Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Spotify.
Getty Images
Survey Monday
After 4/20 rolled in this weekend, will the rescheduling of cannabis from a Schedule I drug happen by the end of 2024?
Take the survey here and don't forget to share your thoughts in the WSB comments section.
Change comes slowly
It's that time of the year again when the budding marijuana legalization conversation lights up on the federal level. It's actually been going on for quite some time, and witnessed some momentum in 2022 with the introduction of the Cannabis Administration and Opportunity Act in the Senate and the Marijuana Opportunity Reinvestment and Expungement Act in the House. Things continued in 2023 as the HHS concluded its independent review, with any change in scheduling now in the hands of the DOJ.
Backdrop: When state and federal laws conflict, the latter preempts the former as per Article IV of the Constitution. However, the 10th Amendment - as interpreted by the Supreme Court - outlines that the federal government cannot "commandeer the state," meaning it cannot force states to arrest cannabis sellers or users that comply with their own state laws. In turn, states also cannot block the federal government from enforcing their laws. As a result, federal agents could be dispatched to make arrests within states if there was a will to do so and the resources were available, but in recent decades, sentiment has turned with regard to weed's place in society.
"The process is still going, the review is still going," White House Press Secretary Karine Jean-Pierre said at her latest briefing. "On decriminalization, the President has been very, very clear. He doesn't believe that anyone should be in jail or be prosecuted just for using or - or possessing marijuana."
Oregon led the effort towards decriminalization in 1973, California kicked off medical marijuana in 1996, and recreational weed even became legal in Colorado and Washington in 2012. As of today, pot is now legal recreationally in nearly half of all U.S. states, though it still remains a Schedule I drug under the Controlled Substances Act of 1970. The illegal classification makes it complicated for companies to operate within their own state borders, as many business activities and banks are regulated by federal law, as well as taxes, trademarks, and legal processes like bankruptcy. Reclassifying cannabis as a proposed Schedule III substance also doesn't mean weed would be legalized, but would be a step towards doing so on the federal level.
Outlook: Cannabis market research firm BDSA expects legal U.S. cannabis sales to grow nearly 10% to $32.4B by the end of 2024. For investors trying to gain exposure to the sector, check out the latest Seeking Alpha analysis and news on multistate operators like Cresco Labs (OTCQX:CRLBF), Curaleaf (OTCPK:CURLF), Green Thumb Industries (OTCQX:GTBIF) and Trulieve Cannabis (OTCQX:TCNNF). Cannabis-related ETFs include the AdvisorShares Pure Cannabis ETF (YOLO) and funds like the Amplify Alternative Harvest (MJ). Take the WSB survey here.
Tesla trouble
There was a lot of news that came out of the Tesla (NASDAQ:TSLA) camp this past weekend as shareholders brace for a painful earnings report tomorrow. Facing headwinds ranging from slowing demand to rising competition, the EV maker slashed prices in many of its major markets, including China and Germany, following notable price cuts in the United States. Other news recently saw Tesla miss delivery estimates, lay off more than 10% of its global workforce, announce a Cybertruck recall, slash the price of FSD software by a third, and Elon Musk cancel a high-profile trip to India. TSLA is down more than 40% YTD. (21 comments)
National security
The U.S. House of Representatives on Saturday voted 360 to 58 to approve a bill that would force Chinese tech giant ByteDance (BDNCE) to sell its popular video platform TikTok or face having it banned in U.S. app stores. The national security legislation extends the divestiture timeline to 270 days from 180 days and allows President Biden to extend the timeline by another 90 days. It was also passed alongside a $95B foreign aid package in support of Ukraine, Israel and Taiwan. The measures now head to the U.S. Senate and are expected to pass this week. (766 comments)
Not happening
Shares of Informatica (NYSE:INFA) are down over 6% premarket after talks by Salesforce (NYSE:CRM) to acquire the data-management software company were said to have fizzled. The parties couldn't agree on terms, according to the Wall Street Journal. The original WSJ report sent Salesforce shares down 7.3% on April 15 as investors didn't appear to like the prospects of a large deal amid past pressure from activists. Informatica has a market cap of $10.4B and is scheduled to report Q1 results on May 1. (6 comments)
Today's Markets
In Asia, Japan +1%. Hong Kong +1.8%. China -0.7%. India +0.8%.
In Europe, at midday, London +1.5%. Paris +0.2%. Frankfurt +0.5%.
Futures at 7:00, Dow +0.5%. S&P +0.6%. Nasdaq +0.7%. Crude -0.6% to $81.75. Gold -1.7% to $2372.90. Bitcoin +1.7% to $66,054.
Ten-year Treasury Yield +3 bps to 4.66%
Today's Economic Calendar
8:30 Chicago Fed National Activity Index
Companies reporting earnings today »
What else is happening...
VW workers vote to unionize in historic win for UAW.
'Civil War' retains top spot at the weekend box office
.
Quantitative tightening could halt in 2025 - New York Fed.
IMF warns Washington on dangers of continued deficit spending.
J&J (JNJ) and Kenvue (KVUE) ordered to pay in latest talc lawsuit.
Shoe-Be-Doo: Sneakerheads losing interest and spending less.
EPA approves summer sales of higher-ethanol gasoline blend.
Beige Book district sentiment may help predict recessions.
Surging demand: 13 new obesity drugs could hit the market by 2029.
Short selling spat sees Citadel call Trump Media CEO 'proverbial loser.'
