SAFE As Pot Houses, Tesla’s Burning Question & United We Fall
Weed With Congress
I always heard that their legislation was top shelf. Lord, I just could not wait to find out for myself.
Well don’t knock it ‘til they pass it, and I’ve waited my friend. I’ll never bet on weed with Congress again.
Now we learned a hard lesson with the banking system. They’ve fired up the SAFE Banking Act time and again.
The last words I spoke before the Senate checked in: “I may discount Bungee jump but I’ll never bet on weed with Congress again.”
Sing it with me, Great Ones… (To the tune of “Weed With Willie” by Toby Keith.)
I’ll never bet on weed with Congress again. The investment’s all over before it begins. You can buy me some crypto Dogecoin, my friend. But I’ll never bet on weed with Congress again.
Yes, it’s that time again, Great Ones. That time when Wall Street gets excited about legal cannabis. The U.S. House of Representatives passed the SAFE Banking Act yesterday in a move to allow cannabis companies legal access to U.S. banks.
That’s right: Under current legislation, any U.S. bank that processes transactions for a state-legal cannabis operation can be prosecuted under Federal law for money laundering. The House hopes the SAFE Banking Act — which passed on a 321-101 vote — will remedy the situation.
Cannabis stocks initially rallied on the news, with the Global X Cannabis ETF (Nasdaq: POTX) jumping roughly 2% on the open. It was an across-the-board “puff, puff, pass” for the cannabis market. Stalwarts such as Tilray (Nasdaq: TLRY), Aphria (Nasdaq: APHA) and Canopy Growth (NYSE: CGC) all jumped roughly 2%.
Even the small-time U.S. growers got in on the rally, with Great Stuff favorites CuraLeaf (OTC: CURLF) and Cresco Labs (OTC: CRLBF) rallying on the news. Arguably, these U.S.-based cannabis companies have more to gain from the SAFE Banking Act than their Canadian counterparts … for obvious reasons.
But, as the song says, the rally was over before it began. About half an hour into trading, Wall Street realized that it’s seen this game before. Back in 2019, the House passed a similar pot banking bill. It died in the Senate.
The same is likely to happen once again with the SAFE Banking Act. Senators are already lining up to bemoan how the act doesn’t go far enough or is the wrong avenue to address cannabis.
“Considering that the larger issue of cannabis legalization has not yet been debated here on the House floor, I think it is premature for the Financial Services Committee to do the full work of this Congress on the question of cannabis legalization,” said Rep. Patrick McHenry (R-NC).
As much as I’d like to see the SAFE Banking Act pass … McHenry is right. Cannabis legalization needs to be taken seriously and tackled head-on — not backdoored with a banking bill. (Though I and many other investors will take the banking bill if it comes to that.)
The lesson here is clear: We’ve all been in the fetal position with drool on our chins. So, don’t break down and bet on weed with Congress again.
What do you think, Great Ones? Does the SAFE Banking Act have a snowball’s chance? Should Congress get off its keister and just legalize already? (And have you ever smoked weed with Willie? Or just some guy who looked like Willie?)
Write in and let us know at GreatStuffToday@BanyanHill.com! Until then…
Look, it’s 4/20 … so um, like yeah … it’s a Great Stuff official holiday, dude. Click here to see why many people are unknowingly putting their money into the worst pot stocks possible.
Good news from IBM (NYSE: IBM)? I guess it happens sometimes. Last night, the company reported first-quarter earnings of $1.77 per share on revenue of $17.73 billion. Both figures beat Wall Street’s expectations handily.
But the real deal Holyfield, the reason IBM shot more than 4% higher this morning, was the company’s outlook. “I think that the spend environment overall is improving, Matt. I think I can say that, definitely compared to the fourth quarter,” IBM CEO Arvind Krishna said in an analyst conference call. Good question, Matt … whatever it was.
