Higher Exchanges

Jesse, Toby, and Morgan begin the show by catching up on the latest cannabis-investing news. Sentiment around the timing of the DEA's response continues to improve and this is driving inflows into the US cannabis MSOS ETF. The group also covers the addition of Ascend to the MSOS portfolio. 

The bulk of the conversation is around the importance of valuations in the cannabis sector and which metrics are most important. They discuss the strengths and weaknesses of EV/sales, EV/AEBITDA, and EV/cash flow and how they are best when viewed together. Jesse shares his experience in the hedge-fund world blending valuations with growth prospects and how the qualitative assessment of the management team is important, especially in emerging sectors. 

The episode concludes with a quick discussion on capex budgets, which will be continued in the coming weeks. 

Jesse, Morgan, and Toby are back together to discuss the improving environment for US cannabis stocks. This is the fifth consecutive week of gains and broad US cannabis benchmarks are up over 50% this year. The boys analyze and appreciate the recent run in cannabis stocks and discuss how the space has evolved since the HHS announcement. They review the top performers AYR and Trulieve and those that have lagged like TerrAscend and The Cannabist. 

The conversation evolves into how the set of catalysts may play out in 2024, and the risk of remaining Schedule I or being moved to Schedule II. The conversation concludes by debating whether the space is investable with the 280E tax burden. 

This week's show starts with Jesse, Morgan, and Toby discussing the strong start to 2024. The group evaluates what's been driving the positive returns and inflows to the MSOS and MSOX ETFs. 

Verano President Darren Weiss and CIO Aaron Miles join 20 minutes into the episode. Darren and Aaron react to the contents of the HHS recommendation and also update us on the Boies lawsuit. We also dig into how 280E removal would impact Verano's business and potential priorities with the increased cash flow. 

Florida Governor DeSantis recently commented on adult use appearing on the Florida ballot in 2024 and the Verano team shares their thoughts on the process and how much the Florida market may grow if adult use is approved. The episode concludes with Aaron and Darren talking about the interest they are seeing from institutional investors since the HHS announcement. 

This week Jesse, Morgan, and Toby discussed the release of the HHS rescheduling recommendation. For the first half hour, Brady Cobb, Founder and CEO of Sunburn Cannabis, shares his perspective on the contents and timing of the release.  He also adds his thoughts on the implications of 280E removal and how he thinks about it from an operator's perspective. 

Higher Exchanges is recorded live on X and Boris Jordan, Executive Chairman of Curaleaf, was listening and joined for the latter half of the episode. Boris shares his thoughts after reading the full 252-page document, updates us on Curaleaf's roadshow, and how and when institutions may participate in the sector. 

This week's show begins by talking about how Jesse is seeing increased interest in companies wanting to tell their stories ahead of a potential increase in the investor base. This is complemented by observations that the cannabis capex cycle may be improving. 

On the state level, new Illinois data shows the state had a strong year, which is contrasted against Tilray's earnings report and the ongoing challenges in Canada. The conversation transitions into talking about the trend of equitizing debt and recent deals done by 4Front and Vext. 

The episode concludes by discussing the HHS saying they will release an unredacted version of its Schedule III recommendation and what this may mean for the timing of the DEA announcement. 

This week on Higher Exchanges the guys start by recapping the holiday break and how they were not surprised that we did not hear from the DEA. This transitions into a conversation about the "news" that the DEA is reviewing cannabis scheduling. While our listeners knew this, it was nice to see the uptick in attention by those following less closely. 

The heart of the episode is about what we are looking forward to in 2024 and what catalysts may drive returns. The DEA's response is number one on the list, followed by potential adult-use flips in Florida, Pennsylvania, and Virginia. Ohio's rollout also made the list and a revised Farm Bill possibly clamping down on the thriving hemp-derived cannabinoid market. 

The show concludes by sharing companies we are watching in 2023. Jesse shares his enthusiasm for California operator Leef Brands and Morgan covers why he thinks Ascend will have a strong 2024. 

This week Morgan and Jesse recap the top cannabis-investing stories from 2023. HHS announcing its recommendation for Schedule III was the consensus top pick, especially when paired with the Boies lawsuit. Other notable news includes Maryland launching adult-use sales, Ohio voting in favor of adult use, increased operational efficiencies, cannabis sales increasing while alcohol declines, and uplisting to the TSX. 

Toby is on vacation, so Jesse and Morgan kick off the show discussing recent performance and the latest Schedule III speculation. Jesse shares data on different portfolios he's tracking that may indicate what types of stocks will perform best in the event we get positive news from the DEA.

Curaleaf Executive Chairman Boris Jordan joins halfway through to discuss the company's uplisting from the CSE to the TSX. Boris shares Curaleaf's roadshow plans, and benefits of the uplisting, and gives his latest perspective on the probabilities and impact of federal reform. 

The show concludes with Morgan explaining the widespread impact of the hemp-derived cannabinoids. This market is beginning to rival the legacy market in scale and impact, especially in states without legal cannabis programs. 

This week's episode kicks off with Jesse providing a review of his trip to Las Vegas for the MJBiz Conference. Sentiment remains optimistic and Jesse touches on the meetings he had, parties he attended, and friends he ran into along the way. 

Ohio issued new adult-use regulations that should provide a faster opening for adult-use sales, but a higher excise tax and THC caps on flower and concentrates. Morgan and Toby share their thoughts on the new regulations and how Ohio should learn from prior states that have gotten too greedy with taxes. 

At the halfway mark, John Hartmann, CEO of Ascend joins the show to discuss their recent strong results and what's been driving the improved outcomes. John talks about what he wanted to change when he joined the firm, the importance of Ohio, and the success of their new Royale and Tunnell Vision products. Ascend has a unique outlet store model and John explains how these fit into the broader retail strategy and the types of products these stores offer. The conversation concludes with a discussion about Schedule III and how it may change companies' capital allocation processes. 

This week the guys start off by reviewing their Green Wednesday experiences. Morgan shares some data on Green Wednesday sales and what he purchased. Jesse picked up some cannabis beverages and explained the reaction that they received at a Friendsgiving event. 

The conversation transitions into the opportunities in 2024 and what could go wrong and lead to more downside. Schedule III is the most critical component, but we also discuss new states, and how a Garland Memo would be a welcome complement to rescheduling. 

The episode concludes by discussing the Capital Intensity Ratio and the traits of capable capital allocators. Even with Schedule III, timely capital raises and investment decisions will be key factors in determining the long-term winners.