<< Back to All NewslettersNew Facts Are Hard: March 26, 2021
“I don’t know about that . . . that doesn’t feel right to me at all” was the best argument a CNBC host could muster at Ben Kovler, CEO of Green Thumb Industries, Inc. (GTI) during a recent interview at the claim that cannabis is actually an “exit” drug that reduces opioid deaths.
Unfortunately, the entire conversation about cannabis and opioids, and doubts about cannabis being able to reduce opioid use, is obscured by another, terrible, underlying truth. Like a frog in water that is slowly being brought up to a boil, the entire debate often misses the reality of just how much opioid death rates have increased (see graph below) in the last few decades:
Cannabis can’t be held responsible for this acceleration (despite some people still trying), and the fact that it even has a chance of helping should be celebrated in public health policy circles. As recreational cannabis matures in certain states, more data is becoming available about cannabis’ positive effects - one study found that Colorado’s legalization of adult-use cannabis led to a 0.7 per month reduction in opioid-related deaths. That’s almost one human being saved per month.
Hedgeye, a financial research firm, took a look at the Kaiser Family Foundation opioid data and found largely the same thing - adult-use legalization had a negative effect on opioid deaths, and that the effect continued after legalization.
And, at the same time as cannabis seemed to be preventing opioid deaths, it was raising tax dollars that could be used to actually help those with opioid abuse issues.
So cannabis didn’t cause opioid deaths to skyrocket, seems to actually prevent those deaths, and helps raise money that has a chance of helping those with opioid issues in the process.
Ben’s response to the interviewer was a piece of understated gold: “New facts are hard.” But maybe they shouldn’t be.
Maybe Not SAFE, But Maybe Not Sorry Either
The SAFE Act was re-introduced by Rep. Earl Perlmutter (D-CO) this week, sparking a wave of cannabis news, and buzz about the effect of the reintroduction on U.S. cannabis company valuations. The Act explicitly allows banks and other financial institutions to accept proceeds sourced directly from state-legal cannabis businesses, an area right now which is murky. Many were hopeful that this version of the SAFE Act would include a safe harbor for stock exchanges as well as banks to allow U.S. MSOs to uplist to NYSE and NASDAQ, but it did not (yet, it may work its way in). Investors now set to work trying to read the tea leaves of current political developments to see what it means for U.S. MSO stocks - but a little bit of nuance is important here.To vastly oversimplify, all stocks’ long term performance depends on two factors: operations (i.e., how much profit the business actually produces), and perception (i.e., what multiple investors are willing to value these earnings - basically a proxy that combines a perception of how “safe” and repeatable these earnings are with a view on how quickly they will grow in the future).