Speaker focused on the new markets rather than challenged ones.
There was a noticeable air of cautious optimism at the Benzinga Cannabis Conference in Chicago this week, driven in large part by the recent events in Washington D.C. While there haven’t been any concrete changes in federal legislation, there appear to be productive steps forward.
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It’s a marked change from the mood in Miami earlier this year, which was somewhat depressed with lots of talk about just trying to survive. Six months later, even conversations around depressed assets had a whiff of opportunity. Instead of dwelling on the fact that there are companies in receivership, the conversation for one panel on “Cellar Assets” talked about the buying opportunities. The panelists focused on where investors could jump in. There wasn’t any talk of abandoning cannabis because the industry had flamed out. Back to Basics There was, however, a larger emphasis on companies getting back to the basics. Advice about zeroing in on profitability, cash flow, and strengthening the balance sheets abounded, as many speakers pointed out that the cannabis industry was experiencing a normal business cycle. Indeed, there was a lot of talk about the recent challenges in cannabis being a part of a typical evolution of an emerging market. “There’s nothing like a crisis to make a company lean and mean,” Seymour Asset Management founder Tim Seymour said. Instead of talking about depressed equity valuations, speakers pointed out that the industry is on the cusp of attracting significant institutional capital. Rob Sechrist, president of Pelorus Equity Group, noted that his investment work has cleared a path for institutional money, and Canaccord Genuity analyst Matt Bottomley also stated that he thinks there will be significant buying in the future. SAFER was Everywhere You would be hard-pressed to sit in any panel and not hear some discussion of the Senate committee vote on the SAFER Banking Act, including exuberance about the historic nature of the movement. “This was the first vote in the Senate, and it was a historic win,” Trulieve CEO Kim Rivers said. She added that the cannabis industry tends to get bogged down with the hurdles and doesn’t celebrate the victories. “It’s a marathon, and this is the time to take a water break and have a high five,” she said. In addition, she acknowledged that the next heavy lift will be getting the House and the Senate aligned on the legislation. However, she stressed, it’s a process that moves in incremental steps. If everything goes according to past movements in the legislature, the industry could see real legislative movement by the summer of 2024, she said. “We’ve been working on this for years,” former Colorado U.S. Rep. Ed Perlmutter added. “I feel like we were the starting pitchers, but now we need closers. It’s good news today. It’s been bottled up in the Senate for the last five years.” That sentiment was echoed by former Colorado Sen. Cory Gardner. “Laws typically take 10 years for legislation to start and then get enacted. The Senate doesn’t really talk about issues like cannabis because they mostly make fun of it. We joke that the Senate has hip replacement Thursdays. Still, this is like lightspeed for the Senate.” New Markets Attendees and speakers also focused more on new markets rather than the challenged one. Sure California was discussed and many shook their heads at the mess in the New York market, but that didn’t stop excitement around Pennsylvania and Ohio. Overall, the talk about the East Coast was positive, with New Jersey, Maryland, and Massachusetts leading the way on solid marketplaces.
