Canadian Cannabis stocks continue to surge higher yesterday, powered in part by increased interest from retail traders who see significant legalization potential. TLRY was the biggest winner, closing the day up 51%, with LONG BIAS CLVR up 40.5% and now up 105% in the past month. CRON, ACB, APHA, and CGC gained 21%, 14%, 10% and 6%, respectively. No, this is not a GME situation. Yes, cannabis stocks are getting attention on Reddit forums (one post with over 100k upvotes said, “Weed about to make me a millionaire in 2021”). Still, Cannabis is a growth industry, unfortunately for the Reddits that have the wrong stocks. The current line up of Canadian LP's will find it very expensive to enter the US market, and many don't have the balance sheets to play in the game. Short interest in Tilray currently stands at around 23% of shares outstanding, compared to the 114% GME was dealing with at one point. The pending merger between Tilray and APHA also helps explain some of the optimism. The fundamentals will ultimately win out, and the US MSO's will dominate the Canadian Cannabis companies.
Connecticut path to recreational cannabis - May 2022.
One of the issues that CT is facing is “Massachusetts dispensaries are advertising extensively here in Connecticut,” says the Gov of CT Lamont. “Rather than surrender this market to out-of-staters, or worse to the unregulated underground market, our budget provides for the legalization of recreational marijuana.”
A summary of the bill’s key provisions:
- Adults would be able to possess up to 1.5 ounces of marijuana without fear of punishment. The proposal includes eight different types of business licenses, including for cannabis delivery services, allocated via lottery.
- The new market would be regulated by the Connecticut Department of Consumer Protection, which would likely have the authority to determine how many licenses would be made available. Existing medical marijuana businesses would be able to transition into the adult-use market.
- The proposal also includes roughly $180,000 in funding for an “equity commission,” which would be charged with determining how to ensure that people disproportionately impacted by criminal enforcement can benefit from recreational sales.
- Municipalities would be able to create restrictions on where cannabis businesses can operate. However, the proposal bans the use of “local benefit agreements,” which have become a magnet for corruption in Massachusetts and other states.
- The proposal includes three different taxes: an excise tax on cultivation, a 3% municipal sales tax, and Connecticut’s existing 6.35% sales tax.
In fiscal 2023, the first full year of sales, it’s projected that $33.6 million in state revenues would be generated from the cannabis market. That figure is expected to hit $97 million by fiscal 2026. Starting in 2024, half of excise tax revenues would be dedicated to “municipal aid and social equity.”
Democrats enjoy large majorities in both Connecticut legislative chambers. However, the legislation is still likely to face a challenging path forward, considering that past efforts to pass full legalization have failed. CT has been trying for five years, and there's never been a vote on the issue. Like NY's efforts, this time could be different.
Idaho medical cannabis in flux
Idaho's Secretary of State approved Kind Idaho to collect signatures to put a medical cannabis initiative on the 2022 ballot. Kind Idaho attempted to get the same initiative on the ballot but suspended efforts during the pandemic. At the same time, lawmakers are advancing a more restrictive medical marijuana bill that could undercut the ballot initiative. The bill that was filed in committee limits patients to two grams of THC a month. Lawmakers are also seeking a constitutional amendment to prevent legalization from ballot measures. 36 states currently have medical cannabis programs, and three states it borders have recreational programs.
