AYRWF FOLLOW UP
AYRWF IS A LONG
After further review, AYRWF drew the short straw - the company was and is ready to take on NJ!
As the company said on Twitter, "We were disappointed not to be included among the cohort approved for adult use on Monday." While regulatory delays are a part of life in the cannabis space, it would have been out of character for the company not to have been working closely with its regulators to gain adult-use approval and believed until late last week that they would be approved. As the company said, "we have one of the largest patients counts in the state and are currently the only operator to have local approval for all three adult-use dispensary locations," which are in (Woodbridge, Eatontown, and Union), for a total of 30,000 SQ Ft. The NJCRC has said they want to ensure there is no disruption for medical patents to supply adult-use conversion and given the size of the company's medical and potential adult-use footprint, AYRWF uniquely figured into that supply equation. In addition to the company's existing inventory and supply agreements, the company has a 76,000 square foot cultivation facility fully complete and awaiting regulatory approval to open. The company-new guidance issued on the last earnings call assumed a May 24 approval date for ATC conversations, which has not changed.
While the Cannabis market is maturing in some states, there are new, substantial states coming online, and NJ is one of them; AYR is nicely positioned to take advantage of that growth. The broader investment thesis surrounding much-needed federal changes to cannabis laws has been hijacked by the Democrats, suggesting that nothing is going to get done before the midterms. I know there is hope that SAFE my sneak by before the mid-terms, the performance of cannabis stocks suggests otherwise.
LEGALIZATION IS A DEMOCRATIC AGENDA
As I said above, the broader investment thesis surrounding much-needed federal changes to cannabis laws has been hijacked by the Democrats, suggesting that nothing is going to get done before the midterms.
According to a new Morning, Consult/POLITICO poll passing a bill to legalize marijuana should be a priority for Congress, according to 41% of registered voters. The problem is there is a significant partisan split: Just over half of Democrats identified marijuana legalization as a "top" or "important" priority, compared to just 27% of Republicans. Yet the Democrats (i.e., @SenSchumer) do not care about the war on drugs and only politics. Senator Schumer is likely driven by the broader public's indifference to the subject, with 19% of registered voters saying marijuana legalization should be a "top" priority for federal lawmakers. 22% indicated that it should be an "important, but lower" priority. An additional 32% said it should be "not too important" a priority.
The other big issue is that the poll also showed a stark age divide; 28% of respondents under 35 said marijuana legalization should be a top priority for Congress, compared to just 12% of those 65 and older. It helps to explain why President Biden will not keep his campaign promise, and the old cronies in Washington don't take up the subject.
If SAFE does not pass before the mid-terms and Republicans win back the House or Senate, the war on drugs will go on past the Biden Administration.
TLRY SHOULD HAVE LET THEM GO BANKRUPT
It remains a mystery, with TLRY's goal of dominating the US market, a leveraged balance sheet, and in desperate need of cash flow, why they spent this money on HEXO.
Tilray Brands (TLRY) announced an agreement on Tuesday under which it will acquire the remaining US$193 million outstanding principal balance of the debt issued by "rival" Hexo to funds affiliated with HT Investments instead of letting them go bankrupt. Last month, Tilray agreed to buy over $210 million worth of debt instruments issued by Hexo to the investment group. Upon closing the agreement, Tilray (TLRY) plans to nominate its Chief Strategy Officer and Head of International, Denise Faltischek, to Hexo's board of directors. The company will also have the right to appoint a Board observer. An amendment to include conversion rights at C$0.85 will give Tilray (TLRY) the right to convert the debt into approximately 35% of the HEXO shares as of April 11, 2022. However, HEXO will not receive any proceeds from the transaction.
