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 | | | MORE Act to Decriminalize Cannabis Clears House Committee | | Matthew Carr | Chief Trends Strategist | The Oxford Club | | | | | Thanksgiving is just days away!
We'll soon be stuffing ourselves with turkey and all the side dishes that round out our meal.
Then we'll nap, watch some football and likely do some holiday shopping.
We also have a shortened trading week in front us. But by no means does that mean there's less market-moving news to digest.
Last week, our High Five focused on U.S. multistate operators (MSOs).
And, boy, did they deliver!
And adding to the bright earnings from Green Thumb Industries (OTC: GTBIF), Trulieve Cannabis (OTC: TCNNF) and others was a major catalyst out of Capitol Hill.
This triggered a massive rally... | | | Pass MORE
Even though pot stocks have struggled in 2019, it's been a year of major milestones for the industry.
First, the Secure and Fair Enforcement (SAFE) Banking Act passed both a House committee and floor vote. The act was the first piece of pro-marijuana legislation to do so.
These were historic moments.
But another stone was recently laid on the path toward ending federal cannabis prohibition.
On Wednesday, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act cleared the House Judiciary Committee, 24-10.
The MORE Act is not a sweeping social justice reform measure, but it seeks to decriminalize cannabis at the federal level. It would essentially do for cannabis what the 2018 Farm Bill did for hemp.
Namely, unlocking billions and billions of dollars for pot stocks.
NORML political director Justin Strekal stated, "The passage of the MORE Act represents the first time that the Judiciary Committee has ever had a successful vote to end the cruel policy of marijuana criminalization. Not only does the bill reverse the failed prohibition of cannabis, but it provides pathways for opportunity and ownership in the emerging industry for those who have suffered most."
As we've seen in 2019, momentum continues to build for marijuana legalization.
Now, the measure isn't expected to move to a House floor vote until 2020. And as usual, the Republican-controlled Senate is seen as the biggest roadblock to its success.
(Though, you should keep an eye out for the next episode of the CannaBiz Now! "Legislative Roundtable." We discuss the MORE Act in detail.)
I've also heard some dissent that the focus isn't on the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. As I've discussed in the past, this has broad bipartisan support.
Colorado Republican Rep. Ken Buck offered the STATES Act as an amendment to the MORE Act. But he didn't push for a recorded vote, so it was rejected.
At times it's felt like American legalization has been slogging forward.
We've seen that weigh on shares this year... But progress is being made. And the MORE Act passage last week is another positive step forward for what is projected to be an $80 billion U.S. industry by 2020.
Another Deal Gets Trimmed
I recently stated that we're likely to see more than half of all the merger and acquisition deals announced over the past year be renegotiated or abandoned.
We've seen Cresco Labs (OTC: CRLBF), Curaleaf Holdings (OTC: CURLF) and MedMen Enterprises (OTC: MMNFF) completely abandon or scale back major acquisitions.
And last week, Harvest Health & Recreation (OTC: HRVSF) announced it too was downsizing its deal of CannaPharmacy.
The original $88 million price tag was for licenses in Delaware, Maryland, New Jersey and Pennsylvania. Instead, Harvest Health will focus on just Pennsylvania and pay $26 million for CannaPharmacy's Franklin Labs. It'll fund this with $15 million in cash and the remainder in a promissory note.
The High Five
Cannabis earnings season is still chugging along. And even with the shortened trading week, there are more than a dozen companies on deck.
So, once again this week, our focus is on American MSOs.
Below are our High Five, where - each Monday - I cover the five pot stocks I believe will make major moves - up or down - in the week ahead.
1) Green Growth Brands (OTC: GGBXF) will report first quarter fiscal year 2020 earnings tonight after the closing bell.
Last month, the MSO and CBD store operator reported fourth quarter revenue surged 29% sequentially to $15.7 million.
It had 47 dispensaries open in three key states, as well as 58 CBD shops (52 opened in the quarter). Fourth quarter CBD revenue skyrocketed 271% sequentially to $1.7 million. And Green Growth forecast first quarter CBD revenue should leap another 200% sequentially. That means we're looking for $5.1 million in CBD revenue.
2) Planet 13 Holdings (OTC: PLNHF) will report third quarter results tonight as well.
Expectations are for the Las Vegas SuperStore operator to report a 238.8% increase in revenue to $16.65 million. And we're looking for earnings per share (EPS) to be flat.
The company has missed EPS expectations the last four quarters.
For October, Planet 13 reported it served 1,923 customers per day with an average ticket of $94.48.
3) MedMen Enterprises (OTC: MMNFF) will report first quarter fiscal year 2020 results on Tuesday after the closing bell.
Wall Street is looking for a 122.5% increase in revenue to $47.75 million with a loss of $0.11 per share.
Shares are trading at 52-week lows after the company announced it was laying off 190 employees and selling noncore assets.
4) Cresco Labs (OTC: CRLBF) will report third quarter results after the bell tomorrow.
Analysts are looking for $38.45 million in revenue with a loss of $0.02 per share. The company has missed EPS the last three quarters, but by smaller amounts each time.
5) Vireo Health (OTC: VREOF) will report third quarter results on Wednesday before the opening bell.
This will be the MSO's first earnings release since Bruce Linton joined the company as executive chairman. So plenty of ears will be tuned into this one.
Over the past month, this week's High Five have once again largely outperformed our benchmark Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF). Planet 13 is the only one in positive territory during that span. But Cresco Labs and Vireo Health have stayed out in front of the marijuana ETF.
Green Growth and MedMen are really lagging, in large part because of their recent fourth quarter results.
But we're looking for each of these to see a renewed spark this week.
It hasn't been a feast for pot stock investors this year. Not unless you've been short.
But as the year inches toward its close, I'm feeling optimistic about the headway being made on the legislative side.
The MORE Act will potentially be a game changer for American cannabis companies. And I believe the end of prohibition is looming.
So indulge in an extra serving of turkey, pumpkin pie and cranberry sauce on Thursday. And be thankful that the decades of failed and needless demonization of cannabis are likely coming to an official end.
If you have a pot stock in mind that you'd like me to discuss here, click the comment button below.
Happy Thanksgiving!
Here's to high returns,
Matthew | | | | |  | | | | | |  |  | | | | Matthew Carr | November 21, 2019 Plus Products is taking steps to become a national brand and edibles market pioneer. Read More | | | | |  | | | | David Fessler | November 20, 2019 Solar power is growing rapidly, while other energy investments are going nowhere fast. Read More | | | | |  | | | | Matthew Carr | November 19, 2019 Investors are wary right now. That means there are small companies with tremendous upside and growth potential... trading at huge discounts. Read More | | | | | | | | |
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