AG Jeff Sessions Ousted as Cannabis Passes in Midterms

Matthew Carr By Matthew Carr
Emerging Trends Strategist

Beyond the Bong
This is individual research and does not constitute investment advice.

Cannabis investors were hit with a mountain of information in the past week.

And today’s issue of Beyond the Bong covers a lot of ground – so let’s get to it…

Hasta la Vista, Jeff Sessions!

The first big news of the week was the marijuana initiatives that passed in Michigan (recreational) and Missouri and Utah (medicinal).

North Dakota’s failure wasn’t a surprise.

We covered this last week, as well as the potential $2 billion these states add to the U.S. cannabis market.

Not 24 hours later, American marijuana investors got their second market-moving news – the resignation of U.S. Attorney General Jeff Sessions.

Sessions has been an outspoken opponent of marijuana and any sort of legalization. Back in January, the then-attorney-general caused a market sell-off when he rescinded an Obama-era memo that essentially said the federal government wouldn’t interfere with the states’ laws. And we’ve covered this multiple times this year.

I never believed Sessions would survive the entire term. And I believed he would likely be booted following the midterms… though I didn’t think it would be the very next day.

I’ve also argued that once Sessions lost his spot, a move at the federal level wouldn’t be far behind.

I think we could see a change nationally by the 2020 presidential election at the latest. Though something will likely happen well before then. And I think it will be on the medical side.

Let me explain…

In my conversations with doctors and specialists in the cannabis industry, one recurring problem is that medical marijuana is not legal at the federal level and has not yet been reclassified.

There are older patients who live in states where it’s legal to possess and consume medical cannabis. But they vacation or “snowbird” in states where it isn’t.

If there’s a designation change at the federal level for medical marijuana – remember, there are already 32 states that have legalized it – patients won’t have to worry about their medical cannabis needs when they travel.

The majority of U.S. states have already given the thumbs-up to medical cannabis. The federal government isn’t that far behind, simply for that reason.

Bold Prediction:

Medical marijuana will be federally legal in the U.S. within five years.

This Week’s Market Movers

We’re not done with market-moving news for cannabis stocks.

This week, we have extremely important earnings announcements from primo pot stocks. And the results will be felt industrywide…

Cronos Group (Nasdaq: CRON) reports Tuesday before the opening bell. Wall Street is looking for $2.71 million in revenue with a loss of $0.02 per share.

Tilray (Nasdaq: TLRY) reports Tuesday after the bell. Analysts are looking for $10 million in revenue with a loss of $0.14 per share.

Canopy Growth Corp. (NYSE: CGC) reports on Wednesday before the open. We’re looking for $25.6 million in revenue with a loss of $0.12 per share.

It could be a volatile couple of days depending on how these results go.

U.S. Marijuana and Post-Midterm Winners

In past issues of Beyond the Bong, I’ve listed some companies to watch following the midterm elections. But I noticed a few popular requests in last week’s comments.

So today I’ll give a brief analysis…

MedMen Enterprises (OTC: MMNFF)

I think this may be the best-known U.S. cannabis producer and dispensary operator.

It advertises a lot.

And it just expanded its footprint in Arizona with the acquisition of Level Up.

This brings MedMen’s total U.S. footprint to 69 stores and 17 cultivation facilities in 12 states.

In its fourth quarter report released at the end of October, the company reported that revenue grew 1,317% to $20.6 million!

That’s fantastic growth. And that quarter alone represented almost 52% of what MedMen reported in its 2018 fiscal year.

That’s because almost all of its stores came online during the quarter.

I also like the fact that its cash and cash equivalents at the end of the quarter totaled $79.2 million. And that’s more than the $56 million it had in total debt.

It’ll announce fiscal year 2019 first quarter results on November 29. So you’ll want to keep an eye out for that.

MariMed (OTC: MRMD)

MariMed is a multistate cannabis operation.

In its second quarter results back in August, the company reported record revenue of $2.9 million. This was also an 81% increase over second quarter 2017’s results.

And we can see that since 2015, year-over-year growth has accelerated.

The company operates in Delaware, Illinois, Nevada and Rhode Island. It’s also in Maryland, which just kicked off its medical marijuana program late last year. And it expanded into Massachusetts during the third quarter.

It has 11 licenses in those five states – three each in Maryland and Massachusetts – and has seed-to-sale facilities in excess of 300,000 square feet.

MariMed is in the precision dosing arena with its cannabis-infused Betty’s Eddies, Kalm Fusion and Nature’s Heritage products.

In the medical cannabis field, precision dosing is an extremely important area of focus. So you’ll hear more and more companies comment on this.

Now, in the second quarter, the company did swing to a loss. But the primary reason for that was equity compensation. I’m not concerned about that. Because, at the same time, even though operating expenses increased, income from operations grew.

CannaBiz Now!

Starting this Thursday, we’re unveiling a new video series, CannaBiz Now!

Our first guest is Dr. Avtar Dhillon.

He’s the chairman of the Cannabis Council of Canada (C3) and executive chairman of Emerald Health Sciences.

In this segment, we discuss the first month of sales in Canada, as well as the future of the medical marijuana market and what Emerald Health Sciences is expecting for 2019.

Make sure to check your email Thursday to catch the premiere of this new video series.

What Happens in Vegas… Goes Into These Pages!

This week, the Energy & Resources Digest team and I will be in Las Vegas at the Marijuana Business Conference & Expo.

We’ll be researching new opportunities and talking with CEOs and business leaders, as well as exploring what’s coming to the market.

As always, if there’s a company you want me to cover or look at, leave the ticker symbol in the comments section. I’ll try to cover as many as I can.

Next week, I’ll do a breakdown of Terra Tech (OTC: TRTC), which just reported third quarter earnings.

Until next time!

Good investing,

Matthew