Discussion on Marijuana legalization Bill (related stocks / ETF's)

[Jamnbutter]

$LFLY (MCMJ)

MCMJ/LFLY - Having our doobie.. and smoking it too!

Merida Merger Corp I (MCMJ) shareholders will be voting on Jan 14, 2022 on the proposed merger with Leafly Holdings, a cannabis marketplace with some bells and whistles, and trade under ticker LFLY shortly after. LFLY valued at ~$385M. Options available. Tl;dr - High likelihood of price to drop in the long run. Low likelihood of a spike immediately merger, before price drop begins. Rationale for Price Drop They do not expect to have positive income until 2024, and do not have parabolic revenue projections like other SPACs that attempt to justify such current unprofitability. Such honesty makes markets frown. [image] Weedmaps (MAPS) is considered to be the closest peer, and has a market cap of $340M. This is close to LFLY’s valuation of $385M. But… MAPS has $51M Q3 revenue alone, and 46% YoY growth. MCMJ/LFLY’s annual revenue projections are $43M for 2021, and $65M for 2022, so a fraction of MAPS’. MCMJ/LFLY confirm they expect very similar growth rates and gross margins (see below). Given that MCMJ/LFLY has almost the same ascribed valuation as MAPS, but makes in a year what MAPS makes in a quarter, and does not have higher growth or margin as justification, we can consider MCMJ/LFLY to be grossly overvalued compared to its peer. [image] What possessed them to ascribe such a high valuation when their own comparables show how unrealistic it is? It’s because the deal was announced at the height of the pot-stock euphoria. MAPS was timely - their max price actually rose to $30 before coming back down to $6 now (see below). MCMJ/LFLY, unfortunately, is very late to the game. We can therefore expect the market to assign it a discount because pot stocks are no longer hot. (And neither are SPACs in general.) [image] MCMJ shareholders have already voted with their feet - 1.4M out of the 13M redeemed their shares on Oct 29, when they voted on an extension for the merger from Nov 7 to Dec 31. The market is also playing this very close to NAV - MCMJ is trading at $9.99, and MCMJW is trading at $0.98. Quite the discount for warrants this close to the merger. Both shareholders and the market therefore seem to be underwhelmed by this union. Caveat: Only MCMJ shareholders are free to sell shares after the merger; those held by Leafly and the sponsors are locked up for 180 days. (There is no PIPE in this deal.) This lockup applies to ~75% of the shares in the post-merger company, assuming no redemption. [image] [image] Based on all this, I therefore expect a price drop, though it may not be as precipitous as some of the other deSPACs because of #5. Rationale for Spike Immediately After Merger Given the data presented above, it would not be unreasonable to expect decently high levels of redemptions on the remaining 11.6M MCMJ shares. A 90% redemption would leave us with a tiny 1.2M float. Even a 75% redemption would leave us with a relatively small 2.9M float. Fintel reports relatively low short interest, but significant redemptions ca…

$CGC

$CGC - Getting high on weed and gains

Primarily this DD will be based off of sentiment and I plan on continuing to add to it as more relevant information becomes available. The company Canopy Growth Corporation, $CGC, I am focused on is one of many popular marijuana tickers like $CURLF, $TLRY, $CRON, $ACB and unfortunately $SNDL ( I would not touch $SNDL with a 10 foot pole). Many of these companies generally share market sentiment and will pop and drop together as witnessed in the past when most of these companies had hit their peaks in 2018 for ATHs and subsequently in Feb. 2021 when they hit near highs for what they were trading at. The other tickers share similar charts with pops and drops at the same time as CGC did and I plan on addressing them in the future with another post. CGC MONTHLY [CGC Monthly] CGC WEEKLY [$CGC Weekly] This is my TA on the current state of CGC. It looks like CGC has been on the downtrend since early 2021 when it hit $50s range and it appears to have found it news bottom. The recent pop that CGC had in October was due to the news that they had acquired Wana Canopy Growth Announces Plan to Acquire Wana Brands, the #1 Cannabis Edibles Brand in North America . TLDR for strategic benefits from article: Strengthens Canopy Growth’s U.S. Ecosystem : Wana’s leadership position and ongoing expansion across the U.S. bolsters Canopy Growth’s product, brand, and geographic exposure to the U.S. cannabis market upon federal permissibility. Dominant Edibles Category : The gummies category is one of the fastest growing segments in both the U.S. and Canadian cannabis markets accounting for more than 71% of all edibles purchased1. Based on Canopy Growth’s consumer research, edibles are expected to continue to serve as the primary point of entry for new consumers into the THC category and as such having a leadership position in the gummy category is critical. Market Leadership in the Edibles Product Category : Wana is the leading cannabis edibles brand in North America based on market share, with the largest multi-market presence of any independent edibles brand across the U.S. gummy market, and #1 share of the Canadian gummy market2, respectively. Increases Exposure to U.S. Cannabis Market Upon Federal Permissibility: Upon exercising its right to acquire Wana, Canopy Growth will own and operate Wana’s vertically integrated facility in Colorado as well as its rapidly growing licensing division, which currently covers 11 states and is expected to cover more than 20 states by the end of calendar year 2022. This expands upon the coverage provided by the Company’s existing right to acquire Acreage Holdings, Inc., a U.S. multi-state operator, and the Company’s conditional ownership interest in TerrAscend Corp., another U.S. multi-state operator. Further Strengthens Canopy Growth’s Leading House of Brands: Wana is the #1 cannabis edibles brand in North America and will complement Canopy Growth’s diversified product portfolio across the recreational cannabis …

others: $CURLF, $TLRY, $CRON, $ACB, $SNDL