Cannabis Musings - January 4, 2024

Looking ahead at the new year.

Friends – happy new year to you all.  It’s that time of year when we engage in the mostly pointless exercise of predicting what’s going to happen in the cannabis industry in 2024, rather than actually creating more engaging content.  I’m cynical about this annual tradition because it’s a fool’s errand to try to prognosticate in this space with any level of certainty. 

With that being said, here are some thoughts on the upcoming year.

• SAFE(R) Banking still won’t be a law.  Still.

• The DEA will reschedule cannabis to a Schedule III controlled substance, releasing 280E’s death grip from the industry. It’s not going to go to II, because that would be pointless. It’s not going to go to IV or V, or off the schedules entirely, because we can’t have nice things, and because there’s no way that happens without a full federal regulatory/taxation scheme in place.

• Congress will pass the 2024 Farm Bill closing the “loophole” (arguably) allowing hemp-derived cannabinoids to be sold legally.  Large retailers like Total Wine will stop carrying these products, but otherwise, they’ll still be produced, sold, and shipped, and the FDA and DEA will continue to do nothing about it (c.f. hemp-derived CBD products).

• Cannabis will not be a major, or even middling, topic of public interest in the 2024 presidential campaign.

• If the Florida Supreme Court doesn’t reject it (I’m not gonna try to predict that), the state’s 2024 ballot measure to approve adult-use will pass.

• New York City will finally make some progress in turning back the tide of unlicensed cannabis shops, helped by licenseholders exerting political, lobbying, and financial pressure to protect their investments.  I also have a feeling that Western states will start to take more seriously the outflow of licensed products into newly-legal states, particularly as word gets out, but maybe that’s just wishful thinking.

• The lawsuit filed by Boies Schiller challenging the Controlled Substances Act’s death grip over intrastate cannabis commerce will fail. 

• Material institutional capital still won’t flow into cannabis because it still won’t be legal (the real problem – not TSX exchange listing or custody/clearing), leaving the industry capital constrained for yet another year.  Oh, and US stock exchanges still won’t list US cannabis stocks – rescheduling wouldn’t change that.

• We haven’t seen the end of large restructurings with companies converting debt into significant equity positions.

Who knows?  I may turn out to be right on some of these.  Then again, az a narishkeit gerot afileh amol, iz es fort a narishkeit. (“When foolishness sometimes succeeds, it’s still foolishness.”)

Be seeing you!

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© 2024 Marc Hauser and Hauser Advisory.  None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.