Did Pot Just Pivot? Cannabis Preps For Possible Presidential Run

By Todd Harrison via Cannabis Confidential (July 22)

With U.S. President Joe Biden stepping aside for the presidential race and endorsing Vice President Kamala Harris, her potential candidacy for the 2024 election against Donald Trump brings attention to her stance on multiple issues, including cannabis.

Although Harris was once a prosecutor, she publicly shifted her position several years ago and supported legalization, and she has since endeavored to champion cannabis. If she gets the Democratic nod, she's widely expected to maintain her policy stance.

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PA System

Despite earlier reports that recreational cannabis legalization in Pennsylvania may have to wait until next year after being left out of the state budget, the spokeswoman of a pro-marijuana coalition said there's still a window this coming fall for a bill to get through to Gov. Josh Shapiro's desk.

"The pieces are aligned and teed up right now in a way that makes a fall session passage of adult use very likely." Brit "da cramper" Crampsie of Responsible PA.

Buck-eyed

Ohio's adult-use cannabis market is officially up and running—well sorta, with four cultivators and six processors now online.

Another 31 cultivators, 36 processors, seven testing laboratories and 133 dispensaries are in the provisional licensing queue for certificates, pending final requirements.

Tha Shiznit 🎶

A new poll found that more Americans smoke cannabis on a daily basis than drink alcohol every day—and alcohol drinkers are three times more likely to say they would benefit from limiting use than cannabis consumers are.

Stocks & Stuff

The D.C. drama drew fresh attention to Cannaland as the presidential race just shifted the political calculous around issues that appeal to young and/ or minority voters.

U.S. canna ETF MSOS finished the session +5%, albeit still under technical resistance.

Below, we'll top-line today's reaction to yesterday's news, explore a few analyst takes on the implications, finger the level of lore for holders galore, update the size of the respective Florida war chests, and continue to sniff at potential CPG involvement.

All that and more, just scroll down.

SPY 0.95%↑ QQQ 1.33%↑ IWM 1.56%↑ MSOS 2.09%↑ ETF Notional: $88M

Top Stories

Industry Headlines

Pregame (written 8:00 AM).

We fire up this five-session set on the heels of President Joe Biden stepping down and V.P. Kamala Harris the odds-on fave (84%) to assume the top of the ticket.

Investors are understandably ~~angry as f*ck~~ wary but this shake-up should help canna remain front and center for the next three months. Ditto the VP pick (there are some genuine advocates (Shapiro, Beshear, et al) and, lest you forgot, today is the final day of the comment period, which ushers in the next phase of rescheduling (ALJ decision).

Technically, the song remains the same. MSOS has to reclaim $8—bc Eight is Enough, already—if it is to begin a second-half rally or, at the very least, continue it’s bipolar stroller of “so hot” (Q1) to “so not” (Q2), before the mood flips, again.

MSOS coming into the week

Between the Bells (→ real-time market updates are now offered daily on X-subs).

There was a fair amount of reflexive trepidation early as our ‘abbreviated’ market digested the news. I preferred that to a low volume gap higher but either way and no matter what, the bulls need to earn the market’s respect and there's only one way to do that, via higher prices.

Earnings are approaching, which will likely continue the recent trend of meh reports with muted growth given a dearth of capex (in response to an onerous tax regime). We expect continued bifurcation (winners vs. sinners) but we also know that, with the comment period coming to an end today, seismic shifts are also in play.

Kamala has been extremely vocal on cannabis (both rescheduling in this term and ‘finishing the job‘ in 2.0) but of course, there’s the matter of 1. her securing the top of the ticket and 2. the election in 105 days, where current odds favor Trump 60-40.

From here to there, Kamala must show the world she has in fact changed her stripes from her days as a prosecutor—where she locked people up for cannabis—and the space should better reflect those potential implications if her numbers are able to lift.

And then there's the GOP candidate, and the potential for Unlikely Allies.

Around 2PM, we saw a Pelosi pop take MSOS to session highs ($7.82, +5.5%)…

…but with volumes so anemic, and all of $88M notional trading by the end of the day, the market, as a shadow of its former pre-custody f*ckery self, continued to more or less trade by appointment and as a public reflection of private equity.

Random Thought

We focus on the ETF a lot because it’s the dog with 25 tails and the driver of price in the absence of custody. Two names we own away from the MSO space are $VFF (big fan) and MAPS 8.33%↑, as a listed and liquid trading vehicle.

AGP on U.S. cannabis

We view one of the most important takeaways from VP Harris being endorsed by President Biden as the new Democrat nominee as things staying status quo as it relates to cannabis reform, given VP Harris is part of the current administration.

As a reminder, the comment period for the proposed rule to reschedule cannabis to a Schedule III drug ends today, and we expect there to be building speculation as to when a final rule comes heading into the election.

While there could have been some risk to a shift in priorities with a different Democratic candidate, VP Harris increases the likelihood of priorities remaining – and we believe that includes a final rule on rescheduling.

This view is due to the fact of rescheduling allowing VP Harris to demonstrate 1), her ability to drive reform regarding an issue she has been supportive of (before Biden), 2) demonstrating the ability of the administration to deliver on a priority issue, and 3) that current efforts will continue with Biden "passing the baton" to VP Harris.

For these reasons, we view VP Harris as the Democratic nominee as favorable for the prospect of a final rule on rescheduling ahead of the election.

Beacon on U.S. cannabis:

“We believe [JB’s] final months will be focused on policy wins designed to support other Democrats. Pushing Rescheduling across the finish line will now be part of Biden's legacy. Absent a hearing, we could see a final rule by September/October.”

Beacon on Florida cannabis:

The political action committee supporting the Florida adult-use legalization measure on this November's ballot has now raised over $61M, following $314k in additional donations during the week ending July 12th.

The opposition PAC started by Governor DeSantis had received $129k in donations as of the same cutoff date, though the state's hemp producers have reportedly pledged $5M to the Republican Party to help defeat the measure.

Jefferies on U.S. cannabis:

The OGI + BAT relationship shows that an appetite for U.S. exposure among broader CPG is building, potentially influenced by the reform momentum at the federal level, and specifically plans to reschedule cannabis this year. If that happens, along with other potential measures like SAFER and a Garland Memo, we think it is very possible we see other CPG looking to get exposure over the next 12 months.

Stems & Seeds

A review concluded that CBD shows various clinical benefits against various neurological and neurodegenerative diseases.

Cannabis More Effective For Musculoskeletal Pain Than Traditional Medications

Housekeeping

I’ll be heading to Nashville late Wednesday (through Friday) for The Karate Combat Championships sponsored by Tempters.

I've never been to an event like this—or Nashville, for that matter—so I look forward to supporting our port-co/ client and experiencing something new with an investor/ pal who I've known since high school in Woodland Hills, CA. It’s the little things.

ICYMI, all payments to Cannabis Confidential have been halted until further notice but (as you can see) I'll continue to write gratis when there is something to say.

Have a safe night and please enjoy responsibly.

If you'd like to help Mission [Green] change federal cannabis policies, please click here.

CB1 has positions in / advises some of the companies mentioned and nothing contained herein should be considered advice

This article is from an external unpaid contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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Comments

Cannabis rescheduling seems to be right around the corner