Republican Fireworks
Republican Rep. Nancy Mace will introduce a federal marijuana legalization (#StatesReformAct} bill on Monday and hold a press conference. POLITICO reports that the bill would eliminate federal criminal penalties, allow states to set their course on cannabis legalization and regulations, and impose a 3.75% excise tax on cannabis products. As with all things in Cannabis legalization, the bill that ultimately gets introduced will likely differ in fundamental ways from the draft we will see on Monday. Nancy Mace is a South Carolina freshman and a graduate from The Citadel and has previously supported a bill to expand research into veterans' use of cannabis to treat ailments like PTSD. In addition, Mace was the only Republican to vote in favor of a different medical marijuana research bill sponsored by Rep. Lou Correa (D-Calif.) last week. The #StatesReformAct aims to remove marijuana from the Controlled Substances Act and is a clear indication that the Republicans are increasingly supportive of ending federal criminal penalties and taking over the issue from Democrats who have more broadly embraced legalization until this point.
We view Rep. Mace's move as a smart move politically. We are confident it is not lost on her that 68% of Americans support cannabis legalization, and several Republican-led states have legalized it in the past few years. The Democrats, led by the three musketeers of CAOA, are losing control of the issue, and they will likely feel more pressure on Monday. The political winds can change daily, and it is turning into a northeaster for Senator Schumer, who is playing politics with cannabis legalization. We have taken the chances that the NDAA has the SAFE act in it is now greater than 75% up 50% in the past week.
Senators Pressure Biden to Pardon
Lawmakers from all over the country took to Twitter to support Elizabeth Warren's letter asking Biden to pardon all non-violent cannabis offenders. "We can make this happen in Florida and give those incarcerated for non-violent cannabis convictions a start at #SomethingNew while strengthening Florida for all," tweeted gubernatorial candidate Nikki Fried. Biden remained silent on the matter when Politico reached out for comment. Since the start of his presidency, Biden has remained silent on the topic of cannabis. This comes after his campaign promise of legalizing medical marijuana and decriminalizing the drug.
Click Here for a link to the tweet.
Cresco Earnings
CRLBF is a USA Long.
Cresco labs reported Q3 21' earnings. The company reported revenues of $215.5M vs. FactSet $217.7M and EBITDA (A) of $56.4 Million vs. Factset $52.6 Million. Revenues increased 2.6% sequentially and 40.6% YoY. EBITDA (A) was 26% of revenue, which increased 9% sequentially and 48.3% YoY. The company reaffirmed Q4 revenue guidance of $235-245 Million. They also reaffirmed their outlook of gross profit margins in Q4 above 50% and EBITDA (A) of at least 30%.
Cresco operates under Sunnyside dispensaries, with its most significant footprint in Illinois, followed by Florida, Pennsylvania, Ohio, and Massachusetts. The company also has operations in New York, which have been delayed due to the slow rollout of adult-use in the state. The company stated that they would add retail for the first time in Maryland between now and year-end, reach total production in Ohio, and commence sales in Michigan. The company currently has a ten-state footprint and plans to grow organically.
Cresco remains a wholesale leader of branded cannabis. Q3 wholesale revenue was $109 Million. The company's products reached 1,100 stores across the country, up 5% sequentially and 32% YoY. In three of their eight wholesale markets, they have over 95% penetration, while they have over 75% penetration in five of the markets. The company also touched on the pricing pressures it is facing in California. The company currently operates three cultivation facilities in the state, which supply its California brand FloraCal. This is currently the 12th best-selling California flower brand. Pricing pressure in the state will continue to deplete its margins.
