cannabis tech firm Syqe Medical on July 19, 2023. Tobacco companies are well connected in Washington and these investments may reflect optimism around rescheduling. On Tuesday, Ohio became the 24th US state to legalize adult-use cannabis, as 56.97% voted in favor of Issue 2, with overwhelming 89% support from voters aged 18-29. There are 36 MSO-owned stores in Ohio and the state will have a typical 10% excise tax. There is currently a five-store cap, but this could expand to eight in short order. On Wednesday, the Florida Supreme Court heard oral arguments on adult-use being on the 2024 ballot. Reports on the hearing have been positive and the court has until April to make a ruling. If allowed on the ballot, legalizing adult-use sales will take a 60% vote, rather than the 50% in Ohio. There are more than 460 MSO stores in Florida and Trulieve (CSE: TRUL, OTCQX: TCCNF) has the most scale with 130 stores. Jushi (CSE: JUSH, OTCQX: JUSHF) jumped 60.23% this week. The company is highly levered to Virginia and this week Democrats took control of the Virginia General Assembly. This means the state could pass a moderate adult-use bill in 2024. However, this would still require sign-off from cannabis bear Governor Glenn Youngkin. Gallup reported that 70% of Americans support legalizing cannabis. This is the highest level in history, up from 68% in recent years. As we enter an election year, we hope politicians will listen to the people, fulfill campaign promises, and finally make cannabis a priority.
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