SLEEKSCAPE'S 2022 CANNABIS & MARIJUANA MANIA GRAND SALAMI -- PART II

[sleekscape]

The State Of The Cannabis Union In A 2020 Post-Election America


Why Hemp/CBD has a Legislative Advantage over MJ

CBD Legalization

CBD Interim Regulations (FDA Enforcement Discretion Policy)

In the big scheme of things, just as we have seen during the past few years, Mitch McConnell isn’t likely to allow any MJ-related legislation to advance in the Senate, so notwithstanding what so far looks like a symbolic election rally that started in the MJ stocks before spreading out more widely to the greater cannabis sector (MJ and Hemp/CBD), from a purely legislative standpoint I continue to see the bipartisan and bicameral supported Hemp-CBD sector as the better play in the cannabis space as we move through 2020 and into 2021:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=159534746


There are 2 separate CBD Legalization Bills (HR 5587 and HR 8179) in the House right now, with HR 8179 regularly adding new cosponsors at a nice clip:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=159535167


But perhaps even more importantly, Mitch McConnell has already demonstrated via Hemp Legalization and Complete Descheduling inside of The 2018 Farm Bill that he has the will and the power to potentially skip the committee process and directly insert the Senate’s version of CBD Legalization into a must-pass bill (Covid-19 Stimulus Bill and Annual Federal Funding Omnibus Bill are the next 2 potential vehicles), and the FDA has sent their Enforcement Discretion Policy (CBD Interim Regulations) to the White House in July 2020, with its release currently pending:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=157109217


Here’s the latest on the status of FDA’s CBD Enforcement Policy:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=158872429


There really isn’t anything out there definitively holding back the release of these CBD Regulations — the only potential factor I can identify is the ValidCare study assessing the impact of CBD on liver function — CBD Isolate has already been shown to be safe at less than 70 mg/day per GW Pharma’s own data, but Broad Spectrum and Full Spectrum don’t have the same level of safety data — this definitive study on all 3 formulations is supposed to conclude in November 2020

I touched on the significance of the ValidCare study to demonstrate liver safety for all formulations here:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=157004799


I put the ValidCare study into context amongst legalization and regulation here:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=158847925


Here is the latest on the progress of the study and the November end date:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=158945261


The catalysts of CBD Legalization via Congress and CBD Regulation via FDA are simply more significant and more substantial than any singular Capitol-based catalyst that could be in play in the MJ sector over the next few months, with the exception of one potential MJ catalyst that is sometimes overlooked — the administrative rescheduling of MJ via Biden executive order to the DEA, which would result in the Federal Legalization of Medical MJ

Now if something really wild happens and Mitch turns around and shocks everybody by declaring his support for moving MJ legislation through the Senate, then of course that would be a highly significant catalyst — but one thing I’ve learned above all about the MJ sector since I began following it in 2014 is that positive surprises are very rare and negative surprises are common — I’ve learned to accept the fact that even though MJ has strong national support and has polled very well with Democrats and Independents, Republican voters as a whole continue to be in opposition to it, less than 1/3 of states have legalized it for Recreational purposes, the pharmaceutical industry and its deep pockets and powerful lobbyists seem terrified by it, and older Americans serving in the DOJ, DEA, FDA and the Senate continue to despise the idea of its future legality — so there are many forces who continue to push back hard against its federal legalization in any form — and even though Joe Biden is less antagonistic towards MJ than Donald Trump, he also doesn’t support Recreational MJ and prefers decriminalization instead — and finally, and most importantly, as long as Mitch and the Repubs control the Senate, MJ legislation simply isn’t going anywhere on a national level

So I personally continue to feel more comfortable being in CBD stocks, as my style of investing in the cannabis sector involves parking myself in stocks that I believe have the greatest potential to participate in the next cannabis mania — just because many investors aren’t currently aware of the specifics of the CBD story in America, and understandably so because it’s not an easy story to follow, the reality of the cannabis sector right now is that CBD is much closer to federal legality and national sales than MJ

It’s also true that even though the election of Biden and New Jersey legalizing Recreational MJ via ballot initiative may not be sustainable catalysts in and of themselves, that doesn’t necessarily mean the MJ and Hemp/CBD sectors can’t continue to warm up, especially considering the frozen depths all cannabis stocks reached before the defrosting process recently kicked in

