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So much for SAFE Banking this go-around. Schumer announced at a press conference that he is aiming to formally file his much-anticipated bill to federally legalize marijuana in April.
https://www.marijuanamoment.net/schumer-plans-to-file-marijuana-legalization-bill-in-april-as-top-house-lawmaker-details-his-own-reform-plan/
I would like to hope that this is the benefit that comes from being an operator in an "OG" regulated market. The expectation being that these issues have already appeared and have been addressed from an market producer standpoint...however, maybe this is something isolated/specific to PA because Grassroots was on there, and they are also Colorado operator.
Great! Just as the industry starts to see momentum, Curaleaf (5 pages of products) and Trulieve (5 pages of products) might have just sparked a second round of vape-gate. First posted by Alan Brochstein, here is an 18-page document of all the products that the state of PA is enforcing a mandatory recall for 'additives not approved for inhalation by the FDA'. Between the 'biggest' operators, and all the CBD psychoactive spinoffs (like D8, D10, etc.) it's almost like the industry is trying its best to force government regulation:
https://www.health.pa.gov/topics/Documents/Programs/Medical%20Marijuana/DOH%20-%20Withdraw%20of%20Products%20Containing%20Additives%20Not%20Approved%20for%20Inhalation%20by%20the%20FDA.pdf
Here is the newest event...however it still doesnt have Schumer's buy-in, which is the only thing that matters.
It is good to hear that Perlmutter plans to attach it to every bill he can...I think eventually, when Schumer needs a win before mid-term elections, he will take what is in front of him.
@natsfert
Perlmutter says that @SpeakerPelosi told him she plans to go to advocate for #SAFEBanking in conference on the America COMPETES bill.
9:05 AM · Feb 4, 2022·Twitter
Thanks for the link. I wonder if the last one was postponed because SHWZ committed to Seeking Alpha first? The timing is a little strange, but huge thanks to MJ Stock Trader for seeing it through given the recent passing of his father.
Rep. Ed Perlmutter: Still pushing even though he plans on retiring this year. He has always been the #1 advocate for SAFE Banking...but knowing that he also sidestepped on SAFE Banking, for his party, when deciding not to push it in Committee, I often wonder if he is just working toward the next phase of his career...like John Boehner.
@RepPerlmutter
I have filed #SAFEBanking as an amendment to #AmericaCOMPETES b/c cannabis-related businesses – big and small – are in desperate need of access to capital & the banking system in order to operate in an efficient, safe manner & compete in the growing global cannabis marketplace.
4:55 PM · Jan 28, 2022·TweetDeck
In regards to podcasts...and I did listen to the one you posted, earlier this week. In this weeks High Rise podcast, with Cy Scott and Emily Paxhia, they announced that they will be interviewing Rep. Nancy Mace in next weeks podcast. However, while I think her plan was well thought out, and could gain bipartisan support, I also take it with a grain of salt because immediately following her announcing the plan the Republican party of South Carolina immediately opposed it. Either way it should be interesting.
It's sad. That is how I see 2022 going. More empty promises...because both sides will be trying to prevent the other from a win going into midterms. I think the best case scenario...and I havent yet convinced myself that this is plausible, because history has proven that he is an advocate for drug policy...is if Biden decides to pardon low level, federal, cannabis convictions. If this happens, I could see people easily pouncing back into cannabis investments, and probably more so, backing his party going into midterms seeing the move as 'hopeful' change originating from the top-down. Really, I think 2022 is the year where more states question whether or not to go medical/recreational...and from an investment standpoint...where investors start to transition to companies that are profitable/cash-flow positive.
Awesome! Someone should show this tweet to Sen. Schumer since he is in the position to do something about it.
I sifted through several of the documents on the NM website and struggled to find the specifics surrounding your question. Most of the information was defining the differences between a medical patient and a recreational customer, in terms of qualifications and acceptable purchase quantities:
https://ccd.rld.state.nm.us/laws-regulations/
However I was able to find simplified information on COVA, a cannabis POS inventory, compliance and analytics site:
"Medical marijuana dispensaries that obtain a recreational marijuana dispensary license could operate both entities in the same/shared location."
https://www.covasoftware.com/us-dispensary-laws/newmexico
Wow thanks. I missed that one. Good to also see that regulators are taking a common sense approach by cutting upfront plant costs to encourage more industry involvement, expecting to make up the difference down the line, as the industry grows in the state.
https://www.krqe.com/news/marijuana/recreational-cannabis-industry-may-be-off-to-bumpy-start/
"Monday, there were about 360 applications for cannabis licenses, including retail, production, and manufacturing. Of those, just 53 have been approved.
That breaks down to 19 producer licenses, 19 micro producer licenses, three manufacturer licenses, and 12 retailer licenses."
