Glass House Hemp on the Horizon?
A Review of Q2 2024 earnings with Glass House Management
The great unlock of value for Glass House (OTC: GLASF) has always been interstate commerce and being allowed to sell its high-quality, low-cost flower outside the state of California. Right now cannabis businesses cannot legally sell cannabis products across state lines. I’ve interviewed a law professor and believe like he does that these restrictions are unconstitutional, but it hasn’t mattered.
The last few months, I have been wondering if I was wrong that interstate commerce could come sooner than expected, and that maybe it is far off in the future and it doesn’t matter. But what if I’m not wrong and interstate commerce is a mere sixteen months away?
Glass House dropped a bombshell on investors and the industry in their second quarter earnings release that I’m not sure has been properly digested yet. Glass House is considering producing Federally legal hemp flower to be sold nationally and even potentially direct to the consumers with its new greenhouse expansion.
For background, hemp, as long as it is grown on a USDA certified farm and harvested with 0.3% THC or less, is federally legal and any cannabinoid derived from that hemp is not on the controlled substances act. All of this is straight from the 2018 Farm Bill. It’s a bit complicated and frankly absurd (remember I love the absurdity of cannabis laws and regulations because they are increasingly untenable), but the Atlantic put it best when it wrote that Congress Accidentally Legalized Weed in 2018.
I’m not going to get further into the weeds on this, but I HIGHLY recommend you listen to or watch my latest quarterly review of Glass House earnings with CEO Kyle Kazan, President Graham Farrar and CFO Mark Vendetti.
Why is hemp suddenly so important to Glass House? The company is only using approximately 40% of its capacity of cannabis production and is stuck selling cannabis for $500 a pound in California, when prices in New Jersey go for $3500 a pound and $2500 a pound in Illinois. If you run some simple math and even with very conservative pricing, Glass House could produce boatloads of free cash flow in an interstate commerce scenario with its facility at full capacity.
I had the audacity during our last quarterly review to wonder if Glass House was becoming boring, but boy was I wrong. In sixteen months, if Glass House is selling hemp flower in Texas and/or other states, everything will change, but most importantly for Glass House’s shareholders, so will the stock price.
I hope you enjoy the interview. Here it is on Youtube: