The Highlights
It was another strong week for cannabis stocks, with the US cannabis MSOS ETF gaining 4.05%. The fund added $3.6 million in inflows last week. The global YOLO ETF climbed 6.22%, as several Canadian companies outperformed. AYR Wellness (CSE: AYR, OTCQX: AYWRF) had the best week, rising 23.64%. CEO David Goubert will be joining us on Higher Exchanges on Thursday. Cannabist (NEO: CBST, OTCQX: CBSTF) also rebounded, gaining 18.59% over the holiday-shortened trading week. MariMed (CSE: MRMD, OTCQX: MRMD) and Cresco (CSE: CL, OTCQX: CRLBF) slipped 6.35% and 4.17%, respectively. For 1Q24, MSOS returned 42.80%, while YOLO increased 36.10%. The S&P 500 and Russell 2000 were up 10.56% and 5.18%, respectively. Among the larger MSOS, Trulieve (CSE: TRUL, OTCQX: TCNNF) led the pack at +138.00% in 1Q24, followed by Jushi (CSE: JUSH, OTCQX: JUSHF) +57.99% and Cresco (CSE: CL, OTCQX: CRLBF) +53.33%. Cannabist (NEO: CBST, OTCQX: CBSTF) had the toughest 1Q24, at -20.43%. On Thursday, we hoped the Florida Supreme Court would opine on whether adult-use cannabis would appear on the ballot this fall. Instead, it was silent and later announced it would release out-of-calendar opinions at 4:00 pm ET on Monday, April 1. If adult-use appears on the ballot, it will require 60% to pass. Medical passed in 2016 with 71.3%, but adult-use is often less popular with voters. If successful, sales would start on May 8, 2025. Florida was a roughly $1.8 billion market in 2023 and we expect sales to more than double if adult-use passes. Adult-use in Florida would be significant for operators like Trulieve (CSE: TRUL, OTCQX: TCNNF) with 134 stores, and smaller companies like Cansortium (CSE: TIUM, OTCQX: CNTMF) with 35 stores and a $111 million enterprise value. AYR Wellness (CSE: AYR, OTCQX: AYWRF) is also heavily levered to Florida, with 64 stores and a $660 million enterprise value. Later Thursday, we learned that Virginia Governor Glenn Youngkin vetoed a bill to begin adult-use sales. This was a day after Youngkin did not get approval for a new sports stadium that could have brought the Washington Wizards and Washington Capitals to his state. Some see his actions as payback for not getting the new stadium. Virginia remains a profitable medical market, but the adult-use flip would have been a boost to Cannabist (NEO: CBST, OTCQX: CBSTF) with 10 stores, Jushi (CSE: JUSH, OTCQX: JUSHF) with six stores, and Green Thumb (CSE: GTII, OTCQX: GTBIF) with six stores. Youngkin’s term ends at the end of 2025, making 2026 the next likely opportunity to begin adult-use sales in Virginia.
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