It’s certainly been very refreshing to see signs of a warmup in the cannabis sector over the past few weeks, and it serves as a great reminder of just how quickly sentiment can turn in the cannabis space, even in a previously completely lifeless sector

To put things in perspective, the MJ sector (and most cannabis stocks in general) has been in a freefall since early 2018 after AG Sessions rescinded the Cole Memo and ruined California’s launch of Recreational MJ, taking down the entire cannabis sector with it

So for the past 3 years, most OTC cannabis stocks have gone virtually straight downhill

Hemp/CBD stocks were an exception during parts of 2018 and early 2019 due to Hemp Legalization, but with the FDA-related regulatory confusion that started in 2019 coupled with the fear of a crackdown on CBD, the Hemp/CBD sector joined the MJ sector in its freefall for the past 2 years and the entire OTC cannabis sector has gone downhill together in 2019 and 2020

The great thing about the Hemp/CBD sector is that whenever the MJ sector has warmed up or gone manic, CBD stocks have always moved in lockstep with it, and we’ve seen the same thing happen this time, most evident thus far in the CBD Dietary Supplement stocks

So what’s good for MJ is good for the Hemp/CBD sector as well

That’s a very important tenet of cannabis investing in America


— — —


The November 2020 Election Reaction and Future Cannabis Manias

There has been a significant reaction to the election in the cannabis sector — based on previous reactions to point-in-time catalysts in the cannabis sector that are similarly symbolic in nature, I’m not sure whether this rally is a sustainable one, but the sustainability of the sector warmup isn’t wholly relevant to the prospects of future mania development in the Hemp/CBD and MJ sectors

So let’s examine the events that triggered a reaction in the cannabis sector last week

There were 2 separate election-related events that have impacted the cannabis sector

Montana, South Dakota, Arizona and New Jersey voters legalized adult-use MJ (Rec MJ) and Mississippi voters legalized medical MJ (Med MJ)

Joe Biden won the Presidential election

There are a number of ramifications stemming from each of these events, but let’s focus in on what’s relevant to the entire premise behind The Grand Salami — predicting the next Cannabis Mania in America

In terms of the states that passed Rec MJ Legalization via ballot initiatives, New Jersey is obviously the most materially significant one of the bunch, based on both population as well as proximity to and influence on the prospects of future legalization of MJ in its neighbor states of New York, Pennsylvania and Connecticut

New Jersey has a well-known history of failure to pass Rec MJ Legalization via legislature, even though Governor Phil Murphy was elected on a prominent platform of doing so in 2017

Over the past 3 years, despite intensive efforts by Murphy and the NJ Dems, the votes to get it done simply weren’t there, so that’s why the issue wound up on the ballot in the first place

The NJ legislature will still need to pass legislation formally legalizing Rec MJ before anything changes with respect to MJ sales in the garden state, but with this directive from the voters, it is generally expected to happen sometime within the next few months

In New York, Governor Cuomo has talked about his plans to legalize Rec MJ for the past few years, but similar to NJ, there simply hasn’t been enough support in the legislature to make it happen

Will NJ legalizing Rec MJ be a strong enough catalyst to finally get NY in the Rec MJ game?

Will the severe financial impact of Covid-19 in NY and NYC be the inciting factor triggering the NY legislature to vote on legalization in 2021?

I believe the answer to both questions is yes, though given the struggle we’ve seen take place in the NJ legislature since 2017, it’s probably not going to be a super linear process, but I’d put the odds at 60%-70% of it (NY legalizing Rec MJ via legislature) happening sometime in 2021

The NY/NJ/PA/CT area is often talked about as becoming the next corridor for Rec MJ in America, linking up with already MJ-legal MA

Pennsylvania tends to be a more conservative state, so it’s less certain we will see Rec MJ pass its legislature in 2021

Connecticut falls somewhere in between NY and PA in terms of the probability of passing Rec MJ via legislature in 2021

MJ is simply one of those issues where it’s generally a matter of time before a state is able to pass Rec MJ legislation once Med MJ is already established, but it often takes several consecutive years of failed attempts before it actually happens — perhaps the impact of Covid-19 on government coffers will shorten the usual timeframe in 2021

The bottom line is that NJ is virtually assured of passing legislation to legalize Rec MJ in its state sometime in early 2021 and NY has moved from the “probably not” category to the “probably” category to do the same sometime in 2021

Is the act of a single state formally legalizing Rec MJ a prominent enough event to catalyze a mania in the cannabis sector?

