More BS this time its - JP Morgan
The Federal Government is standing in its way with its antiquated policies. The House has passed the SAFE Act 5 times to give state-legal cannabis businesses access to financial services and improve public safety. The Hedgeye Safe Tracker has nine votes on the Senate, so we have the ACT passing an in the Senate. Now we have this B.S. move from JPM. Citing an anti-money laundering compliance framework, JP Morgan will restrict trading on U.S. cannabis-related securities beginning Nov. 8th. The move follows similar actions by other brokerages such as Credit Suisse. To avoid federal scrutiny, some large banks are opting to ban the trade of U.S. cannabis stocks. As a result, cannabis stocks are now trading at ludicrously inexpensive valuations, with many large institutions being blocked from investing in these names.
The MSOS was down 2.8% on the day yesterday following the news. In addition to the lack of movement in D.C., this news will cause a perfect storm for cannabis stocks to fall. Bank's reluctance to act as financial institutions and now to even act as a custodian for cannabis stocks shows the dire need for the Safe Act to pass.
<CHART3>
NDAA Timeline Update
According to our in-house policy analyst, JT Taylor, the possibility of starting talks on the NDAA at the end of this week seem very unlikely despite all the stories about republicans ramping up pressure on Chuck Schumer and Jack Reed get NDAA on the floor. There are rumors that the Senate cannot cancel next week's scheduled recess due to so many Congressional Delegations on the books. This would only leave two working weeks before thanksgiving, which seems insufficient to make room for the NDAA given other priorities. The NDAA does have to be passed before the end of the year, so it does not seem like it will spend much time on the floor with the current timeline.
I.L. Tracker
Sales in Illinois do not show signs of a slowdown. Sales were up 1.4% from the month prior and 64% YoY to $123 Million. The majority of sales increase came from out-of-state sales, which were up 5.3% sequentially and 105% YoY. In-state sales were down .6% and 48% in the same period. The average selling price of items has dropped in the past year by 7%, while items sold have increased 77%, which shows organic growth in the state. The annual run rate is $1.47 Billion.