Just like a knife. The financial media’s favorite weapon isn’t the look in your eyes … it’s sensational headlines. (Any Ministry fans out there? Probably not…)
Take Tesla (Nasdaq: TSLA) for instance. Every time a Tesla crashes, a bearish analyst gets his wings. TSLA shares are under pressure this week after a Model S crashed into a tree this past Saturday, killing both passengers.
The media blame the crash on Tesla’s autopilot, since no one was driving the car. However, CEO Elon Musk says that autopilot wasn’t on when the crash happened.
So, why should investors pay attention to this investigation? Well, they shouldn’t … if Musk is right. This is another big nothing-burger. But if Musk is wrong (perish the thought), then this could have serious consequences for Tesla’s flagship autopilot software.
Don’t carry me too far away… How far is too far? I’m thinking United Airlines’ (Nasdaq: UAL) nearly 10% drop on earnings today is a bit too far. I mean, how did investors not see this coming?
United reported a loss of $4.29 per share on revenue of $3.22 billion. Both figures whiffed Wall Street’s targets, which stood at a loss of $4.24 per share and sales of $3.26 billion. Once again, however, the proof was in the guidance.
CEO Scott Kirby said in a statement that “we’re as confident as ever that we’ll hit our goal to exceed 2019 adjusted Ebitda margins in 2023, if not sooner.” I guess analysts expected profitability much sooner than 2023 … though COVID-19 only knows why.
It’s rollin’ round the bend. And I ain’t seen a $33 billion railroad deal since I don’t know when.
And you thought trains weren’t exciting?
Right now, KSU is among the biggest gainers on the NYSE, rallying more than 16% due to the Canadian bidding war.
I wonder if CNI’s higher bid was accompanied by a “Sorry.”
Today’s Quote of the Week is brought to you by mustard stains, corned beef and too-sticky-for-me barstools!
The deli in question is Hometown International (OTC: HWIN), which hit a market cap of $113 million on February 8. Despite its wanderlust paradox of a name, Hometown International is a single deli out in rural New Jersey. Understandably, its sales are minimal … as in:
I’ve seen creative accounting before. I’ve also heard of what we’ll call “backroom accounting.” And lest the Great Stuff team find itself at the bottom of the river, let’s presume there’s no funny under-the-deli-table business going on, no nepotism, no nothing out in that rural Jersey eatery. Just one dauntless delicatessen don looking to spread his restaurant’s “casual and friendly atmosphere” to the, erm, public markets.
Thanks to this CEO/CFO/Treasurer/Director/wrestling coach of the high school next door, deli parent Hometown International is a publicly traded stock. And certain Wall Street stalwarts are a bit unnerved by this.
David Einhorn over at Greenlight Capital mentions the Jersey deli devil in his quarterly letter as an example of market excess. That Hometown International is a poster child for exuberant hype and even more propped-up valuations.
Not even your local deli is safe from the Street’s bullish bug. But let’s be honest here: Wall Street has bought some much rougher cuts than this here deli. WorldCom, Pets.com, housing stocks in 2007 … the list goes on.
But no one really gave a care about Hometown International in particular until Einhorn picked up on the stock last week. The stock that usually only saw 331 shares change hands in a day became a hotly traded punching bag.
More trading happened in HWIN on Friday than in the rest of 2021. Maybe it was the absurdity of buying an illiquid fly-by-night deli stock. Maybe it was Friday afternoon wantonness reaching the Street. Maybe it was the deli’s tremendous turkey club.
Either way, the “suckers” that Einhorn thought would be endangered by stocks like these piled in with reckless abandon.
And thus, another meme stock was born — albeit for a brief period of jesting glory. You can’t just tell someone not to buy a cheap, meme-worthy stock and expect them to listen. It’s like we learned nothing from 2020.
Have you been snatching up any deli stocks lately? Any new meme stocks? Are you bringing a restaurant public in an ill-advised stock offering anytime soon?
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