Building Blocks

February was a month of digestion for the cannabis sector after the January rally alleviated the previously oversold market conditions.

While there were some speedbumps to our thesis—hints the UN will push their vote to reschedule cannabis to March 2020 (despite the World Health Organization recommendation to do just that) and Departments of Health in multiple States barring CBD as a food or drink ingredient until FDA guidelines are published—there were also encouraging signs.

We saw continued adoption of the space, with portfolio companies Village Farms International and Canntrust Holdings Inc. listing on the NASDAQ and NYSE respectively; and several Wall Street research departments assumed new coverage of cannabis-related companies, effectively priming the sector for institutional adoption.

Multiple Democratic candidates made cannabis legalization or decriminalization a cornerstone of their presidential platform, raising the odds, in our view, that the current administration will move to assume the most populous issue of our generation prior to the 2020 elections.

The 116th Congress’ House financial subcommittee held its first hearing on cannabis to discuss potential banking reform for the cannabis industry, Federal Reserve Chairman Jerome Powell called for clarity on marijuana banking issues during a Senate Finance Committee hearing, and former Speaker of the House John Boehner launched a new lobbying group for cannabis.

New Jersey politicians reached a broad agreement on a bill to legalize recreational marijuana in New Jersey while New York Governor Andrew Cuomo and NYC Mayor Bill DeBlasio said that recreational cannabis sales would generate the revenue necessary to help fix the subway system. Other States along the eastern seaboard signaled their intention to legalize, as well.

Martha Stewart took an Advisory position at Canopy Growth Corporation, while Barney’s announced that it would open a line of luxury cannabis products from Beboe, which was recently purchased by portfolio company Green Thumb Industries. And GW Pharmaceuticals announced “high awareness and demand” of Epidiolex®, the first FDA-approved plant-derived cannabinoid medicine.

The European Parliament passed a cannabis resolution, joining the World Health Organization in supporting medical marijuana. The non-binding resolution seeks to incentivize European nations to increase access to medical marijuana, prioritizing scientific research and clinical studies, which we expect will provide validation for adoption by western medicine.

As always, please contact us if you have any questions or would like further clarity on the strategy.

With kind regards,

Todd Harrison

 
Feb LTI image.jpg
 
todd harrison