If we look back at the history of American cannabis manias we have seen thus far, the answer is “No”

The 2014 Cannabis Mania was catalyzed by the actual launch of Rec MJ sales in Colorado, the very first state to do so

The 2016 Cannabis Mania was catalyzed by several different factors occurring simultaneously that led to a synergistic explosion in investor interest — the expectation that the largest state, California, would pass Rec MJ by ballot initiative alongside the first state in the northeast to do so, Massachusetts — at the same time, there was an expectation that Clinton would win the election and reschedule MJ (from Schedule I to Schedule II), thereby federally legalizing Medical Marijuana — in addition there were 3 other states (Nevada, Arizona, Maine) voting to legalize Rec MJ and 4 additional states voting to legalize Med MJ

There was a smorgasbord of catalysts occurring at the same time on a very momentous Election day — the sheer number and significance of these same-day catalysts provided me a tremendous amount of confidence during the Spring of 2016 in the future development of The Fall 2016 Cannabis Election Mania, and served as the impetus for me to start this message board in early September 2016

And the 3rd Cannabis Mania we’ve seen in the United States, The 2018 Cannabis Mania, was also triggered, once again, by the actual launch of Rec MJ sales in California, the world’s 5th largest economy

So what we’ve seen thus far is 2 Rec MJ “Launch” Manias and 1 Smorgasbord Mania marked by a gigantic confluence of catalysts

Simply passing Rec MJ via legislature has never been a powerful enough catalyst to induce a mania in the cannabis sector — at least not yet

So that brings up the following question — would the launch of Rec MJ sales in NJ in 2021 be a significant enough event to trigger another cannabis mania?

It’s certainly less impactful than the Rec MJ launches of the 1st state (Colorado) and the largest state (California)

Illinois is a decent comparison, and launching Rec MJ sales barely moved the needle, let alone being some sort of gamechanger in the cannabis sector

Furthermore, NJ launching Rec MJ sales also doesn’t have as strong a symbolic impact as a state like California in 2018, particularly on the likelihood that Congress will pass legislation to legalize Rec MJ or Med MJ — that likelihood instead is solely determined by whether the Democrats can take control of the Senate, either by winning both Georgia Senate runoff races in Jan 2021 or by winning control in the Nov 2022 midterms

So NJ launching Rec MJ sales is certainly a smaller catalyst than would be expected to trigger a mania in the cannabis sector

But what about the possibility of some type of Smorgasbord Mania, where around the same time NJ launches sales of Rec MJ, NY either passes Rec MJ Legalization via legislature or the expectation of near-term passage comes clearly into focus?

It’s a little amorphous for my liking, but that sounds like something that has at least a shot of catalyzing a serious warmup (baby mania) in the cannabis sector

What if NJ launches Rec MJ sales, and all 3 neighboring states (NY/PA/CT) make some kind of joint announcement of their intention, as is currently rumored to be a possibility, to legalize Rec MJ in 2021?

That would present a stronger case for mania development

What if NJ launches Rec MJ sales, NY/PA/CT make a joint announcement and something very significant happens in Washington D.C. — Biden’s executive order to Reschedule MJ to Schedule 2 or SAFE Banking Act passes Congress?

That would be the closest thing to The 2016 Election Smorgasbord Mania — it would be a pretty special ride, indeed

All of this sounds really great, but there simply isn’t anything ironclad about any of it

As early as the Fall of 2014, I developed a strong belief in the probability of mania formation surrounding the 2016 election, and by April 2016 I felt absolutely certain that The 2016 Election would cause an enormous mania in the cannabis sector

Because there was something very tangible about these catalysts and the same date was attached to all of them

I refer to catalysts in the cannabis sector that are associated with a specific date or timeframe as dated catalysts

By mid-2017, I had developed a similar feeling of certainty around the development of a cannabis mania stemming from the 1/1/18 launch of Rec MJ in California, another dated catalyst

Sometimes a catalyst is so obviously significant that a date isn’t required for it to cause a cannabis mania

I am absolutely certain that CBD Legalization would cause a legendary mania in the Hemp/CBD Sector

I think it’s also probable that the FDA releasing its Enforcement Discretion Policy for CBD Products (depending on the exact specifics of its content) could trigger a serious heat wave in the CBD Sector, if not a full-blown mania