Since we are acquiring established businesses, here's hoping for first mover advantage.
Hoop, Thanks for the clarification. Your detailed thoughts/rationale makes a lot more sense than the previous. Knowing that Dye wants to be a regional player, and because Starbuds already exists, Oklahoma could be the next move. Obviously I am more for a cautious, methodological, approach...mostly because I still think cannabis is so early in the process, so time is on our side, and therefore there is no real need to stretch the company too thin. I just hear that the OK landscape is oversaturated right now and products are cheap (which could play into your border hopping comment). I doubt that Arizona is in the picture. From what I understand all the current licenses are tapped out, therefore it is pay (HUGE) to play. Also, it's doubtful to be Utah because (I read), as of this past July, they moved their medical cannabis retail model to distribution through pharmacies. Not saying that SHWZ couldnt acquire one of the (very) limited cultivation licenses, I ruled it out because the company wouldnt necessarily be vertically integrated in that state...and it also doesnt play into the 'go-deep' strategy. Kansas seemed interesting due to population and bordering Missouri (double the population of KS), up until a week ago, when (I read) legislation was moved out of committee and therefore jeopardizing the medical side in the state. Thanks for the conversation.
Hoop, I am not trying to argue, just thought I would point out that you're comparing apples and oranges. Sure SHWZ has their nutrient line, but it is nothing in comparison to the Home Depot of the hydroponics/cannabis supply industry, that is GRWG. Their move into Oklahoma makes perfect sense. It is oversaturated from a licensed perspective. There is a license for every 93 patients...and those operators are going to need supplies. It is super easy to get a license. And the state is not yet recreational. From a SHWZ, (primarily) cultivation and retail oriented company, the oversaturation of operators fighting for 10% of the population that holds a medical card, doesnt exactly suggest that the Oklahoma landscape would be a great use of capital. With all that being said, GRWG is on my radar if this bloodbath continues, because I wouldnt be the slightest bit shocked if Home Depot...or just a bigger fish...makes a play at the company.
Inflation might slow the amount of new investors willing to hold/add cannabis stocks...but industry excitement, specifically surrounding political influence, IMO, is the quickest way the SP increases. We all know Schumer will have it as part of his reelection campaign. In addition, Perlmutter is still focused on getting SAFE Banking passed before he retires. Historically the odds arent in his favor, but this could drive excitement back into the industry (personally I am not counting on any 'promise-based' industry spike to be maintained). We also havent surpassed the 30-day tax loss wash rule. Will we see a pop come February? What I believe we will see in 2022/23 is other states considering adult use because they are losing potential tax dollars to neighboring states. For instance, if NJ finally opens its recreational doors, this could force the legislature of PA to finally accept what the majority of Pennsylvanians want...adult use. As for lower demand, I think that has to be expected as the industry matures. This is just another factor in competition that will prove operator efficiency. Just because demand is decreasing doesn't necessarily mean that SHWZ's revenue will follow suit. They could offset this by increase consumer market share...which I believe is happening. Now do I see a down Q4, yes, only because money has been spent to grow the business. However, like past earnings, Dye could continue to surprise...and that is what I am hopeful for.
StevenRisk, I dont necessarily disagree. I mean cannabis sales saw a boom, due to COVID, and are slowly rebalancing. Add in that the feds will be doing 4 rate hikes, and 2022 sales could see continued decline. Then you have 2022 as a midterm election year, and midterm election years arent the greatest market return years. For the industry as a whole, I personally do not expect much this year. I expect more hype surrounding cannabis, and politicians trying to push the platform in an attempt to secure their positions. I think Schumer will push his CAOA...and run out of time to trying to last second push SAFE banking, because the opposition will be focused on blocking any win so as not to lose their own parties chances from overtaking seats. I will go as far as to guess that AOC will challenge Schumer for his seat using cannabis, specifically his lack of accomplishment while holding the #1 position to get something done, against him. Utimately I expect 2022 to end in another year of all talk no (cannabis) show, with the Dems losing seats and a lame duck session for the next two years. That doesnt mean that, in addition to possible stock price hype spikes, I dont also see some potential moments for the industry, as new states come online, businesses expand (seeing additional sales channels) and/or consolidation. As an investor in the industry, I am constantly reevaluating and restratigizing. SHWZ is my core position, and I still have faith in my investment. Even though my 2022 industry view is so pessimistic. I have no intentions on turtling. I plan to trade around a core position while also playing other avenues in a way that I believe will be hedging my bets. Whether or not they are the right decisions, time will tell. That's the fun of investing in this gray industry.
