BRND/A - Mercer Park Brand Acquisition Corp

[nafregnum]

On 6/11/2021 at 11:42 AM, Libs said:

Don't underestimate CA's ability to @#$%^& this up on the supply side. Maybe (for once) I can benefit from this dysfunction by owning GHG.

 

https://mjbizdaily.com/thousands-of-rural-california-farmers-still-blocked-from-joining-legal-marijuana-market/

 

Yeah, the "Murder Mountain" documentary series on Netflix seems to bolster this idea -- small local governments maybe can't get the "weed is evil" mindset out of their systems so they want to keep punishing growers with endless bureaucratic regulation.  That suffocates the little guys, and benefits the big growers like GHG.

[nafregnum]

On 6/11/2021 at 1:16 PM, JRM said:

I think I would stay away from the cannabis ETFs, even MSOS.  Most of these ETFs don't own the underlying, but rather equity swaps for many of the US companies because they can't trade the OTC tickers, I guess.  The Canadian companies seem obscenely overvalued for a limited TAM, and the US companies are hard to value because only a few companies actually have positive cash flows.  I'm afraid most of the industry are poor capital allocators and blame the financing and tax hinderances for their problems.  Repealing 280E and passing safe banking will not magically turn them into good businesses.

 

Yesterday I talked with a friend who is a financial planner.  She said she can't recommend cannabis investing to clients because of fears related to federal rules and getting in trouble as a fiduciary.

 

I don't know, but it seems like a lot of institutional investors are unable to hold cannabis stocks as well.  I'm sure there's some guy on the super investor list on dataroma.com who holds Cannabis stocks, but they're probably the Canadian tickers and not subject to 13F reporting rules, so I have no idea who is brave enough to buy this kind of thing. 

 

Maybe these factors are keeping valuations muted in the US for now.  If the federal boogey man turned friendly, we might see the US stocks do exactly what the Canadian company stocks are doing: irrational exuberance might ensue.  Would be great to buy before the fed turns friendly and sell some time afterward.  But still I can't drum up much courage to buy Mercer Park SPAC shares just yet.  Some mornings I wonder if today will be the big day, or even how to tell if it's only a few days away.  Their investor deck said they expected the deal to complete in the first half of this year, and we'll soon be past that point.

Edited June 14, 2021 by nafregnum

[Libs]

Nafregnum,

On the issue of limited supply - Investor relations told me last week Glasshouse believes the Ventura referendum doesn't allow for a competitor to build out a similarly huge greenhouse. "Our lawyers did a really good job writing it." FWIW. 

Also they expect to get their own listing by 7/31.

 

Edited June 14, 2021 by Libs

[Spekulatius]

My understanding is that the taxation and regulation still allows these small illegal growers to compete with legal commercial growers

I don’t really have an answer to most of your questions 1)-7). I do respect Aaron Edelheit because most of his stock picks turned out reasonably well. He talks very enthusiastic about all of them, so keep that in mind when you hear him mentioning Glass House.

 

I am almost certain that Glass house won’t be the low cost producer. My reasons being the high Capex cost that Glass house is incurring as well as the relatively high cost to do business in California and Ventura county.

 

I know one company in CA for example that acquired dirt cheap industrial buildings in the North Bay post the 2001 crash and started to do indoor growth including cannabis and I bet their Capex/ unit is a fraction of what Glass house is paying and investing just to name one example. This is in the same state and if we are talking other states, I am certain that costs are even lower.

 

This doesn’t men that Glass house won’t work out, I would look at everything that is presented by  SPAC with a few grains of salt, especially in the cannabis space.