National sales are the holy grail in the cannabis sector

So the first catalyst that leads to national sales of CBD Products is going to be a manic catalyst and either CBD Legalization (definite) or CBD Regulation via FDA Enforcement Discretion (probable, largely dependent on specifics of the policy) are capable of taking us to the promised land

National sales of cannabis products are the most direct way to cause an overnight skyrocketing in consumer and investor interest in CBD — one day CBD Products are not federally legal (Congressional CBD Legalization) or federally permissible (FDA Enforcement Discretion Regs), and the next day they are — all the stores are already out there, so the retail infrastructure is fully in place — it will be like flipping on a light switch

And CBD products sold in all types of stores all across America will become the 1st federally permitted national cannabis products

The media will be ALL over it

And media attention is the biggest driver of manias in the cannabis sector

Investors will stampede into the CBD Product sector overnight in a way that will be reminiscent of Jan 2014 in the MJ sector — a pure, unadulterated, galactic mania will ensue, causing a stunning explosion in the prices of CBD Beverage/Dietary Supplement stocks

We probably need the FDA to publish their Enforcement Discretion Policy (“Regs”) in order for that to happen, and I believe CBD Legalization (“Legs”) via legislation will follow (Regs before Legs is more likely than the other way around)

To me, federally permissible national sales of cannabis products is the most exciting moment in the history of the cannabis sector

It represents a ground floor investment opportunity that will only happen once

And it would ignite the first Cannabis Legalization Mania in America driven by national sales of cannabis products

And because the field size of CBD stocks is much smaller than MJ stocks, the potential for % gains in CBD Product stocks is unmatched

I expect CBD Beverages in particular to wind up becoming the hottest products in the CBD space for both consumers and investors


— — —


MJ/Hemp/CBD Manias vs Hemp/CBD Manias

All prior cannabis manias in America have involved the entire sector — both MJ and Hemp/CBD stocks have fully participated together

So in any kind of future cannabis mania triggered by a MJ-related catalyst, the Hemp/CBD stocks would be expected to fully participate in it, almost as if they were actually MJ stocks

In other words, technically speaking, there is no such thing as an MJ-specific Mania — the catalyst itself may be MJ-related, but all-inclusive cannabis manias are how the market has reacted thus far, and as long as Hemp-CBD products continue to be viewed as federally illegal, that isn’t likely to change

In fact, Hemp/CBD stocks have often outperformed MJ stocks in these cannabis manias — in The 2016 MJ Election Mania, the 3 biggest % gainers actually turned out to be CBD stocks

On the other hand, in the case of a Hemp/CBD-specific manic catalyst, like CBD Legalization or CBD Regulation, I expect the Hemp/CBD stocks to be the sole star of the show — the MJ sector may warm up a bit in sympathy, but the act of legalization and/or regulation of CBD would actually serve to highlight the vast differences between the 2 industries — federally legal and regulated CBD products selling in all types of stores in all 50 states representing a true national cannabis economy vs federally illegal MJ selling only in dispensaries in a state-by-state patchwork economy

So there’s MJ/Hemp/CBD Manias and Hemp/CBD Manias

The Hemp/CBD Sector is a virtual lock to participate in any kind of cannabis mania, whereas the MJ Sector is not

That’s a huge reason why I’m more bullish on the Hemp/CBD Sector than the MJ Sector, especially with Hemp/CBD-specific catalysts like CBD Legalization and CBD Regulation (Enforcement Discretion) expected to occur in the near-term future


— — —


A Biden Presidency with McConnell Running The Senate and Impact on SAFE Banking Act

A Biden Presidency with a Republican Senate is a disappointing combination in terms of the possibility of any MJ-related legislation passing Congress due to Mitch McConnell not allowing MJ Legislation to hit the Senate Floor

There is one possible exception to the McConnell blockade on all MJ-related legislation

If Mitch believes that The SAFE Banking Act is the best vehicle for hemp-derived CBD Beverages/Supplements Legalization, then he may very well allow its passage — the caveat here is that there are multiple legislative options for CBD Legalization (Covid-19 Stimulus Bill and Annual Federal Funding Omnibus Bill are the next 2 potential legislative vehicles), so that’s not something I want to count on to move The SAFE Banking Act through Congress

