Fund Manager: Schumer’s New US Cannabis Legalization Bill Has No Chance of Passing

TL;DR

Recent cannabis industry developments, including Chuck Schumer's draft bill, may impact the market but full legalization is unlikely soon. US operators continue to perform well with solid financials and revenue growth.

Transcript

for the investing news network i'm brian mcgovern and today we're going to be talking about the cannabis industry and the year so far with me is dan ahrens the managing director and chief operating officer at advisor shares investments dan thank you so much for your time hey thanks for having me on again brian nice to see you of course now as we al... Read More

Key Insights

• 💁 Chuck Schumer's draft bill on cannabis reform is promising but unlikely to pass in its current form.
• 🎱 Canadian cannabis LPs may need to reassess their plans to enter the US market due to the limited scope of the draft bill.
• 👶 US cannabis operators continue to perform well, with solid financials, revenue growth, and expansion into new states.
• 💪 The US market offers more attractive investment opportunities compared to Canadian counterparts, thanks to stronger balance sheets and revenue growth.
• 🐢 Investors should approach the cannabis market as a long-term investment and be prepared for volatility and slower periods.
• 🍂 The fall season historically brings renewed interest and potential growth in the cannabis market.
• 🇨🇫 Ongoing discussions on cannabis reform indicate increasing support and public opinion favoring legalization.

Questions & Answers

Q: How do you feel about Chuck Schumer's draft bill and its potential impact on the cannabis market?

While it is exciting to see progress in cannabis reform, the current draft bill is unlikely to pass. However, it does signify increasing support for reform. The bill's provisions, such as descheduling and banking reform, could positively impact the market if implemented.

Q: Will the US cannabis market experience a surge in hype and potential takeovers following recent news?

The US cannabis market should be viewed as a long-term play, and investors should exercise caution. US operators are listed on smaller exchanges, leading to lower trading volumes and increased volatility. However, with ongoing state-level legalization and solid financials, US operators are well-positioned for growth, with or without reform.

Q: What trends have emerged in the cannabis market in the first half of 2021?

The US market has shown dominance and growing financial strength. Cannabis-focused ETFs have generated significant returns, with an over 100% increase in one fund and over 60% increase in another. US operators, with strong balance sheets and revenue growth, continue to outperform their Canadian counterparts.

Q: How do you differentiate between US cannabis operators to identify potential investments?

While all US multi-state operators have value, there are distinct differences between them. Companies like Curaleaf, Green Thumb, Trulieve, and Cresco Labs each have unique strategies and focus areas. Fundamental stock picking, including factors like balance sheets, revenue growth, and earnings power, helps identify the best plays in the industry.

Summary & Key Takeaways

• Recent news of Chuck Schumer's draft bill on cannabis reform has generated excitement, but the bill is unlikely to become law. It includes provisions such as descheduling, banking reform, and up listing for US cannabis companies.

• Canadian cannabis LPs, hoping to enter the US market, may need to delay their plans due to the limited scope of Schumer's bill.

• US operators are expected to continue operating profitably, with revenue growth and expansion into new states. The differences between US and Canadian operators are evident in their financials and market performance.