Wall Street Loses Its Cannabis Buzz

August 22, 2023 · Green Market Report

Before the COVID-19 pandemic, Wall Street was salivating at the cannabis industry. Seemingly every cannabis company was going public, whether it should or not. Investment bankers were happily signing big checks and crowing about the green rush. The requisite puns were consistently bad whether it was an industry “growing like a weed” or “pot stocks are lit.”

Now, however, it seems cannabis has lost its buzz for Wall Street.

Major Wall Street firms cut equity analysts, and banking dollars dried up as stock valuations have been mired in a two-year bear market.

Cowen Group led the way for many cannabis stocks to public markets, and its analyst Vivien Azer was considered the best. The company has since cut its equity research reports, and while Azer still covers cannabis, it’s only for an internal audience.

Shortly after Cowen was acquired by TD Bank Group in March, Cowen said on Twitter that previous estimates, price targets, and ratings for the industry could no longer be relied upon.

Similarly, Cantor Fitzgerald saw the departure of its analyst Pablo Zuanic and stopped covering all cannabis companies except for WM Technology, better known as Weedmaps. Zuanic stepped out on his own and will soon restart his coverage under the Zuanic & Associates title. 

Wall Street had been holding onto hope for some sort of legislative action that would nudge the industry closer to federal legalization, but that hasn’t happened. While some states continue to deliver millions if not billions of dollars in sales, onerous taxes and inefficient operations resulted in most cannabis companies facing financial struggles.

Overwhelming debt also forced many lenders to reconsider throwing good money after bad. Many companies have already gone public, leaving only some merger and acquisition business for banks. Overall, Wall Street’s dance with cannabis seems to have limped to an end.

Some equity analysts do remain, including:

  • Matt Bottomley of Canaccord Genuity 
  • Andrew Carter and Andrew Partheniou from Stifel
  • Matt McGinley from Needham & Co.
  • Eric Des Lauriers of Craig-Hallum
  • Jesse Redmond of Water Tower Research

However, these analysts ask standard questions about same-store sales or future projections, and in this latest earnings season, cannabis executives were often unable to answer those questions. Either they don’t report those metrics or the situation in cannabis is so volatile that making estimates is difficult.

Ultimately, if Wall Street doesn’t see cannabis as a source of banking business, it quickly packs up its bags and moves on to the next promising sector – perhaps AI. (Full Story)

In category:Business
Next Post

Cannabis Tax Revenues Outpace Other ‘Sin’ Taxes in Colorado

Cannabis tax revenues in Colorado are outpacing those of cigarettes, and other tobacco and nicotine products, and alcohol, according to an August 16 analysis from the Colorado Legislative Council Staff (LCS). In the 2022-2023 fiscal year, Colorado collected $282.3 million in cannabis tax revenue,…
Read
Previous Post

Canadian cannabis firms increasingly flag rivals over alleged misdeeds

More Canadian cannabis operators than ever are lodging complaints against rival businesses over alleged transgressions or other concerns, a phenomenon being driven by intense competition and desperate companies looking for any edge they can get, according to experts. Last year,…
Read
Random Post

Cannabis Legalization Bill Introduced in Pennsylvania

A bill to legalize cannabis for adults was introduced in Pennsylvania last week. The bipartisan legislation would legalize cannabis possession and retail sales and includes expungement provisions for nonviolent cannabis criminal charges.  The measure was introduced in the Senate by Democratic Sen. Sharif Street…
Read
Random Post

4 Things You Can Do to Move Your Business Forward Right Now

We’re about a year into what is undoubtedly the most challenging stretch the cannabis industry has faced since the legalization movement began. The initial hype surrounding the industry’s potential as the next great American boom has slid back to a harsh reality.…
Read
Random Post

Moving Marijuana To Schedule III Could Have Sweeping Impacts For Businesses, Federal Employees, Research And More

If the U.S. government moves marijuana to Schedule III of the Controlled Substance Act (CSA)—as the Department of Health and Human Services (HHS) has now formally recommended—the shift could have profound implications for all sorts of cannabis-related issues, ranging from research…
Read
Random Post

Cannabis Brand News: Rick Ross, Ben Cohen, Cookies, Cheech's Stash and Monogram

Both noted for their cannabis advocacy, rapper Rick Ross and entrepreneur Ben Cohen have announced new cannabis ventures and brands. Rick Ross Rick Ross is teaming up with High Tolerance Los Angeles on the launch of the Collins Ave strain, named…
Read