If the SAFE Banking Act, with CBD Legalization attached, did pass Congress, we would see a generalized mania throughout the entire cannabis sector, much like we have seen in the 3 previous American cannabis sector manias of 2014, 2016 and 2018

However, in that setting, The SAFE Banking Act with CBD Legalization attached would be a far larger catalyst for the Hemp/CBD Sector than for the MJ sector — CBD Legalization is the biggest possible catalyst for Hemp/CBD stocks, one I argue would be the biggest catalyst in the history of the cannabis sector, not simply due to the far smaller universe of CBD stocks in comparison to MJ stocks, but also because, as I mentioned above, it would be the 1st Legalization Mania that actually leads to NATIONAL SALES of cannabis products

The SAFE Banking Act is the 3rd or 4th biggest manic catalyst remaining for the MJ Sector — clearly behind behind Rec MJ Legalization and Med MJ Legalization, and probably behind the potential Smorgasbord Mania of NJ/NY/PA/CT as well

That being said, The SAFE Banking Act would be the strongest catalyst for the MJ sector since the 1/1/18 launch of Rec MJ sales in California, so I don’t want to downplay it too much and underestimate its impact — it’s a huge catalyst for MJ stocks and therefore it’s important to be positioned for it


— — —


The Real Impact Of Joe Biden — Democratic AG/DOJ/DEA and Potential for Executive Order Legalizing Medical MJ via Rescheduling MJ as a Schedule II/III Substance

So what’s the recent reaction in the cannabis sector to the election actually about?

I’m sure the media attention from states passing MJ Legalization through ballot initiatives is playing a role — it reminds people that MJ as an industry continues to grow

I believe a larger factor in what we are seeing now is a general cannabis sector reaction to Trump and a cannabis-hating Republican AG/DOJ/DEA exiting the stage and being replaced by what is widely expected to be a more MJ-friendly Democratic AG/DOJ/DEA, as opposed to Biden himself coming in

Though Biden is also clearly less antagonistic towards MJ than Trump, he is far from a Bernie Sanders

Biden supports MJ Decriminalization but not national legalization for recreational purposes

He doesn’t support completely descheduling MJ, which is what the Dems aim to do with The MORE Act of 2019

Perhaps he will change his mind due to the tremendous pressure coming from his own party

What Biden does support is the Federal Legalization of Medical MJ, which would require MJ to finally be moved off Schedule I and onto either Schedule II or III

But how could such a legalization of Medical MJ occur if it couldn’t pass Congress due to a Republican-controlled Senate?

Biden could use an executive order and direct the DEA to reschedule MJ, thereby legalizing it for medical purposes

If we see MJ being legalized in any form under a Biden Presidency with a Republican Senate, this is how it would occur

The exact details of such an executive order are largely unknown at this time and subject to great speculation

But the likelihood of mania formation with the Federal Legalization of Medical Marijuana is extremely high


— — —


Brief List of Events and Catalysts in the MJ/Hemp/CBD Sector To Keep An Eye On Moving Forward


December 2020

House plans to vote on Recreational MJ Legalization and Complete Descheduling (The MORE Act)

https://www.marijuanamoment.net/congress-will-vote-on-federal-marijuana-legalization-next-month-house-leadership-announces/


Late Fall 2020/Winter 2021

FDA Enforcement Discretion (Interim Regs) For CBD Products


Jan 2021

New York launches legal and fully regulated CBD sales

https://www.foodnavigator-usa.com/Article/2020/10/30/Clarity-is-a-good-thing-Proposed-regs-on-CBD-hailed-by-New-York-food-bev-brands-as-pragmatic-and-rational


Jan/Feb 2021

New Jersey passes Recreational MJ Legalization thru its legislature

https://www.marijuanamoment.net/new-jersey-senate-committee-approves-marijuana-sales-bill-after-voters-approve-legalization/


Important Legislative Events For Hemp/CBD and MJ

CBD Legalization in Beverages/Supplements

SAFE Banking Act


States That Could Pass Recreational MJ Legalization and Launch Sales in 2021 (Cannabis Mania formation potential here, too)

NJ
NY
PA
CT
RI
AZ
MT
MS
SD
VA


Biden Executive Order to Legalize Medical Marijuana and Reschedule from I to II/III


It’s really starting to feel like 2021 is setting up to be the most exciting year in the cannabis sector we’ve seen since 2016


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