Safe Banking Won’t Do It

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Friends,

The market rallied this week, actually increasing more than the S&P 500, which is very different from recent performance. Still, the New Cannabis Ventures Global Cannabis Stock Index fell nearly 3% in April. It is down 15% in 2023, while the S&P 500 has gained 8.5%.

Driving the market higher was news that SAFE Banking legislation has been reintroduced. As we have discussed in the past, this measure is not a catalyst for higher cannabis stock prices in our view. It has failed to ever pass the Senate after passing in the House many times. Even if it were to pass, this legislation isn’t helpful to the publicly traded companies, which have good access to banking already. We do think it is necessary for some smaller organizations, but, perhaps more importantly, passage could be a jolt to sentiment, which remains very down.

As we have discussed, the potential changes that we believe would help the stocks would be the elimination of the onerous 280E taxation, which weighs on cash flows. If cannabis is rescheduled to 3 or higher from its current scheduling level, 1, the tax would be wiped out. The other thing we hope for is the ability of American cannabis operators to trade on a higher exchange. We aren’t yet hearing that this is being discussed, and we aren’t expecting that the NYSE or NASDAQ will just move in that direction on their own. I moderated a panel this past week in NYC at the MJ Unpacked conference, and one of the discussion points was raised by Columbia Care CEO Nick Vita, who suggested that the NEO exchange, now owned by Cboe Global Markets for the past eleven months, could help move its parent towards listing American cannabis operators in the United States. A move like this could encourage NYSE and NASDAQ to begin to list them and open the doors to more institutional investors.

The pop that began after trading closed on Wednesday and continued into Thursday morning was quickly erased. We know that the market could use a strong catalyst, but the fast selling at higher prices was the right reaction in our view to the reintroduction of SAFE Banking. We believe that the elimination of 280E and the ability of American cannabis companies to list on a higher exchange would be stronger catalysts.

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New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

Exclusives

The cannabis market, as measured by the New Cannabis Ventures Global Cannabis Stock Index, fell in April, its third straight monthly decline. We discussed the best and worst performing stocks.

Financial Reports

Decibel Cannabis reported its Q4 financials, with revenue soaring 41% sequentially to C$25.8 million. The adjusted EBITDA exceeded C$7 million.

SNDL reported Q4 revenue in excess of $C240 million. The cannabis-related sales increased 3% sequentially to C$80.7 million.

M&A

Schwazze purchased an operator in New Mexico, spending $38 million in cash and stock to buy Everest.

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View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks.

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Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email