The Highlights
It was another strong week for cannabis stocks, with the US cannabis MSOS ETF and the global YOLO ETF gaining 7.65% and 5.65%, respectively. MSOS is now +7.62% YTD and +53.91% since the HHS recommended Schedule III on August 29, 2023. The MSOS ETF had $29,340,300 in inflows this week. Some large investors are waiting for the DEA response prior to pushing in their chips, but others are comfortable increasing allocations in advance. Due to its NYSE listing and higher trading volume, most of the capital in our emerging sector enters through one large ETF. On Friday, the HHS finally released more than 250 pages related to its decision to recommend moving cannabis from Schedule I to Schedule III. Here’s a link to the contents. Shane Pennington and Matt Zorn, coauthors of the blog On Drugs, deserve credit for submitting a request under the Freedom of Information Act (FOIA) to obtain the records. Pennington shared his thoughts on the documents on their On Drugs blog, which can be read here. Short-term cannabis returns may continue to be driven by expectations and timing of the DEA’s response to the HHS’ rescheduling recommendation. The average of prior DEA response times takes us to December 17, but we don’t know that this has predictive value. We are more interested in the numerous CEOs that have publicly predicted late December. We have also heard 4/20 mentioned. Ascend Wellness (CSE: AAWH, OTCQX: AAWH) jumped 11.25% this week. Since pre-announcing strong 3Q results on October 25, the stock is +67.83% versus +25.17% for MSOS. CEO John Hartmann joined us on our Higher Exchanges podcast this week to discuss what’s been driving stronger results. Those interested can listen on Apple Podcasts, Google Podcasts, Spotify, or X. The Cannabist was +27.21% in the last five days, driven by approval of adult-use wholesale distribution and retail sales in New York. It currently has wholesale relationships with 20 dispensaries and has Cannabist stores in Brooklyn, Manhattan, Riverhead, and Rochester. Adult-use distribution can begin immediately, while the company decides which medical dispensary to convert to adult-use.
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