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Good morning! It’s Monday—snow outside, coffee brewing, and the week ahead waiting to be tackled. Nicolás Rodríguez and Patricio Liddle are here with your quick, energizing capsule of cannabis updates. The DEA faces corruption claims and anti-cannabis dealings just days before a pivotal Dec. 2 hearing, while Cresco, Decibel, and TILT reveal a mix of promise and challenges. With federal cannabis policy hanging in the balance, this briefing has everything you need to power through the day and stay ahead of the curve.

Green Pockets, Red Flags

The cannabis industry struggles with optimism and challenges. Cresco’s (OTC: CLRBF) Q3 revenue hit $180 million, dipping 2% sequentially. With a steady 29% EBITDA margin, it seems stable—until you see the negative $3 million cash flow and towering 80% leverage. Meanwhile, its EV-to-sales ratio 1.6x looks like a steal compared to Curaleaf’s 2.2x, but the risks are equally towering.

Decibel (OTC: DBCCF) brought CA$24.1 million ($17.2 million) for Q3, a 9% sequential boost down 12% YoY. Still, gross margins shot up to 53% from last year’s 44%, and free cash flow surged 75% YoY to $1.8 million. Efficiency is its North Star.

TILT (OTC: TLLTF), however, faced steep declines. Gross margins fell to 14%, and vape arm Jupiter struggled, with U.S. sales plunging to $9.4 million. Add $62 million in debt, and TILT’s road ahead is anything but smooth. Analysts might argue that without a dramatic shift toward higher-margin products or reduced debt obligations, the company's long-term viability could hinge on divesting its plant-touching business (PTB) and addressing operational inefficiencies. Zuanic underscores that the potential sale of the PTB and strategic collaboration with CCELL could unlock value, but with limited visibility on these efforts, TILT's financial health remains precarious amid mounting competitive pressures

DEA’s Double Trouble

The DEA finds itself in two scandals. A DOJ report revealed the agency seized $209 million from over 5,200 travelers at 15 airports over the past decade, often without proper documentation, and even paid tens of thousands in kickbacks to airline employees. The DEA is also accused of unlawful talks with anti-cannabis group SAM, raising doubts about its neutrality in the marijuana rescheduling debate. Despite over 42,000 public comments supporting cannabis reform, the DEA only approved one cannabis company, Village Farms, to participate in the December 2 hearing. Advocates call for transparency in what could reshape federal cannabis policy.

Federal Cannabis Policies At A Crossroads

Big changes might be on the horizon for federal cannabis policies, especially with President-elect Trump picking Pam Bondi as his Attorney General. Unlike former nominee Matt Gaetz, who is a strong advocate for cannabis legalization, Bondi has a history of opposing cannabis reform. As Florida's Attorney General, she challenged medical marijuana initiatives and defended laws restricting cannabis use. This has some in the industry wondering how her appointment might influence the federal stance on cannabis.

On the legal front, a Massachusetts lawsuit is taking aim at federal cannabis prohibition. Spearheaded by heavyweight lawyer David Boies, the case argues that federal enforcement against state-legal cannabis businesses violates constitutional principles. If successful, it could remove significant barriers like heavy taxation and limited banking access for cannabis businesses. Interesting times ahead!

Weed Industry News From Texas, Kentucky, Nebraska And California

As usual, a lot is happening at the state level. In Texas, AG Ken Paxton’s lawsuit against Dallas’ Proposition R challenges voter-approved cannabis decriminalization. This legal push highlights the clash between grassroots reforms and state control, with Paxton claiming cities cannot override Texas drug laws.

Meanwhile, Kentucky’s medical marijuana program launches on December 1. Governor Beshear announced an online directory for finding certified practitioners, ensuring smooth access to care for patients.

Nebraska's recent voter-approved medical cannabis legalization is facing legal challenges. Allegations of widespread petition fraud and notarial malfeasance could potentially nullify the election results, despite strong public support. The case underscores the contentious nature of cannabis reform in the state.

In California, Josh Wurzer, co-founder of SC Labs, discusses challenges like lab shopping, pesticide issues, and the thriving black market. He emphasizes the need for better regulation and enforcement to restore consumer trust. Wurzer believes California still produces some of the finest cannabis in the world and sees potential in fixing the current system to benefit both consumers and legitimate businesses.

Tackling Stigma In Cannabis Insurance

Before we wrap up, don’t miss Pato’s exclusive interview with Loretta Eldridge and Matt Jardine from EQUA, a trailblazing Canadian insurance brokerage tackling stigma in the cannabis industry. From inflated premiums to tailored solutions, EQUA is redefining how insurance serves cannabis businesses. Discover how their advocacy and education are driving industry transformation in this compelling feature. Dive into this article to see why EQUA believes they’re just at the “precipice of change.”

Stories In The Spotlight:

• US Overdose Deaths Decline As Fentanyl Potency Weakens, Harm Reduction Expands

• Formula 1 Drivers React To Cannabis Smell At Las Vegas Grand Prix: 'Everyone Would Test Positive'

• LEEF Brands Completes 10:1 Share Consolidation

• 'The Most Authentic Celebrity Story In Cannabis': Khalifa Kush Exec

• Hemp-Focused CV Sciences Expands Via New Cannabis Acquisition, Here's What Investors Need To Know

Our Writers Today

Nicolás holds a B.A. in International Relations, an M.A. in International Affairs, and an M.Phil in Public Policy. He is a doctoral student in Public and Urban Policy at The New School in New York City. After working for the United Nations in 2014, Nico pivoted his research to studying the relationship between the cannabis industry and economic development.

Patricio is a development economist with extensive experience in IT, finance, and banking. He writes about the economic and social opportunities obscured by over half a century of failed drug prohibition. Beyond his professional expertise, Pato is a committed advocate for social change, passionately working to promote harm reduction and reform drug policies.

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