Chicago Atlantic downgraded to Neutral at Compass Point with growth ‘elusive’

As previously reported, Compass Point downgraded Chicago Atlantic to Neutral from Buy with an unchanged price target of $16. While the firm thinks there were some positive signs in the first eight months of 2023 for the marijuana industry – such as price stability in markets where supply contracted, more states voting to legalize the product for medical or recreational use, and the HHS recommendation to the DEA to reschedule marijuana from Schedule I to Schedule III – it does not think this will help marijuana operators obtain debt financing from regulated financial institutions because most nationally-chartered banks will not act in defiance of the Federal ban and it is updating its earnings models for companies in marijuana-linked real estate with the expectation that growth in earning assets and earnings “continues to be elusive in 2024.”