I wonder how much expansion is really in the cards? I am not trying to downplay the company or their ability to execute, what I really wonder with that question is the endgame. It is obvious that Dye is building the company to either go it alone or to hook a big fish. At the time I was fine with them focusing solely on Colorado, and now I like the regional play. I started thinking, what if the landscape changes and cannabis is federally accepted...even if it is still state run...what would the big CPG companies who have always wanted in the space, and have easier access to capital, want? Personally, I think there is a such thing as too big. I dont think that these big fish will be asset focused. I think that they will focus on fundamentals and ability. I dont see them wanting to spend the money on a company spread across 10+ states. That could not only command a higher price, but come with several unknowns...like overpriced acquisitions or unproven execution. ("Success" is not high profit margins due to a limited licensed/market focus.) Or, they could pay a little less (but still plenty by SHWZ's standards) and pick up a company capable of expanding market share in a highly competitive state while also proving the ability to execute their playbook across other markets? To me, a CPG company would find the second one investable because it has a solid core business and pathway for future growth...because they have a proven business model and really just need the new influx of capital to grow it. For the deep pockets that are waiting for federal regulations to change in order for them to enter the industry. We dont need to have the biggest and flashiest "top MSO". The company just needs to keep executing and the dream will sell itself.
My comments are not specific towards SHWZ. My comments are industry thoughts because SHWZ isnt my only holding, just my largest holding. Quite frankly...and I dont have 5 years invested in SHWZ, but about 4...I have entirely different thoughts because, if you have been here long enough...or not...you finally are seeing years of intentions come to fruition under Dye.
I checked out after 10 mins...then back in shortly after when I really didnt have anything else of interest to listen to. I liked the open forum style conversation, and for the few that took part, they did so respectfully of each other. Some trade/short talk...which is outside my wheelhouse...but there was a lot of Curaleaf/Boris talk, and some Germany conversation, that I would have enjoyed playing devils advocate. I also had some questions surrounding SAFE Banking. I think most people see SAFE Banking as the industry being, not just allowed access to banking, but also customers access to debit/credit cards. I actually think that second part is more a myth. I think most assume SAFE will allow uplist. Which should then mean federal industry acceptance to the point of debit/credit card use.. but Visa/Mastercard have been extremely firm in their stance. No acceptance until federal acceptance. So, from and investor standpoint, SAFE Banking is moreso an opportunity to take some profit off the table.
Maybe it's Sally, Petey-Wonka or Mamma Williams herself? Just messing.
Side note: listening to MJs broadcast. It's an alright forum. My problem is, I have so much to say but no hand to raise in order to join the chat.
I noticed Kim Rivers was a listener. I wonder if she was on for MJ or for the interview that didnt happen.
The problem is, the market is so depressed right now. Like Hoop pointed out earlier...the question becomes do you go with what you know or do you try to take advantage of some of the other opportunities in the space. My initial plan, going into 2022, was to 'round out' my portfolio...but SHWZ is doing a good job distracting me from that plan.
ETRF had an 18K ask out there yesterday. Only stayed up a few minutes though.
Thanks StevenRisk. I am confident in the company. Mostly speculating, strategizing, planning and trying to adapt to the industry.
Interesting point. Thanks for the food for thought. Maybe not for SHWZ, at this time, but definitely a direction I expect most of the larger companies to head.
One thing is for sure, cannabis is capital intensive. IMO, if the stock price stays depressed, it is less likely that they will not want to raise capital via equity. Since they just raised debt, I believe that it's just a matter of time before the company raises more capital via sale leaseback. Walmart and Starbucks dont own their properties, they lease. Eventually the cannabis industry will head this direction too because it doesnt make sense to have capital tied up in an asset when that money could be put to better use, and provide a better return, growing the company.
I dont want to rain on your parade, but IIPR and AFCG have two completely different business strategies. IIPR is sale leaseback, and property ownership with 15-20 year leases. AFCG is more a mortgage style, but short term 5 year, lender. They dont own any of the property (tier 3) unless the company defaults. They both have their place in the industry, but aside from from the fact that each company offers a dividend, they really cant be compared. Here is an interesting conversation to explain it better. It's definitely worth a listen:
So many thoughts on this subject, based on information heard across podcasts, but I held off until I could locate some of the sound bites to backup my comment. Unfortunately, I wasnt able to get them all...but I now have a notebook next to me so I will try to jot down reference points for the future.
First: In agreement with Knife's comment. Key Investment Partners - Scott Jordan Sept 15th podcast, at the 14:27 mark: "The top 15 to 20 companies are only properly bankable. If you look at the numbers Viridian put out only 5 of the top 10 show a net profit. Other companies have shown EBITDA positive, but banks dont loan on EBITDA positive, they want to make sure that you are able to make a profit." For SHWZ to receive an approval for a loan that is above their OTCMarkets page market cap is incredible.
