Make America Legal Again? Go for It, Donald ⛓️‍💥🥬

Chris Christie suggests that Trump might reclassify cannabis, fueling investor optimism and boosting stocks in hopes of federal reform and market expansion.

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Nicolas Rodriguez & Patricio Liddle
November 13, 2024

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Happy Wednesday from sunny Argentina—sending warmth to everyone feeling the autumn chill up north! Nicolás Rodríguez and Patricio Liddle here, with your midweek market pulse. In an exclusive chat, Chris Christie predicted President-elect Trump could reclassify cannabis to ease legal barriers, sparking a 15% rally in the MSOS ETF. Earnings season paints a clear divide: global players hold firm while domestic operators face pressure. And in a historic move, New Jersey just became the first state to offer medical cannabis benefits for public employees, signaling bigger shifts ahead.

In an exclusive conversation with Benzinga’s Javier Hasse, former New Jersey Governor Chris Christie predicted that President-elect Donald Trump will attempt to deschedule cannabis at the federal level. Christie, who has traditionally opposed federal legalization, noted that descheduling would remove legal barriers for the industry, especially in banking and financial services.

"What I think Trump will attempt to do, which I don't favor, is change marijuana to a non-scheduled drug that wouldn’t be illegal, and then banks and other institutions would be more free to do business with cannabis store owners and entrepreneurs," he said.

Following Christie's remarks, cannabis stocks experienced a significant boost. The AdvisorShares Pure US Cannabis ETF (MSOS) jumped over 15%, and major companies like Cronos Group and Tilray Brands saw substantial gains.

He also sees Trump going light on crypto regulations, which added more fuel to the market rally.

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Garden State Vibes

More news is rolling in from Jersey! First off, NJ is making history by becoming the first state to offer medical cannabis as an employee benefit for government workers in Trenton and staff from some local school boards.

Meanwhile, Wu-Tang Clan's Raekwon and Charlamagne Tha God are lighting up Newark with the grand opening of Hashstoria, a sleek new dispensary that's set to become a cultural hotspot. 

But it's not all smooth rolling—state delays on cannabis lounge approvals are leaving entrepreneurs in limbo. To top it off, New Jersey has started enforcing its statewide ban on synthetic hemp products. And the Garden State isn’t alone: Ohio lawmakers are gearing up for their hemp product ban, citing youth safety concerns.

Three’s A Crowd: Village Farms, Green Thumb, And Jushi Bet On Different Paths

Village Farms is expanding into Europe with a 2,000 kg facility, eyeing $12.7M in annual sales, while Green Thumb flexes its $176M cash cushion for acquisitions. Meanwhile, Jushi dives into Ohio’s new adult-use market, aiming to offset declines in core states. Whose strategy will come out on top?

The cannabis sector’s earnings reports painted a clear divide: firms with international strategies leverage global growth to weather economic storms, while domestically focused operators face shrinking margins and ballooning losses. Despite some bright spots in adjusted EBITDA and gross profit improvements, the overriding theme is a struggle for profitability against a backdrop of flat revenues and intensifying cost pressures.

AYR Wellness (OTC: AYRWF) reported flat Q3 revenue at $114.4 million, with net loss soaring 160% to $50.51 million. Despite the hit, AYR improved its gross profit to $48.1 million and raised adjusted EBITDA by 10.5% to $28.4 million, focusing on cost management. The firm made headlines today with a strategic move into New York through its partnership with Black Star Wellness, securing a conditional license for vertically integrated medical cannabis operations.

Cronos (NASDAQ: CRON) reported a 38% increase in revenue to $34.3 million, swinging from a $1.6 million loss last year to a net income of $7.3 million. Although gross profit dipped due to inventory adjustments, adjusted EBITDA losses narrowed significantly, underscoring the success of Cronos’ international expansion. Beacon Securities is maintaining its C$6/share price target for Cresco, noting that the stock trades at 5.0x its updated forecast, a 12% discount compared to the 5.8x average of its major MSO peers.

Weedmaps (NASDAQ: MAPS) posted its eighth quarter of profitability, with a 312% spike in net income to $5.3 million. Revenue steadied at $46.6 million, while adjusted EBITDA reached $11.3 million, highlighting consistent financial health backed by strong cash reserves.

iAnthus Capital (OTC: ITHUF) struggled, with a 6.1% revenue decline to $40.3 million, but managed to boost gross profit to $18.1 million through strategic cost cuts. Nevertheless, a net loss of $11.6 million and liquidity concerns signal potential financial strains ahead.

Safe Harbor Financial (NASDAQ: SHFS) marked a turnaround, reporting net income of $354,000, reversing a prior loss. Despite a 20% revenue drop, cost reductions boosted profitability, with the company now better positioned for sustainable growth.

GrowGeneration (NASDAQ: GRWG) 's net sales declined 10.2% to $50 million due to store closures, but same-store sales rose 12.5%, reflecting customer retention. However, gross profit fell 33.2%, exacerbating a widened net loss of $11.4 million as the company shifted focus toward proprietary products.

Cybin Inc. (NYSE: CYBN) advanced its Phase 3 trials for CYB003, aiming to address Major Depressive Disorder. The company posted a Q2 net loss of C$57.2 million, up from C$11.9 million, as operating expenses surged amid expanded research efforts. Cybin’s cash position remains strong, with C$154.3 million in reserves to back its clinical developments.

Ispire Technology (NASDAQ: ISPR) reported Q1 revenue of $39.3 million, down 8.2% year-over-year, yet improved gross profit by 13.2% to $7.7 million. Net loss widened to $5.6 million as the company ramped up investments in marketing and R&D. Ispire’s push towards high-margin products and strategic global partnerships hints at a potential rebound.

Anaheim Cannabis Spotlight Event Seals Benzinga’s Stellar Year

Last but not least, Benzinga wrapped up its 2024 cannabis event series with a bang at the California Cannabis Market Spotlight in Anaheim yesterday. The one-day gathering drew industry heavyweights eager to connect and share insights on the future of cannabis in the Golden State. 

Packed sessions covered capital strategies, retail growth, and consumer trends, while a star-studded speaker lineup, including leaders from Glass House Brands and Gold Flora, made it a must-attend event. A big shoutout to the events team for ending the year on a high note!

Stories In The Spotlight:

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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