Issues
The cannabis sector remains unloved as investors abandon hope that President Donald Trump will come through on his campaign promise to reschedule the drug.
Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).
I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.
Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).
I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.
Updates
It’s cannabis company earnings season. So, I highlight fourth-quarter results in this issue.
Before we get to the details, here are the key takeaways from earnings reports:
* Price compression continues, creating an ongoing “Hunger Games” environment in which only the financially strong will survive, given the debt levels at a lot of cannabis companies. Much of this debt comes due over the next two years. Bankruptcies might be the clearing event that helps bring an end to price compression. None of our names appear to be at risk, but no guarantees...
Before we get to the details, here are the key takeaways from earnings reports:
* Price compression continues, creating an ongoing “Hunger Games” environment in which only the financially strong will survive, given the debt levels at a lot of cannabis companies. Much of this debt comes due over the next two years. Bankruptcies might be the clearing event that helps bring an end to price compression. None of our names appear to be at risk, but no guarantees...