Second: The rate displayed is not always the 'true' rate. There could be an extra 3%-4% on top of the posted amount for (and I could not find the podcast for the exact term used...but essentially) administration fees related to gray market operations/services. Personally, I wonder if SHWZ is revealing the true value of their percent whereas Curaleaf is only revealing the posted interest rate (without any behind-the-scenes extras). I only really mention this because Curaleaf is still reporting in IFRS, and not GAAP accounting. Side note: This annoys me...and I consider it 'shady' behavior. First of all, I wonder just how 'Top MSO' the company would be if it had to report in GAAP. But in addition to that, for a company who has one of the most vocal mouthpieces in the US industry...to spend all 2021 hyping up US federal legalization and interstate commerce...the continued company's operations dont match the speak. The company is not ready for uplisting and the company is still approaching the market treating the forever US landscape as State run, and not federal, with limited licensing.
Third: Key Investment Partners - Scott Jordan Sept 15th podcast, at the 21.06 mark: "Many times speed is one of the important factors." The speed of the close could also dictate the interest rate. Maybe Curaleaf has been working on this funding for some time and was willing to wait for a lower rate whereas SHWZ saw an opportunity, and instead of waiting accepted a higher interest so it could move forward with the deal.
Absolutely! Upon initial review, I just would have hoped it would have been more. Thanks for DrugDoctor for pulling the past numbers. I just looked at the last time I saved the holdings spreadsheet, on 7/29, and they only held 12786 shares. That made up a total of 0.40% of its overall holdings. It's great that they have grown their share count over 4x, since the end of July, and an increased holding percentage of almost 3.5x. I didnt mean to come across negative. I just was looking at it in relation to one of their other holdings, and was upset to see that another position grew almost 6x in holdings percentage, and into the top ten of their holdings...but after being able to compare July share count to the current, the share count also only increased around the same 4x percentage.
MJUS up to 51,582 shares of SHWZ, but still minimal (only 1.37%) of its holdings.
I was wondering what was bringing them up today. I looked at their earnings and I too thought it was unimpressive. I wasnt quite sure how all those negative number reported could somehow result in a positive net income. The only positive that I did see was that they managed to lower their G&A expense...but it is still almost 3x their gross profit.
Thanks DrugDoctor, StevenRisk and Future2016 for your input!
Thanks for the explanation. I personally didnt understand the filing. I read as much as possible but it was still as clear as mud.
DD, I am trying to understand what this means...and believe this as dilution of another 120M shares through common, preferred and warrants (maybe I am misunderstanding the filing which is why I didnt want to be too quick to comment). I was also pointing out that the current fully diluted share count is between 125M-133M, and an additional 120M puts the company right at the OTC 250M share max. I get that they can increase the OS, I took part in the last vote, and I get that cannabis is a capital intensive business. I would like to think that the ends would eventually justify the means...just stumped why the timing is now. It also kinda upsets me that I added more share Friday when it appears better buying opportunities could be in the near term as the revenue numbers catch up to the new fully diluted share count.
S-3 posted on the SEC page on 1/7. Can someone put this in layman's terms? When talking fully diluted share count, does this max out the OTC 250M authorized shares?
https://www.sec.gov/Archives/edgar/data/1622879/000168316822000178/medman_s3.htm
Quick Summary of the company:
So I should have stated that I am not an Oklahoma resident and therefore dont know the true state of the industry in the state. I was just regurgitating information that I heard on 2 podcasts, from a while ago, and tried to locate them to post...but failed to find them. In all honesty, I didnt realize that the state was not recreational already. With the oversupply, something has to give, and from what I was reading tonight it might be the state flips recreational soon. There was talk about it being put on an upcoming ballot. Going recreational could allievate some of oversupply issue, because currently only 10% of the residents of Oklahoma have medical card. Even though I think it is way to early to make a move on Oklahoma, quite frankly I am not worried if mgmt decides to because it is obvious that the company is heading in the right direction under Dye...and he isnt spending an absurd amount, like the other MSOs, when it comes to acquisitions. In Plain Sight's Jim Parco comment about growing his business by 80%, has me sold. Anyway here is some other Oklahoma information driving my reason for hesitation:
Oklahoma decided to let the free market run unencumbered. As a result, the state is now home to nearly 12,600 marijuana business licenses, including more than 8,600 growers and upwards of 2,300 dispensaries. That’s more than double Colorado’s combined recreational and medical stores – despite the fact that Oklahoma has some 1.8 million fewer people.
I agree. I dont see it happening in at least the first 9 months of 2022, if at all next year. The state is going through similar struggles as Oregon. There is no need to be there right now...if at all. It is not cost effective. It is not good stewards of capital. It's not good for shareholder value. And the margins suck. Buying in now is buying in too early.