GRAMF is a LONG
We are hosting a fireside chat with Michael Auerbach, chairman of The Parent Company and Director of Tilray, today @ 10 AM EST.
The decline in cannabis stocks and especially GRAMF has been painful. During this downturn, the industry fundamentals have only gotten stronger, with NY and other states opening up to medical and recreational sales. The SAFE Act was re-introduced and will likely make its way through the House and the Senate in short order, where it has several sponsors.
GRAMF also trades at a discount to others in the space due to its concentration in the California market. To some degree, the California cannabis market is miss understood. Since going recreational, the California 1.0 "green rush" led to some bad actors and poor handling of the rollout that lead to investors losing a significant amount of money. In some respects the California market is underserved and is moving into a new phase of growth or California 2.0. As a "mature market" there are 706 dispensary licensees in the state, leading to one dispensary for every 38,000 residents. This is on par with other limited license states like AZ, MA, NV, MD, and FL.
So why the weakness in the industry? We will discuss these and other issues with Michael Auerbach. Michael is an entrepreneur, cannabis investor, business consultant, media producer, and private diplomat. He is the Founder of Subversive Capital, dedicated to investing in radical companies whose core missions subvert the status quo and require sophisticated government and regulatory strategies for success. Subversive Capital recently acquired The Parent Company, the Largest Vertically Integrated Omnichannel Cannabis Platform in California.
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New Mexico Legalization
New Mexico governor Michelle Grisham (D) gave final approval to legalize marijuana in the state and expunge any previous records of individuals with low-level violations. With Grisham's action, New Mexico is the third state to legalize marijuana in the past few days. Virginia and New York both legalized recreational use recently. Legal retail sales have a target date of commencement on April 1, 2022, or earlier. There is no limit to the number of licenses granted or the number of facilities a licensee could open. Still, regulators could stop issuing new licenses if "market equilibrium is deficient." Local governments cannot ban cannabis businesses entirely as some other states have allowed. Municipalities could, however, use local zoning to distance these dispensaries from schools, daycares, or other cannabis businesses. New Mexico currently has a population of about 2,000,000 and a marijuana usage rate of 20.5% compared to the national average of 17.3%. Currently, no publicly traded company has dispensary locations in the state. Still, a private company named Ultra Health, Inc. has 16 dispensary locations in New Mexico, giving them a large incumbent advantage and making them an attractive target for acquisition.
Uber Cannabis Delivery
Uber CEO Dara Khosrowshahi appeared on CNBC Monday, speaking on prospects of cannabis delivery for Drizly, the leading alcohol delivery service which Uber recently acquired in February 2021. Uber wants to find items that consumers want to be delivered fast and frequently. Cannabis falls perfectly into this category. For now, the company stated they would focus on Alcohol delivery, but when federal legalization comes into play, they are going to take a hard look at cannabis delivery.
