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Happy Holidays: Let's Wrap Up 2025
1/PRESENT
In case you missed it, I was back on the Higher Exchanges podcast last week (Dec 19th), joined alongside Hirsh Jain (Ananda Strategy) to break down Trump’s move to reschedule cannabis. It’s my third sit-down this year with Jesse and Morgan, and my first alongside my pal Hirsh, who is a “must-follow” resource on cannabis policy.
While it’s always hard to react in the moment just hours after a monumental event, I stand by my early takeaways of vindication and legitimacy after a weekend of reflection. And I stand by my strong view that this decision will release meaningful kinetic energy over time. Over the weekend I also addressed on X some outstanding debates like this one on pricing related to 280E tax relief.
If you only remember three tenets from SUNDAY SESH this year:
One, Demand Always Leads Policy;
Two, “All At Once” reform—even if no one has any clue on timing—is closer today than yesterday; and
Three, Big Ideas Take Time. For those linking policy success to stock prices, take a beat. Be patient, pick your “bifurcated” horses, and ignore the noise.
Last week put these transformational themes on clear display. The puck is always moving so stay tuned for my latest thoughts.
2/ PAST
I said 2025 would be a great year to be a stock-picker in and out of cannabis, and boy did that prediction come to fruition. Hindsight is always 20/20, but 2025 was clearly hunting season whether you’re a trader, an investor, or an executive who needs to take action.
If you’ve been following my Safety, Spiffs & Stupidity playbook, this year brought some of the best risk-adjusted opportunities I’ve witnessed in many years (if not decades). It truly was the year of the “Spiff”—convexity was persistently mispriced in assets undergoing powerful transformations as the world accelerates, creating ‘too-many-to-mention’ asymmetric setups all year long.
Similarly, the market repeatedly mispriced “Safety”—most visibly during April’s Tariff Tantrum—reinforcing my belief that: i) valuation still matters (even if it’s not obvious); ii) a sharp utility curve helps sift through the rubble; and iii) durable, safe “bond floors” allow patient capital to pounce when opportunity is presented.
The market also gave us a number of “Stupid” situations due to liquidity air pockets, forced pod deleveraging, thematic unwinds, and crowd FUD mentality—on both the long and short side—in every transforming sector I closely track. Google is an easy one to flag: it wasn’t too long ago the crowd thought “search was dead” and woefully behind in AI. When a $1.5 Trillion asset moves 2x in less than 6 months, it’s safe to say there was a lot of smart money that didn’t act so intelligently. On the short side, Starbucks and Nike proved once again that legacy—like Big Food and Alcohol—is too slow to change. Or too afraid to take the pain.
Specific to cannabis, as always this sector requires you deeply know what you own, and it typically pays to be a liquidity provider. (And to emphasize, beta scares the fuck out of me so the ETF basket doesn’t get our capital.) Like in past years, investors had to be both nimble and highly convicted to capitalize on the constant stampede of emotional traders repeatedly charging through a liquidity hole the size of a thimble. It is what it is.
In FY’25, cannabis beta (i.e. MSOS) is on pace for two +150–205% trough-to-peak moves, alongside two ~40–50% peak-to-trough drawdowns (see below chart). And post-Schedule III, we may not be done yet. Exhausting? Yes. Opportunity? Hell yes. Is it for everyone? Hell no.
Given the importance of these ETFs, it caused perpetual distortions in the highly illiquid underlyings that most professional investors can’t access. I completely understand why many smart investors think the sector is untouchable. I just don’t have to agree. I entered FY’25 with a decent allocation to very few cannabis companies that materially grew into H2 (as discussed). I stayed nimble all year long, and carry largely the same fundamental playbook into 2026.
3/FUTURE
Looking ahead, 2026 is shaping up to be a foundational year for cannabis. Performance won’t be universal—bifurcation, duh—but I continue to expect cannabis to be one of the more compelling idiosyncratic opportunity sets again next year, particularly if and when the pipes finally open. Paying subs know where I’m focused (check the chat).
More broadly, my themes and top picks into 2026 remain relatively unchanged. I’m holding more cash and Safety than usual, but the pipeline is very full as I take a much-needed break.
If you’re new here, I would suggest spending time with today’s links and our archives over the holidays. (Perhaps dump them all into your favorite AI prompt to get a good feel of my evolving cannabis thesis that’s humbly proving out.)
4/ THANK YOU
Thank you all for joining SUNDAY SESH, truly.
I sincerely hope you found value this year—not to follow my path, but to think critically for yourself and hone a repeatable process in and out of the office. Whether you’re an investor or an operator.
And for those paying subscribers, thank you for your financial support. Your contributions allowed SUNDAY SESH to stay engaged, and as promised, provide financial assistance to a variety of pro-cannabis groups that keep our politicians accountable.
So with that…roll up a faaaat holiday J and I’ll see you on the other side in January.
Happy holidays and my very best for a wonderful 2026.
Onward,
SUNDAY SESH
