Scott Atkison

"Growth for the sake of growth is the ideology of the cancer cell." -Edward Abbey. Not a fan of Abbey, but in these words he drops some wisdom.

[Scott Atkison @ScottAtkison]

@vedadi Hedge fund, mutual funds, private equity

[Scott Atkison @ScottAtkison]

There are currently 3 categories of Companies who exist today: (1): Companies which are, and will continue to, implementing AI tools to drive costs out of their businesses and improve products/services, (2): Companies who sell to those Companies in category (1) and (3): Companies who don't implement AI well, lose market share, see profit margins fall and ultimately fail.

[Scott Atkison @ScottAtkison]

@curated_value @JDerevyanny If VA does follow through with adult use in Nov 2026, this will likely turn out very well for curaleaf. A little surprised this asset did not command more. Begs the question on what other assets are worth using this transaction a valuation guideline.

[Scott Atkison @ScottAtkison]

@TheDankInformer A 4 year chart of $MSOS (down 83%) against Verano (down 89%), Trulieve (down 73%), Curaleaf (down 70%), and Green Thumb (down 68%).

[Scott Atkison @ScottAtkison]

@JDerevyanny Your bubbles are not sized correctly.

[Scott Atkison @ScottAtkison]

How low can prices go? Is a better bet to think prices go back up to $40 per 1/8th (and were, after all "compressed") or is a better bet to think prices can drop another 50% with better growing techniques, higher yields, more time on the experience curve and that current prices are, after all, not "compressed" but systemically declining from experience, technology, industrial scale competitive pressures, etc., leading to lower costs?

[Scott Atkison @ScottAtkison]

@Bkov9 Along those lines, if you could buy GTI shares at a lower price then what you had to pay buying from the MSOS ETF, wouldn’t this be the most Henry Singleton way to allocate GTI’s capital on a share buyback? And maybe that would be the open market? Other than getting the lowest possible price for GTI, why would you care about the source of where you bought shares? I’m genuinely curious about this.

[Scott Atkison @ScottAtkison]

@RevelationsLP Does "alleviate" mean when prices stop going down, is when they stabilize and remain flattish, or when they go back up? Experience curves, competitive factors, productivity gains all argue for unit pricing to decline far into the future.

[Scott Atkison @ScottAtkison]

This was a good listen, and when I heard this comment my body twitched a bit. I don't agree it's hard to value - not particularly harder than a lot of industries. I agree what is hard is setting aside the biases for up and to the right future outlooks and coming to grips with real factors such as much more intense future competition, melting ice cube revenue and cash flow dynamics, and ultimately applying an appropriate discount rate in a DCF model. These (cannabis markets/assets) are no longer mysterious creatures which largely unknown future prospects. I think the analogs are out there for most every emerging or mature market and carefully considering most all of the competitive factors and risk factors should give an analyst a framework to build a reasonable model of the future and discount future projected cash flows. The answer from this analysis may not be supportive of former biases for valuation multiples. The math ultimately will be undefeated.

[Scott Atkison @ScottAtkison]

@JDerevyanny

[Scott Atkison @ScottAtkison]

@MikeReganInvest @aaronvalue @kylekazanceo @GlassHouseBR Good analysis

[Scott Atkison @ScottAtkison]

In all industries? Not true. I'm not putting down Glass House here, merely pointing out the terms of borrowing for a cannabis company are expensive relative to other industries (you could say "duh" to this) and when we get numb to this and consider these terms "great" it is all relative.

[Scott Atkison @ScottAtkison]

@aaronvalue @kylekazanceo @GlassHouseBR Yep. My point - debt in this space expensive. If it quacks like equity, walks like equity, but eats before equity, is there any equity?

[Scott Atkison @ScottAtkison]

@aaronvalue @kylekazanceo @GlassHouseBR Borrow $50, have access to $40 (net of restricted cash), pay interest on $50. That's a great deal? Cannabis debt expensive. Those are decent equity returns.

[Scott Atkison @ScottAtkison]

If thesis for upside is these handcuffs are removed, what removes them? An act of congress? That is a very tenuous bet. Congress has many priorities and cannabis, although important to those with a stake, just is not at the top, middle, or maybe even bottom. For a few in Congress, a talking point, but as a body, it’s not an industry that is garnering their serious attention.

[Scott Atkison @ScottAtkison]

But wait, the extra tax cost associated with 280e is not a surprise and is known - just like rent is a known cost. So why not price this cost into the business? Or, perhaps it is priced in and if this cost goes away, prices will go lower to the consumer and the companies will not benefit? It is really, in my opinion, a terrible take to think companies will pocket 100% of the benefits of this cost going away in such a competitive industry. I believe there is a real fallacy here in subscribing to a recast financial scenario on “with 280e” and “without 280e” with the only difference being the amount of incremental taxes 280e levies on the business. Other competitive factors will come into play in a post 280e environment and there is really no strong argument to suggest margins would actually improve. Or; maybe I am just missing how competitive forces actually play out?

[Scott Atkison @ScottAtkison]

@sammyj_19 @sammyj_19 I beg you, stop highlighting EBITDA. It is a misleading metric in this industry. Time to raise the bar and focus on Net Income. Will not have a healthy and valuable industry until Net Income is a positive situation for most and EBITDA is a remnant of the past.

[Scott Atkison @ScottAtkison]

@curated_value Where I operate we have weekly shipments from cultivators or even multiple times a week. Flower inventory turns in 15 days or so and stays fresh. I don't think a intermediate hub would add anything but inefficiency as the product would need handled again and turning inventory on a FIFO basis would always be a challenge for the operator of that distribution hub. Running delivery trucks from cultivation facilities to retail stores on a frequent basis just seems to work. Third party transporters can bring value as they can pick up from multiple cultivators and over time develop consistent routes.

[Scott Atkison @ScottAtkison]

Agree this is a super interesting development. I know firsthand (buy a lot of wholesale product for dispensaries I partially own) of this team's cultivation product and their flower and over the last year has made massive improvements in quality in the market where I operate. Not sure if this will be the case in Illinois - only that they have internal abilities to grow great product at competitive pricing. I'm not a 4front shareholder, so no skin in the game in that regard. I can see this facility having some market disruption potential if the largest. The market does not seem to be growing and another leg of incremental quality supply without demand curve shift has economic consequences if I correctly recall my Econ 101/102 classes.

[Scott Atkison @ScottAtkison]

@sammyj_19 This is the way!